The rules require consumers to pay penalties when they purchase gas-guzzlers, while buyers of more environmentally friendly cars receive bonuses.

Consumers who buy cars that emit less than 120 grammes of carbon dioxide (CO2) per kilometre and less than 60 milligrammes of nitrogen oxide per kilometre stand to pocket tax bonuses of up to 500 euros (787 dollars).

By contrast, buyers of automobiles that emit more than 180 grammes of CO2 per kilometre must pay a penalty of 25 euros per excess gramme or total penalties of 4,000-10,000 euros for the most polluting cars. Value-added (VAT) or sales tax of 20 percent is added to the price.

The new legislation, adopted by the grand coalition of Social Democrats and conservatives, is aimed at cutting carbon emissions by up to 33,000 tonnes per year and could also generate 21 million euros in additional tax revenues for the government.

The opposition Green party, however, insists the so-called "bonus-malus" system does not go far enough. The Greens estimate it will only apply to around 20 percent of new vehicles, since most new registrations apply to cars that emit between 120-160 grammes of CO2 per kilometre.

At the same time, the city of Vienna has said it will offer a premium of 1,000 euros for people who purchase natural gas-fuelled cars or re-fit their cars to drive on natural gas.

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