# EUR-Lex - 52012DC0756 - EN

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# 52012DC0756

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE Strengthening the Single Market by removing cross-border tax obstacles for passenger cars /* COM/2012/0756 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE

Strengthening the Single Market
by removing cross-border tax obstacles for passenger cars

1.           Introduction

More than 230
million passenger cars circulate on European roads. Each year, more than 13
million new passenger cars are registered in the European Union, and about 3
million used cars are transferred between Member States, of which up to 1
million are linked to people migrating from one Member State to another[1].

Car taxation is
an important revenue source for all Member States. On
average, registration and circulation taxes accounted for 1.9% of all tax
revenues in 2010[2].
The actual level and design of such national tax
regimes is therefore of specific interest for national tax authorities as well
as for car producers and citizens and enterprises owning and using a car.

The issues of
double or multiple taxation[3] and of potential tax discrimination in case of cross-border
transfers of passenger cars are of concern to EU citizens and service
providers. In its 2010 EU Citizenship Report[4]
the Commission announced that it would work on solutions to double registration
taxes on cars as this can be an obstacle to EU citizens' right to move freely
in the EU and in its Communication 'Removing cross-border tax obstacles for EU
citizens'[5] the Commission pointed out that, when
buying a car in a Member State other than that of their normal residence or
when transferring a car to a Member State other than that in which it is
registered, EU citizens frequently face excessively complex re-registration
procedures and may have to pay registration and/or circulation taxes twice.

The
present Communication focusses on the tax aspects in cross-border situations.
High registration taxes on cars
transferred between Member States in the context of the transfer of permanent
residence may work as an obstacle for potential migrants. Also, the multitude
of different and un-coordinated thresholds and technical triggers for different
levels of taxation such as engine size, fuel used or CO2 emissions
(be it for registration or circulation taxes) further complicates the already
diverse market conditions for car producers triggering a tax-induced
fragmentation of the Single Market, which results in tax-induced cross-border
trade as well.

The Commission has taken initiatives and
put forward legislative proposals to solve these problems on three occasions,
in 1975, in 1998 and in 2005[6].
The 1975 proposal resulted in the adoption of Directive 83/182/EEC[7], providing tax exemptions for
the temporary introduction of a motor-driven road vehicle into a Member State from another Member State. The 1998 proposal aimed at introducing a mandatory
exemption when private motor vehicles were permanently brought into a Member State from another Member State in connection with the transfer of normal residence of a
private individual. The third proposal aimed at abolishing registration taxes
altogether and replacing them by annual circulation taxes after a transitional period
of 10 years, and to 'green' circulation taxes. The two last proposals have not
so far received the required unanimous support of the Member States.

It should be noted that, currently, there
is no harmonisation at EU level of car registration and circulation taxes. This
means that the evolution of vehicle taxation in the EU has so far depended to a
large extent on the jurisprudence of the Court of Justice of the European Union
(hereafter 'the Court').

Despite the jurisprudence of the Court and
legislative actions, it has not been possible to overcome the fragmentation of
national tax schemes or to fully and systematically remove double taxation and
the potential tax discrimination of cars transferred by citizens from one Member State to another. In the present Communication and the accompanying Staff Working
Document (hereafter 'the SWD') the current situation in the field of passenger
car[8] taxes within the Union is
described and re-assessed in order to identify best practices that Member
States should be able to implement within the existing legal framework.

This Communication and the SWD aim at
clarifying the EU rules on vehicle taxation, explaining rights and obligations
of Member States, citizens and businesses. From the questions put to the
Commission, it appeared that citizens and businesses are often not sufficiently
aware of or they do not understand their rights and their obligations in
various situations, in particular when moving vehicles temporarily or permanently
from one Member State to another. The SWD, in particular, aims at giving an
overview of the rich case law of the Court on vehicle taxation and illustrates
secondary legislation applicable in this field.

