# 62017CO0640

ORDER OF THE COURT (Eighth Chamber)

17 April 2018 (
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(Reference for a preliminary ruling — Article 99 of the Rules of Procedure of the Court of Justice — Internal taxation — Prohibition of discriminatory taxation — Article 110 TFEU — Annual road tax for motor vehicles — Setting of tax rate according to the date of first registration of the vehicle in the taxing Member State — Second-hand motor vehicles imported into other Member States — No account taken of the date of first registration in another Member State)

In Case C‐640/17,

REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Administrativo e Fiscal de Coimbra (Coimbra Administrative and Tax Court, Portugal), made by decision of 18 October 2017, received at the Court on 16 November 2017, in the proceedings

Luís Manuel dos Santos

Luís Manuel dos Santos

v

Fazenda Pública,

Fazenda Pública,

THE COURT (Eighth Chamber),

composed of J. Malenovský, President of the Chamber, D. Šváby and M. Vilaras (Rapporteur), Judges,

Advocate General: E. Sharpston,

Registrar: A. Calot Escobar,

having decided, after hearing the Advocate General, to give a decision by reasoned order, in accordance with Article 99 of the Rules of Procedure of the Court,

makes the following

Order

Order

| 1 | This request for a preliminary ruling concerns the interpretation of Article 110 TFEU. |
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1

This request for a preliminary ruling concerns the interpretation of Article 110 TFEU.

| 2 | The request has been made in proceedings between Mr Luís Manuel dos Santos and the Fazenda Pública (State Treasury, Portugal) concerning the assessment of annual road tax (Imposto Único de Circulação) due for 2014 in respect of a second-hand motor vehicle imported from another Member State. |
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2

The request has been made in proceedings between Mr Luís Manuel dos Santos and the Fazenda Pública (State Treasury, Portugal) concerning the assessment of annual road tax (Imposto Único de Circulação) due for 2014 in respect of a second-hand motor vehicle imported from another Member State.

Imposto Único de Circulação

Legal context

Legal context

| 3 | Article 2(1) of the Código do Imposto Único de Circulação (Annual Road Tax Code; ‘CIUC’) provides:
  ‘Annual road tax shall be charged on vehicles in the following categories, registered or listed in Portugal:





  (a) | Category A: Light passenger motor vehicles and light mixed-use motor vehicles with a gross weight not exceeding 2500 kg, registered from 1981 until the entry into force of this Code; |
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3

Article 2(1) of the Código do Imposto Único de Circulação (Annual Road Tax Code; ‘CIUC’) provides:

‘Annual road tax shall be charged on vehicles in the following categories, registered or listed in Portugal:

(a)

Category A: Light passenger motor vehicles and light mixed-use motor vehicles with a gross weight not exceeding 2500 kg, registered from 1981 until the entry into force of this Code;

| (b) | Category B: Light passenger vehicles referred to in Article 2(1)(a) and (d) of the código do imposto sobre veículos (Vehicle Taxation Code) and light mixed-use motor vehicles with a gross weight not exceeding 2500 kg, registered after the entry into force of that Code; |
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(b)

Category B: Light passenger vehicles referred to in Article 2(1)(a) and (d) of the código do imposto sobre veículos (Vehicle Taxation Code) and light mixed-use motor vehicles with a gross weight not exceeding 2500 kg, registered after the entry into force of that Code;

...’

The dispute in the main proceedings and the question referred for a preliminary ruling

The dispute in the main proceedings and the question referred for a preliminary ruling

| 4 | The applicant in the main proceedings is the owner of a second-hand motor vehicle in Portugal, which he imported from the United Kingdom. The vehicle, which was first registered on 20 October 1966 in the latter Member State, was re-registered in Portugal on 31 May 2013, that is to say after the entry into force of the CIUC on 1 July 2007. |
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4

The applicant in the main proceedings is the owner of a second-hand motor vehicle in Portugal, which he imported from the United Kingdom. The vehicle, which was first registered on 20 October 1966 in the latter Member State, was re-registered in Portugal on 31 May 2013, that is to say after the entry into force of the CIUC on 1 July 2007.

| 5 | On 31 December 2014, he was asked to pay EUR 131.40 in annual road tax for 2014 in respect of that vehicle. |
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5

On 31 December 2014, he was asked to pay EUR 131.40 in annual road tax for 2014 in respect of that vehicle.

| 6 | Considering that he was subject to discriminatory treatment, the applicant in the main proceedings brought an action before the referring court against the tax assessment. He claims, inter alia, that vehicles imported after 1 July 2007 and those of the same age registered before 1 July 2007 are taxed differently even though they have the same characteristics, which is incompatible with the principle of free movement of goods between Member States set out in Article 110 TFEU. |
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6

