Brussels, 27 January 2011
Taxation: Commission requests Cyprus to modify discriminatory rules on car taxation
The European Commission has formally requested Cyprus to amend its legislation which gives more favourable tax conditions to Cypriot citizens, nationals and descendants than to other EU citizens when it comes to import and excise duties for imported new passenger cars. The request takes the form of a ‘reasoned opinion’. If, within two months, there is no satisfactory response from the Cypriot authorities, the Commission may decide to refer the matter to the European Court of Justice.
Under Cypriot legislation, EU nationals who set up permanent residence in Cyprus may only benefit from an exemption from import and excise duty when they import a new car if they are not practising any profession in Cyprus.
Such a condition does not apply, however, to Cypriot citizens, nationals and descendants who return to live permanently in Cyprus. Therefore, the Commission is of the opinion that the rule discriminates against non-Cypriot EU citizens and is contrary to Article 18 of the Treaty on Functioning of the European Union. Moreover, it also violates the freedom of movement for workers (Article 45 (1) and (2) of the TFEU) and the freedom of establishment (Article 49 of the TFEU).
In view of the above, the Commission has formally requested Cyprus to change these rules within two months. It may otherwise decide to refer the matter to the European Court of Justice.
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