The
procedures related to
re-registration are specifically
addressed
in the Commission proposal for a Regulation of
the European Parliament and of the Council
simplifying the transfer of motor vehicles registered in another Member State
within the Single Market[9]. The solutions proposed in the
present Communication for certain situations of use of cars in a Member State other than the one of registration may have to be reconsidered at a later
stage in the light of the outcome of discussions on that proposal. That
proposal does however not concern taxation and Member States remain free to
exercise their power of taxation with respect to motor vehicles, in accordance
with Union law.

2.           Current rules on
registration and circulation taxes on passenger cars

Given that no secondary tax legislation in
this area has been adopted so far apart from Directive
83/182/EEC, Member States are free to apply taxes other
than VAT on passenger cars as long as these taxes are in line with the general
principles of EU law.

2.1.                  Registration
taxes

The term 'registration tax' used in this
Communication includes all kinds of taxes currently linked to the registration
of a vehicle, regardless of their name (tax, excise duty, environmental
bonus-malus scheme, etc.) but does not cover fees covering the administrative
cost for registration of a vehicle or the cost of technical inspections.

EU legislation

Directive 83/182/EEC covers temporary use in a
 Member State other than the Member State of residence. For vehicles for
private use, it provides that their temporary use in a Member State shall be
exempt from registration and circulation taxes provided the individual
transferring the vehicle has his normal residence[10] in
another Member State and the vehicle is not disposed of or hired out in the
Member State of temporary use or lent to a resident of that State. This means
that in situations other than those covered by the Directive, Member States are
in principle allowed to levy registration and/or circulation taxes.

National legislation

At present, 18 Member States levy a
registration tax on vehicles[11].
The tax base and level of taxation differ considerably between Member States[12]. Most common differentiators
are the purchase price or value of the car, the fuel used (e.g. petrol or
diesel), engine size or power and the CO2-emissions of a car. Over the last
years, many Member States have restructured the tax base of registration and
circulation taxes to be totally or partially CO2 based. National registration
taxes are typically levied once in the lifetime of a car, except in Belgium, where they are levied each time the (private) ownership of a car changes.

Most of the problems that arise concerning
passenger car taxation relate to one of the following cross-border scenarios:

·
Case 1: A citizen moves his car to another Member State upon the transfer of his normal residence. Although Council Directive
2009/55/EC of 25 May 2009 on tax exemptions applicable to the permanent
introduction from a Member State of the personal property of individuals[13] does not apply to vehicle
registration taxes, some Member States provide for an exemption in this
situation. Member States levying a registration tax must apply a depreciation
factor in line with the reduction in the economic value of the imported car. In
case of a permanent de-registration and export of a car, some Member States
grant a refund of part of the registration tax already paid, typically also
applying some kind of depreciation factor.

·
Case 2: A citizen brings his car permanently to
his second residence (e.g. a holiday home) in another Member State and has to pay registration tax again. Some Member States at destination exempt this
transfer. Also, some Member States at departure grant a refund of part of the
registration tax.

·
Case 3: A citizen lives in one Member State and uses a company car registered by his employer or by the company of which he is
an administrator in another Member State. The Member State of registration may levy a
registration tax. The Member State of residence of the employee or
administrator may only levy a registration tax if this is the Member State where the car is essentially used on a permanent basis.

·
Case 4: A citizen lives in one Member State and uses a leased car registered by a leasing company in another Member State. The Member State of registration may levy a registration tax. The Member State of residence may also levy a registration tax which is proportional to the
duration of the leasing contract.

·
Case 5: A citizen lives in one Member State and uses his car frequently in another Member State to visit his partner or
family. The second Member State may only levy registration tax if the partner
or family uses the car regularly.

·
Case 6: A student is going to temporarily study
in another Member State or a worker is seconded by his employer to another Member State. For this period, both use their car primarily in their country of
studies/secondment. In these cases, the Member State of study/secondment may
not levy a registration tax.

·
Case 7: A car rental company that has registered
a car fleet or part of it in one Member State would enter into one-way rental
contracts or would like to move part of this car fleet to another Member State without having to pay registration and circulation taxes so as to better
manage seasonal peak demand.