Considering that he was subject to discriminatory treatment, the applicant in the main proceedings brought an action before the referring court against the tax assessment. He claims, inter alia, that vehicles imported after 1 July 2007 and those of the same age registered before 1 July 2007 are taxed differently even though they have the same characteristics, which is incompatible with the principle of free movement of goods between Member States set out in Article 110 TFEU.

| 7 | The referring court argues, in that regard, that annual road tax is levied under Article 2(1)(b) of the CIUC on the vehicle imported by the applicant in the main proceedings, first registered in another Member State on 20 October 1966, in so far as the vehicle was imported into Portugal and re-registered on 1 July 2007, whereas it would have been exempt from that tax if it had been first registered in Portugal. Thus, the vehicle is subject to annual road tax simply because it was first registered in a Member State other than Portugal. |
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7

The referring court argues, in that regard, that annual road tax is levied under Article 2(1)(b) of the CIUC on the vehicle imported by the applicant in the main proceedings, first registered in another Member State on 20 October 1966, in so far as the vehicle was imported into Portugal and re-registered on 1 July 2007, whereas it would have been exempt from that tax if it had been first registered in Portugal. Thus, the vehicle is subject to annual road tax simply because it was first registered in a Member State other than Portugal.

| 8 | In those circumstances, the Tribunal Administrativo e Fiscal de Coimbra (Coimbra Administrative and Tax Court, Portugal) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
  ‘Does the principle of free movement of goods between Member States, set out in Article 110 of the Treaty on the Functioning of the European Union (TFEU), preclude a rule of national law [Article 2(1)(b) of the CIUC], interpreted as meaning that annual road tax should not take into account the date of first registration when it was allocated in another Member State and should only be based on the date of registration in Portugal, if that interpretation results in higher taxation of vehicles imported from another Member State?’ |
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8

In those circumstances, the Tribunal Administrativo e Fiscal de Coimbra (Coimbra Administrative and Tax Court, Portugal) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘Does the principle of free movement of goods between Member States, set out in Article 110 of the Treaty on the Functioning of the European Union (TFEU), preclude a rule of national law [Article 2(1)(b) of the CIUC], interpreted as meaning that annual road tax should not take into account the date of first registration when it was allocated in another Member State and should only be based on the date of registration in Portugal, if that interpretation results in higher taxation of vehicles imported from another Member State?’

Consideration of the question referred

Consideration of the question referred

| 9 | Pursuant to Article 99 of the Rules of Procedure of the Court, where, inter alia, the answer to a question referred to the Court for a preliminary ruling may be clearly deduced from existing case-law or admits of no reasonable doubt, the Court may at any time, on a proposal from the Judge-Rapporteur and after hearing the Advocate General, give its decision by reasoned order. |
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9

Pursuant to Article 99 of the Rules of Procedure of the Court, where, inter alia, the answer to a question referred to the Court for a preliminary ruling may be clearly deduced from existing case-law or admits of no reasonable doubt, the Court may at any time, on a proposal from the Judge-Rapporteur and after hearing the Advocate General, give its decision by reasoned order.

| 10 | That provision must be applied in the present case. |
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10

That provision must be applied in the present case.

| 11 | By its question, the referring court asks, in essence, whether Article 110 TFEU is to be interpreted as precluding legislation of a Member State pursuant to which the annual road tax established by that legislation is levied on light passenger motor vehicles registered or listed in that Member State without taking into account the date of first registration of the vehicle where registration took place in another Member State, which results in higher taxation of vehicles imported from another Member State compared to similar non-imported vehicles. |
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11

By its question, the referring court asks, in essence, whether Article 110 TFEU is to be interpreted as precluding legislation of a Member State pursuant to which the annual road tax established by that legislation is levied on light passenger motor vehicles registered or listed in that Member State without taking into account the date of first registration of the vehicle where registration took place in another Member State, which results in higher taxation of vehicles imported from another Member State compared to similar non-imported vehicles.

| 12 | It must be pointed out at the outset that the aim of Article 110 TFEU is to ensure free movement of goods between Member States in normal conditions of competition. It is intended to eliminate all forms of protection which may result from the application of internal taxation which discriminates against products from other Member States (judgment of 9 June 2016, Budişan, C‐586/14, EU:C:2016:421, paragraph 19 and the case-law cited). |
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12

It must be pointed out at the outset that the aim of Article 110 TFEU is to ensure free movement of goods between Member States in normal conditions of competition. It is intended to eliminate all forms of protection which may result from the application of internal taxation which discriminates against products from other Member States (judgment of 9 June 2016, Budişan, C‐586/14, EU:C:2016:421, paragraph 19 and the case-law cited).

| 13 | To that end, the first paragraph of Article 110 TFEU prohibits all Member States from imposing on products of the other Member States internal taxation in excess of that imposed on similar domestic products (judgment of 9 June 2016, Budişan, C‐586/14, EU:C:2016:421, paragraph 20). |
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13

