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Brussels, 21 March 2007

Car taxation: infringement procedures against Malta and Romania

The Commission has decided to send to Romania and Malta formal requests to amend their car registration tax rules which discriminate against second-hand car brought from other Member States into these countries. The requests take the form of "letter of formal notice", the first stage of the infringement procedure laid down in Article 226 of the EC Treaty. If the Commission does not receive satisfactory responses from these Member States within two months, it may proceed with the second stage of the said procedure and ultimately bring the cases before the Court of Justice.

The European Court of Justice (ECJ) has consistently held that a Member State is not prohibited from levying 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 any internal taxation on the products of other Member States of a kind in excess of that imposed on similar domestic products.

The Court also decided that registration tax paid on a new vehicle forms a part of its market value and that Member States must take actual car's depreciation value into account when calculating registration tax. (see ECJ cases Nunes Tadeu, C-345/93; Commission v Denmark, C-47/88; and Commission v Hellenic Republic, C-375/95)

Following example illustrates 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.

Similar infringement procedures regarding discriminatory car taxation had been opened against Cyprus, Poland and Hungary upon their entry to the EU. The ECJ has recently declared Polish and Hungarian tax systems incompatible with Article 90 of the EC Treaty, thus, providing the taxpayers with means to claim before national courts the reimbursement of tax amounts illegally collected.


Despite intensive discussions with the Romanians authorities, the Commission still considers that Romanian car tax legislation does not comply with the EC Treaty.

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 age of the cars alone. Given that the Romanian car registration tax is levied only when the vehicle enters the Romanian market, the cars most heavily taxed are, by default, imported second-hand cars, including those from other Member States. In the Commission's opinion, such tax application modalities are contrary to Article 90, as interpreted by the ECJ.

The Commission also believes that the contested Romanian tax system fails to address environmental concerns. The age factor alone fails to accurately reflect environmental performance of different motor vehicles and it exclusively increases the tax due on used motor vehicles coming from other Member States.

Under Community law, Member States may encourage behaviour conductive to greater protection of the environment. However, the criteria applied to that effect must be objective and pertinent to avoid any discrimination against goods coming from other Member States. The Romanian legislation on car registration tax fails to meet the standard of complete neutrality and, thus, must be changed to comply with EC Treaty.


The Maltese car registration tax system has discriminatory effect with respect to motor vehicles coming from the other Member States. In Malta, the tax rate, which depends on the vehicles' engine capacity, is the same for new and used cars. The rate is applied on the vehicle's value, which is determined by the Maltese authorities. However, differently from new motor vehicles, there is a minimum amount of tax fixed only for used cars. Even if the application of the corresponding tax rate to the taxable value determined by the authorities results in a smaller amount than the fixed minimum the latter prevails. The application of the minimum tax cannot guarantee that the tax applied on second-hand vehicles coming from other Member States will not exceed the residual tax incorporated in the value of similar vehicles already registered in Malta, as required by the ECJ.

An additional aspect is the lack of transparency of the administrative procedure which is used to determine the taxable value of motor vehicles. The ECJ has ruled in Case C-393/98 (Gomes Valente) that the criteria on the basis of which the taxable value is determined have to be brought to the knowledge of the public.

The Commission further contests the lack of possibility for the taxpayer to challenge the correctness of the tax due where he believes that the assessed amount of the tax does not correctly reflect motor vehicle's actual depreciation. Commission's reference numbers are 2007/2001 (Romania) and 2005/4534 (Malta)

For information on EU activities in the field of car taxation see:

For the press releases issued on infringement procedures in the taxation or customs area see:

For the latest general information on infringement measures against Member States see:

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