·
Case 8: A citizen or car dealer of a Member State that levies a registration tax sells a car to a citizen or company established in
another Member State where it will have to be re-registered. In case of
non-refund of the registration tax still incorporated in the value of the car
there might be an 'over-taxation' in the first Member State as compared to cars
that remain registered in that Member State until their end of life. However,
some Member States applying a registration tax also provide for a partial
refund of the tax already paid in case passenger cars are de-registered and
exported by professional dealers, i.e. without the car owner actually
emigrating.

Given the sparse legislation at EU level in
relation to car taxation, the Court has been called upon to decide in a number
of cases and has set out several principles which Member States must respect
when applying registration taxes in situations such as those described above.
However, while this jurisprudence provided solutions to the discrimination
between domestic and imported products, the issue of double taxation occurring
in situations such as those described in cases 1, 2 and 8 was not addressed.

2.2.                  Circulation
taxes

The term 'circulation tax' used in this
Communication includes all kinds of taxes linked to the circulation of a car in
the territory of a Member State, regardless of the name of the tax, excluding tolls,
vignettes and excise duties on fuels.

Typically, circulation taxes are levied annually
by the Member State in which a passenger car is registered and are differentiated
according to engine size or engine power, the fuel used and/or the
environmental performance of the car. In case a car was de-registered or changed
ownership in the course of the period for which the circulation tax has been
paid, a pro-rata refund is applied. Thus, the problem of double taxation in
case of a cross-border use of passenger cars is limited.

3.           the remaining problems

3.1.                  The problem of
double taxation

Even though the jurisprudence of the Court
has solved a number of issues in the field of the levying of registration taxes
in the country of destination, a number of problems remain in various
situations.

Registration taxes

Citizens may be faced with double taxation
when moving a car permanently to another Member State or when primarily using
it in a country different from the country where the car has initially been
registered.

Double taxation notably arises where
citizens are migrating from a Member State that levies a registration tax without
providing for a refund in case of a transfer of a car to another Member State
that applies a registration tax without providing for a tax exemption in such a
case. Double taxation may also occur in cases where a car is registered in a
Member State applying registration taxes and is primarily (temporarily or
permanently) being used in another Member State also applying registration
taxes (cases 3 to 5 above).

As EU integration proceeds, more and more
people move from one country to another to live, study, work or retire, or have
holiday homes in other Member States, leaving their (second) car there[14]. Although the EU rules prevent
double taxation in some specific situations the problem of double taxation may
still arise in many other situations.

Circulation taxes

Double taxation in the field of circulation
taxes is not to be expected as they are charged annually and are only charged
pro rata, i.e. they are typically refunded in case of deregistration.

3.2.                  Other challenges

3.2.1.     The lack of information on
the application of car registration and circulation taxes in cross-border
situations

Citizens often complain not only about double
taxation but also about the complexity of foreign tax rules and the
difficulties in obtaining information on those rules and procedures. These
difficulties are partly due to language barriers.

3.2.2.     The proper application of
EU rules in case of temporary or occasional use of a car

The proper application of Directive
83/182/EEC on the tax treatment in case of temporary or occasional use of a car
in a Member State other than the one of registration has been the subject of
numerous Court decisions and infringement procedures (see section 3.1. of the
SWD). Other situations in which the Court has been called upon to decide concern
cross-border leasing, company cars used by an employee or an administrator
living in another Member State and cars borrowed by a resident of a Member State other than the one of registration (see sections 3.4. to 3.7. of the SWD). By
now, the case law of the Court has crystallised important principles that have
clarified the taxing power of Member States, while protecting the rights of EU
citizens. It seems, however, to be a challenge for some Member States to bring
national legislation and practices in line with these developments. The
Commission is continuously engaged in monitoring the compliance of Member
States' legislation with the case law of the Court in this field.