To that end, the first paragraph of Article 110 TFEU prohibits all Member States from imposing on products of the other Member States internal taxation in excess of that imposed on similar domestic products (judgment of 9 June 2016, Budişan, C‐586/14, EU:C:2016:421, paragraph 20).

| 14 | According to settled case-law, a system of taxation can be considered compatible with Article 110 TFEU only if it is proved to be so structured as to exclude any possibility of imported products being taxed more heavily than domestic products, so that it cannot in any event have discriminatory effect (judgment of 19 March 2009, Commission v Finland, C‐10/08, not published, EU:C:2009:171, paragraph 24, and of 19 December 2013, X, C‐437/12, EU:C:2013:857, paragraph 28). |
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14

According to settled case-law, a system of taxation can be considered compatible with Article 110 TFEU only if it is proved to be so structured as to exclude any possibility of imported products being taxed more heavily than domestic products, so that it cannot in any event have discriminatory effect (judgment of 19 March 2009, Commission v Finland, C‐10/08, not published, EU:C:2009:171, paragraph 24, and of 19 December 2013, X, C‐437/12, EU:C:2013:857, paragraph 28).

| 15 | The Court has also held that, in relation to the taxation of imported second-hand motor vehicles, Article 110 TFEU seeks to ensure the complete neutrality of internal taxation as regards competition between products already on the domestic market and imported products (judgments of 17 July 2008, Krawczyński, C‐426/07, EU:C:2008:434, paragraph 31, and of 3 June 2010, Kalinchev, C‐2/09, EU:C:2010:312, paragraph 31). |
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15

The Court has also held that, in relation to the taxation of imported second-hand motor vehicles, Article 110 TFEU seeks to ensure the complete neutrality of internal taxation as regards competition between products already on the domestic market and imported products (judgments of 17 July 2008, Krawczyński, C‐426/07, EU:C:2008:434, paragraph 31, and of 3 June 2010, Kalinchev, C‐2/09, EU:C:2010:312, paragraph 31).

| 16 | Motor vehicles present on the market in a Member State are domestic products of that State within the meaning of Article 110 TFEU. Where those products are placed on the market for second-hand vehicles in that Member State, they must be regarded as analogous to imported second-hand vehicles of the same type, characteristics and wear. Second-hand vehicles purchased on the market of that Member State and those purchased in other Member States in order to be imported and placed in circulation in the former State are competing products (judgments of 7 April 2011, Tatu, C‐402/09, EU:C:2011:219, paragraph 55, and of 7 July 2011, Nisipeanu, C‐263/10, not published, EU:C:2011:466, paragraph 24). |
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16

Motor vehicles present on the market in a Member State are domestic products of that State within the meaning of Article 110 TFEU. Where those products are placed on the market for second-hand vehicles in that Member State, they must be regarded as analogous to imported second-hand vehicles of the same type, characteristics and wear. Second-hand vehicles purchased on the market of that Member State and those purchased in other Member States in order to be imported and placed in circulation in the former State are competing products (judgments of 7 April 2011, Tatu, C‐402/09, EU:C:2011:219, paragraph 55, and of 7 July 2011, Nisipeanu, C‐263/10, not published, EU:C:2011:466, paragraph 24).

| 17 | It follows that Article 110 TFEU requires each Member State to select and arrange taxes on motor vehicles in such a way that they do not have the effect of promoting sales of domestic second-hand vehicles and so discouraging imports of similar second-hand vehicles (judgments of 7 April 2011, Tatu, C‐402/09, EU:C:2011:219, paragraph 56, and of 7 July 2011, Nisipeanu, C‐263/10, not published, EU:C:2011:466, paragraph 25). |
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17

It follows that Article 110 TFEU requires each Member State to select and arrange taxes on motor vehicles in such a way that they do not have the effect of promoting sales of domestic second-hand vehicles and so discouraging imports of similar second-hand vehicles (judgments of 7 April 2011, Tatu, C‐402/09, EU:C:2011:219, paragraph 56, and of 7 July 2011, Nisipeanu, C‐263/10, not published, EU:C:2011:466, paragraph 25).

| 18 | In the present case, it follows from the decision to refer that the annual road tax at issue in the main proceedings is levied each year on, inter alia, any light passenger motor vehicle registered or listed in Portugal, with the tax amount varying, inter alia, according to the date of first registration of the vehicle concerned in Portugal. The tax therefore applies to new vehicles as well as second-hand vehicles and to vehicles imported from other Member States and first registered in Portugal as well as vehicles already on the domestic market. |
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18

