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Brussels, 16 January 2006

Indirect taxation: Commission refers Greece to Court over VAT on roadside assistance contracts and over car registration taxation

The European Commission has decided to refer Greece to the European Court of Justice for its refusal to exempt from VAT the “insurance” aspect of roadside assistance contracts. In a separate case, the Commission has also decided to refer Greece to the Court over its car registration taxation rules. Greece calculates the depreciation on second hand cars imported into the country in a way that does not guarantee that the registration tax will not exceed the residual tax on a vehicle of a similar age that was registered in Greece when new.

Insurance on roadside assistance

The provision of insurance services is exempt under the European Community VAT system set out in the Sixth VAT Directive (77/388/EEC). In Greece, there is a roadside assistance body, ELPA, that comes to the assistance of motorists whose vehicles have broken down or had accidents. Members pay an annual flat-rate subscription which ensures supply of the breakdown service in the event of problems. The Commission considers that it follows from the case law of the Court of Justice interpreting the notion of insurance services for the purposes of the Sixth VAT Directive that part of the motorists' annual fee to ELPA should be regarded as the provision of insurance services and should therefore be exempt from VAT. However, Greece charges VAT on the full membership subscription.

Since the Greek Government has not amended its law following the reasoned opinion that the Commission sent to it on 22 December 2004 (see IP/04/1507), the Commission has decided to refer the case to the European Court of Justice.

Registration tax on cars

Greece calculates the depreciation on second hand cars imported into the country for the purpose of applying registration tax on the basis of a single rule which allows a depreciation of 7% for cars between six months and one year or 14% for a one-year old car. The Commission believes that this rule fails to guarantee that the amount of the registration tax due does not exceed the amount of the residual tax incorporated in the value of similar vehicles that were registered in the Greek territory when new. It believes that Greece therefore infringes Article 90 of the EC Treaty, which states that a Member State must not impose any internal tax, directly or indirectly, on the products of other Member States of a kind in excess of that imposed directly or indirectly on similar domestic products. The European Court of Justice indicated in its judgement in the Gomes Valente Case (C-393/98) that a fixed scale of prices should reflect the true depreciation of vehicles with sufficient precision. The Court also held in that Case that discrimination between national and imported products is always prohibited under Article 90 of the EC Treaty, even if the discrimination arises in only a few cases.

A further aspect of the Greek legislation that the Commission has contested concerns the lack of transparency of the administrative procedure in as much the tax authorities do not disclose how they determine the taxable values of the cars. In addition to this, the taxpayer is obliged to pay a €300 fee for having the car inspected by a special Committee if he disagrees with the values determined by the tax authorities.

Since Greece did not amend its legislation following the receipt of the Commission's Reasoned Opinion in this matter (see IP/05/863), the Commission decided to take Greece to the European Court of Justice.
The latest information on infringement procedures concerning all Member States can be found at the following site:

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