3.2.3.     The case of cross-border
car rental

Car-rental companies rent out motor
vehicles for a relatively short period of time. Car-rental fleets are usually
very new, as vehicles remain in the fleet for about 6-9 months and are
subsequently bought back by manufacturers. The EU passenger car fleet for
short-term rental is estimated at 1.4 million vehicles. A car rental company
providing services across the border may face two challenges:

(1)
The first is the repatriation of a car in case
of a one-way rental[15].
Member States often do not allow to re-rent the car to a resident of a country
in which the one-way rental ended without re-registration and payment of
registration tax. Therefore the car can often only be returned if the rental
company finds a customer residing in the registration country, or if the car is
returned by an employee of the rental company or is repatriated by trucks.
Apart from repatriation costs there is the revenue forgone for the period the
car cannot be rented out. As a consequence a one-way rental to another Member State is expensive, often to the extent that rental firms do not offer this
possibility to customers.

(2)
The second is that it is difficult for car
rental companies to cope with seasonal peak demand in certain Member States by
temporarily moving rental cars from one Member State to another. The costs of
deregistering in the Member State of origin and registering the car and paying
registration tax in the Member State of destination and the revenue forgone
while these procedures are ongoing - and the other way round after a few months
- are too high to justify the relocation of a car for a few months. As a
result, it is often not possible for car rental firms to meet peak demands for
rental cars in certain Member States during the touristic season, while at the
same time cars are standing idle in other Member States. Therefore car rental
firms would like to be able to transfer part of their fleets to other Member
States for a certain number of months each year.

Both challenges implicitly restrict the
freedom to provide services across borders, increase costs for rental companies
and for their customers, or limit the latter's choice of services as such
cross-border services may not even be provided at all. As regards the
formalities and costs linked to de- and re-registration, a solution is provided
in the proposal for a Regulation simplifying the transfer of motor
vehicles registered in another Member State within the Single Market, referred to
in section
1. The proposal provides that car rental companies would only be
required to register their vehicles in the Member State where they have their
normal residence.

3.2.4.     Tax-induced market
fragmentation

Most Member States levying registration or
circulation taxes based on the technical specifications of a car do so by
differentiating according to technical performance (e.g. engine size or power) or
the amount of CO2 emissions[16].
Often, the thresholds have been set according to national market
characteristics or national policy ambitions valid at the time of their
introduction, and also having net revenue implications of successive reforms in
mind.

Car manufacturers have - wherever
economically meaningful - adjusted their supply to these design features of car
taxes, notably by supplying cars to their main markets that remain just below
certain thresholds, such as providing cars with engine sizes of 1599 cm3 or
1999 cm3. However, these thresholds differ from country to country. This
absence of harmonisation, thus, triggers a 'technical' fragmentation of the
Single Market. As a result, potential economies of scale of a Single Market
with around annually 13 million new cars being registered cannot be exploited
in full, having a negative impact both on the competitiveness of the industry and
the effectiveness of incentive schemes. The cost of cars is also raised as a
result. This is because a fragmented system induces car manufacturers to waste
resources on fine-tuning cars to different thresholds, and reduces the
cost-effectiveness of European climate policy. This fragmentation in car taxes
was clearly recognised by the CARS 21 High Level Group in 2012[17]. Car manufacturers have therefore
called for harmonised CO2-based car taxes. An initiative by the
Commission for harmonisation in this respect has however so far not received
unanimous support by Member States[18].

4.           Policy options and best
practices

The Commission considers the abolition of
registration taxes and integrating them (in a revenue neutral way) into the
circulation taxes as well as the harmonisation and 'greening' of car taxation
as the best solution to the remaining problems identified above. However, as
the 2005 proposal has so far not been adopted, it is appropriate to explore
immediate solutions to the problems identified in this Communication.

4.1.                  The problem of
double taxation

So as to avoid double taxation or 'over-taxation'
in case an EU citizen permanently moves a car to another Member State (cases 1, 2 and 8 of section 2.1), there
exist in principle three policy options:

·
The Member State of destination totally exempts
the 'imported' car from registration taxes.

