Car taxation: the Commission takes the next step in the infringement procedure against Romania
European Commission - IP/07/1799 28/11/2007
Brussels, 28 November 2007
The Commission has taken the second step in the infringement procedure against the Republic of Romania regarding its car registration tax, which discriminates against second-hand cars brought into the Romanian territory from other Member States. Further to the letter of formal notice sent by the Commission in spring 2007 (IP/07/372) and to the unsatisfactory reply of the Romanian authorities, the Commission has issued a reasoned opinion, formally requesting Romania to change its legislation. If the relevant national rules are not amended in order to comply with the reasoned opinion within a two-month deadline, according to article 226 of the EC Treaty the Commission may decide to refer the matter to the European Court of Justice.
In spring of 2007 by means of a letter of formal notice the Commission signalled to the Republic of Romania the conviction that its national rules on car registration tax were incompatible with Article 90 of the EC Treaty. Romania failed to provide satisfactory arguments in its reply and, despite intensive discussions with the Commission, did not modify the contested legislation.
Consequently, the Commission has issued a reasoned opinion formally requesting Romania to bring this infringement to an end. Should Romania fail to comply with the reasoned opinion within the prescribed two-month time limit, the Commission may bring this case before the European Court of Justice.
The European Court of Justice (ECJ) has consistently held that Member States may levy registration taxes on second-hand imported cars provided that the tax is in conformity with Article 90 of the EC Treaty. This means that a Member State must not impose higher taxes on the products of other Member States than on similar domestic goods.
The Court has been clear that registration tax paid on a new vehicle forms a part of its market value and that Member States, thus, must take account an actual depreciation in car's value into when calculating the amount of tax due. (see ECJ cases Nunes Tadeu, C-345/93; Commission v Denmark, C-47/88; and Commission v Hellenic Republic, C-375/95)
The following example illustrates the application of these rules: registration tax on a x years old car imported in one Member State cannot exceed the amount of duty included in the residual value of a similar used vehicle registered x years ago in that Member State.
Under the Romanian legislation, the tax due on used motor vehicles is not
abated in line with the actual depreciation of similar cars already registered
on the domestic market. On the contrary, the tax amount is increased on the
basis of the car's age alone. Given that the Romanian car registration tax is
levied only once, imported used cars, by default, fall within the most heavily
taxed category. In the Commission's opinion, such tax application modalities are
contrary to Article 90 of the EC Treaty as interpreted by the ECJ.