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Brussels, 3 April 2008

Car taxation: infringement procedure against Malta

The Commission has decided to send to Malta a formal request to amend its car registration tax rules which discriminate against second-hand cars brought into Malta from other Member States. The request takes the form of a "reasoned opinion", the second stage of the infringement procedure laid down in Article 226 of the EC Treaty. If the Commission does not receive a satisfactory response from Malta within two months, it may ultimately bring the case 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 products from other Member States 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)

The 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.

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 vehicle's 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 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.

The Commission's reference number is 2005/4534.

Similar infringement procedures regarding discriminatory car taxation had been opened against Cyprus, Hungary, Poland and Romania 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.
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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