·
The Member State of departure refunds the part of
the registration tax already paid still incorporated in the value of the car (the
residual tax)[19].

·
The Member State of destination reduces the
domestic tax due by the tax already paid in the Member State of departure
(imputation system), on top of the depreciation to be applied when taxing used
instead of new cars.

The following table shows which of the 18
Member States applying a registration tax already apply options 1 and/or 2:

|| AT || BE || CY || DK || EL || ES || FI || FR || IE || IT || HU || LV || MT || NL || PL || PT || RO || SI

1. || || || X1 || || X || X || X || || X || X || || || || X || X || X || ||

2. || X || X || || X || || X || X || || || || || || || X || X || X || X || X

1 for the excise duty on cars but not for the
registration tax

The first option might have some negative
budget implications for Member States levying high registration taxes. This
high-tax status, however, might also discourage inward migration and inward
cross-border working arrangements, potentially negatively affecting their
economies. Also, this option puts immigrants coming with their (used) car in a
somewhat privileged position as compared to residents. However, since migration
itself typically causes high social and economic costs for the immigrant, the 'tax
privilege' will only partially compensate for this.

Under the second option, the Member State of departure 'loses' the residual tax. But, as a result of the refund, the car
leaves the Member State 'tax neutral'.

Under the third option, the car would
factually be exported tax neutral from the country of departure. It would be
the Member State of destination that foregoes tax revenues corresponding to the
residual tax. The negative budgetary implications of applying such an
imputation system would be less pronounced than the implications of applying an
exemption scheme.

The best regime for citizens would be a
depreciation-based refund system applied by the Member State of departure
combined with an exemption from registration tax in the Member State of destination. In this situation, the ultimate tax burden in the first Member State would always be proportional to the period of use of the car in that Member State (meaning no over-taxation would occur) and no tax burden would occur in the second
  Member State. The second-best regime would be a combination of refund and
imputation schemes. This regime is less beneficial for the citizens as they
would not or not fully benefit from such imputation in case they moved to a Member State not charging or charging a lower registration tax.

4.2.        Other challenges

4.2.1.     The lack of information

By means of this Communication and SWD, the
Commission aims at clarifying the EU rules on passenger car taxation taking
into account the principles developed by the Court. It is the responsibility of
the Member States to provide detailed information to citizens and businesses on
their application of national taxes and on how they have implemented the
principles developed by the Court. It should be available in at least the
language(s) of the Member State and the key issues (e.g. in the form of
'Frequently Asked Questions') also in the languages of the citizens that mostly
move to this Member State, and in English for all others. The information
should be easily accessible on the Internet, adequate and up-to-date and should
contain a contact point for more information.

4.2.2.     Temporary transfer of a
passenger car to another Member State (cases 3 to 7 of
section 2.1.)

As pointed out in section 3.2.2., it may be
a challenge for Member States to bring their car tax legislation in line with
the principles laid down in the jurisprudence of the Court. The SWD, which the
Commission intends to update regularly, should provide guidance to Member
States. Moreover, discussions with Member States in a technical Working Group
could be useful to identify best practices for certain situations.

Already now, some Member States allow that
vehicles registered in another Member State are for a relatively short period
(maximum two weeks, a month) primarily used by their own citizens without the
obligation to pay registration and circulation tax provided certain conditions
like an administrative notification are fulfilled. But even this looks quite
rigid at times of increasing international mobility and differentiating
mobility patterns. Given the recent jurisprudence of the Court on borrowed cars[20], Member States should consider
allowing a certain period of use of vehicles registered in another Member State
by a citizen without the obligation to pay registration tax, provided certain
conditions set to avoid evasion or abuse are fulfilled.

4.2.3.     The car rental sector

Some Member States have already taken measures
to overcome the problems described in section 3.2.3.:

(1)
As regards the repatriation of a one-way rental
car, some Member States allow that vehicles registered in another Member State
which arrived in their country as a result of a hire contract, are hired for a
certain period to a resident without the obligation to pay registration and
circulation tax if certain conditions are fulfilled[21]. This makes it easier to
supply one-way rentals although the conditions vary considerably.

