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Brussels, 31 January 2008

VAT – Commission takes steps against Austria, Malta and Finland as regards the inclusion of the car registration tax in the amount on which VAT is levied in the cases of supplies of road vehicles

The European Commission has formally requested Austria, Malta and Finland to change their legislation as regards the inclusion of the amount of the car registration tax within the amount on which VAT is levied in the case of supply of road vehicles. The Commission considers that the registration tax should not be included in the taxable amount of VAT. The requests take the form of a reasoned opinion (second step of the infringement procedure provided for in article 226 of the EC Treaty). If the relevant national legislations are not amended within two months in order to comply with the respective reasoned opinions, the Commission may decide to refer the matters to the European Court of Justice.

In the sale of road vehicles, Austria, Malta and Finland include the amount of their car taxes (the Austrian "Normverbrauchsabgabe", the Maltese "taxxa ta' registrazzjoni ta' vetturi bill-mutur" and the Finnish "autovero") within the amount on which VAT is levied.

In Case C-98/05, the European Court of Justice has examined whether the taxable amount for VAT purposes, in the case of supplies of means of transport, must include the amount of the registration tax ("RT"). This tax is usually paid by the supplier to the tax authorities and afterwards repaid to him by the purchaser along with the price of the vehicle. The RT at stake in the case was the one levied in Denmark.

The Court ruled that, in the context of a contract of sale which provides that the dealer will supply a vehicle registered for a price which includes the registration tax he paid before supplying the vehicle, the amount of that duty must not be included within the taxable amount of the VAT charged on the sale of the vehicle. This is because, firstly, the RT is charged by reason of the registration of the vehicle and not by reason of the supply and, secondly, because the RT is paid by the supplier of the vehicle on behalf of the purchaser.

The Commission understands that the car taxes levied in Austria, Malta and Finland, despite some minor or ancillary differences, are basically identical to the Danish one examined by the Court. Thus, all of them are one-off taxes which are payable on the acquisition of the motor vehicle or as a condition for bringing it into use on the territory of the Member State concerned.

Moreover, the Commission has already initiated infringement procedures against Poland and Portugal concerning the same matter (see IP/07/1003).

Given that the rules on the taxable amount of VAT have been harmonized at the EU level, and the uniform application of those rules is an essential condition for the proper operation of the VAT system, the Commission has taken the view that the criteria of the EC Court in Case C-98/05 must be applied to the car taxes levied in Austria, Malta and Finland. These Member States have been given two months to bring their legislation in conformity with Community Law.

The Commission's case reference numbers are 2007/2176 (Austria), 2006/4256 (Malta) and 2006/2563 (Finland).
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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