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European Commission - Press release

Taxation: Commission requests Ireland to modify its taxation of motor vehicles less than 3 months old

Brussels, 26 January 2012 - The European Commission has today formally requested Ireland to modify how motor vehicles less than 3 months old are taxed so as to make the rules comply with EU law.

The EU Court of Justice has established that a vehicle starts to lose its value as soon as it is bought or brought into use. According to EU case law on car taxation, the amount of tax due can not exceed the amount of tax supported by similar vehicles that are already registered in the national territory and are incorporated in their value. However, under Irish legislation vehicles which are less than 3 months old or cars which have travelled less than 3000 km bear the same tax burden as new vehicles. This is a discrimination of these vehicles which are proportionally more taxed than new vehicles purchased in the country.

The request takes the form of a reasoned opinion which is the second stage of an infringement procedure. If the rules are not brought into compliance within two months, the Commission may refer the matter to the Court of Justice of the European Union.


Subject to certain exceptions, the taxation of motor vehicles has not been harmonised. According to EU case law, the Member States have the right to levy a registration tax - at a rate as high as they see fit - when a vehicle is registered for the first time in the State. This tax can be levied even if the transfer of the vehicle is linked to a change of residence and even if a similar tax has already been levied in another Member State.

EU rules prohibit Member States from imposing higher taxes on products of other Member than imposed on similar domestic products (article 110 TFEU). This is to guarantee the complete neutrality of internal taxation as regards competition between products already on the domestic market and imported products.

Concerning taxes which are levied in the Member State just once with the first registration of the vehicle, the Court has considered that a part of such a tax remains incorporated in the value of second-hand vehicles already registered on the national market. The residual value of the tax diminishes proportionately with the depreciation of the vehicle. Consequently, EU rules are breached (article 110 TFEU) if the amount of tax levied on an imported second-hand vehicle is higher than the residual tax incorporated in the value of similar second-hand vehicles already registered on national territory. This is the case with the current Irish legislation on taxation of vehicles less than 3 months old.

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

For more information on EU infringement procedures, see MEMO/12/42.

For the most up-to-date general information on the infringement proceedings initiated against Member States, see:

Contacts :

Emer Traynor (+32 2 292 15 48)

Natasja Bohez Rubiano (+32 2 296 64 70)

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