(2)
One Member State allows the temporary transfer
of rental cars registered in another Member State, for no longer than 3 months
every year, without the need to pay the registration and circulation tax for
these vehicles, allowing car-rental firms to cope more effectively with
seasonal peak demands.

Member States applying more flexible
arrangements in these two situations can do this on the basis of Article 9(1)
of Directive 83/182/EEC. So far, there is no evidence that this flexibility has
caused problems. Hence, the Commission suggests that the other Member States
introduce similar arrangement, subject to the conditions set by them with a
view to avoid any possible evasion or abuse. This would allow car rental firms
to optimise the use of their fleets and to reduce costs and, hence, prices for
final customers.

4.2.4.     Tax-induced market
fragmentation

Although the 2005 proposal has not received
unanimous support of Member States, it should be recognized that a lot of
Member States have since introduced environmental elements in their registration
taxes and/or circulation taxes. However, even if Member States apply the same
environmental elements, they often use different thresholds resulting in
(sometimes huge) differences in the tax levied. Differentiations
within car taxation should not be based on
technology-specific criteria, such as engine size or engine power, but rely on
objective, commonly available and policy-relevant performance data, such as CO2
emissions. Moreover, the thresholds should be regularly updated to keep
pressure to buy a clean and efficient vehicle. From this perspective it is
suggested that Member States examine in a Working Group how the criteria they
use as a basis for calculating registration and circulation taxes can be better
coordinated, so that the technical fragmentation of the EU car market is
reduced, economies of scale are exploited, and environmental goals are reached
in a cost-effective manner. It is also to be noted that the Commission services
are currently preparing guidelines for Member States wishing to introduce
financial incentives in line with the European strategy on clean and
energy-efficient vehicles[22].

5.           Conclusion and follow-up

Mobility of citizens is steadily rising,
thanks to European integration and as a result of business and growth models increasingly
relying on an intensified international division of labour. Mobility can help
to solve problems on local labour markets, increase the efficiency of markets
and enhance economic growth. Free movement is also EU citizens' most cherished
EU right and a cornerstone in the development of the EU. Double taxation in the
area of vehicle taxation, high registration taxes upon transfer of a car in the
context of migration and the lack of information on this may hinder
cross-border mobility.

Even though the approach proposed by the
Commission in 2005, namely the abolition of registration taxes and integrating
them in a revenue-neutral way into the existing circulation taxes, has so far
not been adopted, some Member States have already on a voluntary basis taken
certain measures envisaged by the proposal, which the Commission welcomes.
However, a number of problems which are incompatible with the idea of a real
Single Market persist and therefore require a solution in the short term.

Hence, the Commission has identified and
proposes to the Member States to apply the following best practices in the
short term:

1.           To ensure that taxpayers
know their rights and obligations when moving to another Member State, Member States should provide adequate information on their application of registration
and circulation taxes on vehicles in cross-border situations, including
information on how they have implemented the EU legal framework described in
this Communication and the SWD. To this end, a central contact point for
taxpayers should be designated, to which a link can be provided on the website
of the Commission.

2.           To avoid double taxation
and 'over-taxation' where citizens move a car permanently from one Member State
to another, Member States that initially applied a registration tax should as a
minimum grant a partial refund of the tax taking into account the depreciation
of the car independently from whether or not the Member State of destination
provides an exemption from registration tax, if any.

3.           Member States should make
full use of the flexibility offered by Directive 83/182/EEC to apply more
liberal arrangements allowing for the temporary use of vehicles in Member
States without application of registration and circulation tax. This relates,
in particular, to rental cars registered in another Member State, but also to other situations of temporary or occasional use by a resident of a car
registered in another Member State.

4.           To take action to reduce
the fragmentation of the EU car market caused by the divergent application by
Member States of car registration and circulation taxes. The upcoming
Guidelines on financial incentives for clean and energy-efficient vehicles also
need to be taken into account.