In the present case, it follows from the decision to refer that the annual road tax at issue in the main proceedings is levied each year on, inter alia, any light passenger motor vehicle registered or listed in Portugal, with the tax amount varying, inter alia, according to the date of first registration of the vehicle concerned in Portugal. The tax therefore applies to new vehicles as well as second-hand vehicles and to vehicles imported from other Member States and first registered in Portugal as well as vehicles already on the domestic market.

| 19 | However, light passenger motor vehicles such as the imported vehicle at issue in the main proceedings are exempt from annual road tax when registered in Portugal before 1981, whereas similar vehicles registered in another Member State before 1981 are subject to that tax if first registered in Portugal after that date. |
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19

However, light passenger motor vehicles such as the imported vehicle at issue in the main proceedings are exempt from annual road tax when registered in Portugal before 1981, whereas similar vehicles registered in another Member State before 1981 are subject to that tax if first registered in Portugal after that date.

| 20 | Moreover, those vehicles fall into Category A when first registered in Portugal from 1981 until 1 July 2007, date of entry into force of the CIUC, and into Category B when first registered in Portugal after 1 July 2007. By contrast, similar vehicles imported from another Member State and registered in Portugal after 1 July 2007 fall into Category B, even when first registered in another Member State before that date. Vehicles imported into Portugal after 1 July 2007 and first registered in another Member State before 1 July 2007 are therefore systematically taxed at a higher rate than similar non-imported vehicles first registered in Portugal before that date. |
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20

Moreover, those vehicles fall into Category A when first registered in Portugal from 1981 until 1 July 2007, date of entry into force of the CIUC, and into Category B when first registered in Portugal after 1 July 2007. By contrast, similar vehicles imported from another Member State and registered in Portugal after 1 July 2007 fall into Category B, even when first registered in another Member State before that date. Vehicles imported into Portugal after 1 July 2007 and first registered in another Member State before 1 July 2007 are therefore systematically taxed at a higher rate than similar non-imported vehicles first registered in Portugal before that date.

| 21 | Consequently, the national legislation at issue in the main proceedings taxes second-hand vehicles imported from other Member States after 1 July 2007 at a systematically higher rate than that to which similar second-hand domestic vehicles are subject since it does not take into account the date of first registration of imported vehicles in other Member States. Accordingly, it has the effect of promoting sales of domestic second-hand vehicles and so discouraging imports of similar second-hand vehicles. |
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21

Consequently, the national legislation at issue in the main proceedings taxes second-hand vehicles imported from other Member States after 1 July 2007 at a systematically higher rate than that to which similar second-hand domestic vehicles are subject since it does not take into account the date of first registration of imported vehicles in other Member States. Accordingly, it has the effect of promoting sales of domestic second-hand vehicles and so discouraging imports of similar second-hand vehicles.

| 22 | In the light of the above, the answer to the question referred for a preliminary ruling is that Article 110 TFEU must be interpreted as precluding legislation of a Member State pursuant to which the annual road tax established by that legislation is levied on light passenger motor vehicles registered or listed in that Member State without taking into account the date of first registration of the vehicle where registration took place in another Member State, which results in higher taxation of vehicles imported from another Member State compared to similar non-imported vehicles. |
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22

In the light of the above, the answer to the question referred for a preliminary ruling is that Article 110 TFEU must be interpreted as precluding legislation of a Member State pursuant to which the annual road tax established by that legislation is levied on light passenger motor vehicles registered or listed in that Member State without taking into account the date of first registration of the vehicle where registration took place in another Member State, which results in higher taxation of vehicles imported from another Member State compared to similar non-imported vehicles.

Costs

Costs

| 23 | Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. |
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23

Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

| | On those grounds, the Court (Eighth Chamber) hereby rules: |
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On those grounds, the Court (Eighth Chamber) hereby rules:

| | Article 110 TFEU must be interpreted as precluding legislation of a Member State pursuant to which the annual road tax established by that legislation is levied on light passenger motor vehicles registered or listed in that Member State without taking into account the date of first registration of the vehicle where registration took place in another Member State, which results in higher taxation of vehicles imported from another Member State compared to similar non-imported vehicles. |
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Article 110 TFEU must be interpreted as precluding legislation of a Member State pursuant to which the annual road tax established by that legislation is levied on light passenger motor vehicles registered or listed in that Member State without taking into account the date of first registration of the vehicle where registration took place in another Member State, which results in higher taxation of vehicles imported from another Member State compared to similar non-imported vehicles.

Article 110 TFEU must be interpreted as precluding legislation of a Member State pursuant to which the annual road tax established by that legislation is levied on light passenger motor vehicles registered or listed in that Member State without taking into account the date of first registration of the vehicle where registration took place in another Member State, which results in higher taxation of vehicles imported from another Member State compared to similar non-imported vehicles.

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[Signatures]

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(
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  )	Language of the case: Portuguese.

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