After having received the opinion of the
institutions to which this Communication is addressed, the Commission intends
to set up a technical Working Group to discuss the issues above with Member
States. As a result of this process, the discussions in the Council on the 2005
proposal could gain a new momentum. Revision of Directive 83/182/EEC could also
be envisaged in order to take account of the extensive jurisprudence of the
Court and to enhance transparency and legal certainty.

[1]               Source: Eurostat, ACEA and Öko-Institut.

[2]               Taxation trends in the European Union, 2012
edition, Eurostat, European Commission.

[3]               According to the Court of Justice
of the European Union, the successive levying of a registration tax in two Member States
does not necessarily constitute a double taxation in its narrow sense as the taxable
event is the right to use the vehicle on national roads (See section
3.1. of the Commission Staff Working Document accompanying this Communication for more
details).

[4]               EU Citizenship Report 2010 'Dismantling obstacles to
EU citizens' rights', COM(2010)603 of 27.10.2010, see action 6.

[5]               COM(2010)769 of 20.12.2010.

[6]               OJ C 267 of 21.11.1975, p.8, COM(1998)30 of
10.2.1998 and COM(2005)261 of 5.7.2005.

[7]               Council Directive 83/182/EEC on tax exemptions within
the Community for certain means of transport temporarily imported into one Member State from another (OJ L 105, 23.4.1983, p.59).

[8]               While this Communication deals with the taxation of passenger cars
only (M1 vehicles), the arguments brought forward could be used by analogy for
other road vehicles, notably light duty vehicles (N1 vehicles) or motorized
two-wheelers.

[9]               COM(2012)164 of 4.4.2012.

[10]             The Directive defines 'normal residence' as the place
where a person usually lives, that is at least 185 days in each calendar year,
because of personal and occupational ties, or, in the case of a person with no
occupational ties, because of personal ties which show close links between that
person and the place where he is living.

[11]             See Annex I to the SWD.

[12]             More information on the tax base and the level
of taxation is available in the database 'Taxes in Europe'. http://ec.europa.eu/taxation_customs/taxation/gen_info/info_docs/tax_inventory/index_en.htm.

[13]             OJ L 145, 10.6.2009, p. 36.

[14]             The number of citizens that reside in a Member State other than their
Member State of origin reached 12.8 million in
2011 The number of cross-border workers (citizens working in another
Member State than the Member State of residence) has reached around 1
million in 2010. A specific category of 'cross-border workers' are the persons
living in one Member State and using a motor vehicle registered by their
employer in another Member State. There are no data available for this category
but generally company registrations accounted for about 50.5% of the 11.6 million new
passenger cars registered across 18 EU Member States in 2008.

[15]             Article 3 of Directive 83/182/EEC obliges Member States to
allow rental cars to be re-hired to non-residents with the view of being 'exported' if they are
in the country as a result of a hire-contract that ended in that country. They
may also be returned by an employee to the Member State where they were
originally hired, even if the employee is a resident of the Member State of
temporary importation. Article 9 of The Directive
allows Member States to introduce and/or maintain more liberal arrangements,
e.g. permitting these vehicles to be re-hired to a resident of their country
with a view of re-exportation. However, not many
Member States make use of this possibility.

[16]             See Annex IV of the SWD.

[17]             The CARS 21 Final Report, adopted on 6 June 2012, is
available on the following website: http://ec.europa.eu/enterprise/sectors/automotive/files/cars-21-final-report-2012_en.pdf.

[18]             See the 2005 proposal referred to in footnote 6.

[19]             Member States granting such a refund apply it under
different conditions (see Annex II to the SWD). Typically the refunds are not
only given to citizens changing residence with their cars but also in case cars
are de-registered and exported by car dealers or citizens selling their cars
abroad.

[20]             Judgment of 26 April 2012, joined
cases L.A.C. van Putten, P. Mook, G. Frank, C-578/10, C-579/10, C-580/10.

[21]             For more details see annex III of the
SWD.

[22]             COM(2010)186 of 28.4.2010.