Proposal for a Council Directive governing the tax treatment of private motor vehicles moved permanently to another Member State in connection with a transfer of residence or used temporarily in a Member State other than that in which they are registered (98/C 108/12) (Text with EEA relevance) COM(98) 30 final - 98/0025 (CNS)

(submitted by the Commission on 10 February 1998)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 99 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of the Economic and Social Committee,

Whereas, in the single market, tax obstacles to the free movement of persons and their personal property, including motor vehicles, should be removed;

Whereas, at present, Community law regarding the tax treatment of private motor vehicles used temporarily in a Member State other than that in which they are registered is unnecessarily restrictive in the context of the principles of the single market;

Whereas, furthermore, present Community law covering the tax treatment of motor vehicles belonging to persons transferring residence from one Member State to another can place an unnecessary administrative burden on such persons to prove that a liability to pay tax does not exist;

Whereas, accordingly, the terms of the exemptions provided by Council Directive 83/182/EEC on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another (1) and Council Directive 83/183/EEC on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals (2) do not reflect the present needs concerning free circulation of persons and of goods;

Whereas, in any event, Directives 83/182/EEC and 83/183/EEC no longer accurately cover the systems of taxation of motor vehicles applied by Member States since the introduction of the single market; whereas their application to exemption from VAT has already been repealed by Article 2 of Council Directive 91/680/EEC supplementing the common system of value added tax and amending Directive 77/388/EEC with a view to the abolition of fiscal frontiers (3); whereas, in practice, problems concerning taxation of property following a transfer of residence are confined to motor vehicles and it is thus no longer necessary to lay down rules for other goods; whereas permanent exemptions other than in connection with transfer of residence need no longer be provided for;

Whereas, however, abuses caused by the differing levels of taxation of motor vehicles between Member States should be prevented; whereas, therefore, it is still necessary to provide for certain restrictions on temporary use by residents of vehicles registered in other Member States;

Whereas, therefore, the provisions of Directives 83/182/EEC and 83/183/EEC require updating and these directives should be repealed and replaced by a single, consolidated directive;

Whereas Member States should not charge taxes on private motor vehicles moved to their territory from other Member States by individuals transferring residence from such Member States;

Whereas Member States should not charge taxes on private motor vehicles registered in other Member States where such vehicles are used temporarily on their territory, in certain defined circumstances;

Whereas for the purposes of determining liability to tax it is necessary to define the place of normal residence of the vehicle user;

Whereas in the case of transfer of residence, no tax should be payable in the new Member State, subject to certain conditions and provided the vehicle has been acquired in accordance with the tax rules of the first Member State;

Whereas temporary use in another Member State without payment of taxes should be permitted for a period of six months in any twelve; whereas, in the case of a person whose professional ties are in another Member State, this should be increased to nine months;

Whereas it is necessary, in the interests of the internal market, to introduce some flexibility concerning the use of rental vehicles in Member States other than that of registration, subject to certain conditions; whereas, furthermore, it is necessary to expressly provide for use of vehicles by certain persons other than the owner, and whereas it is necessary, in certain circumstances, to allow use by a resident of a Member State a vehicle registered in another Member State;

Whereas it is necessary to provide rules governing the temporary use of a private vehicle in another Member State for business purposes;

Whereas vehicles which, during temporary use in another Member State, are irretrievably damaged should not incur liability to taxation as a result;

Whereas persons who wish to use vehicles in a Member State other than that of their place of residence should be entitled to register vehicles in such Member States; whereas, in such cases, taxes shall be payable in the Member State of registration; whereas, furthermore, the Member State of residence of the owner may prohibit use of such vehicles on its territory;

Whereas, in cases where infringements of the rules are encountered, any sanctions imposed shall be proportionate to the offence;

Whereas, in cases where Member States are entitled to impose registration or similar taxes on used vehicles arriving from other Member States, they shall ensure that the tax charged does not exceed the residual amount of tax contained in the value of similar vehicles on the domestic market, in accordance with Article 95 of the Treaty;

Whereas, in cases of dispute, the competent authorities of the relevant Member States shall consult with each other; whereas, furthermore, in such cases tax should not be imposed pending the outcome of such consultations by the relevant competent authorities; whereas if no agreement is reached between the competent authorities, the Commission should decide on the matter,

HAS ADOPTED THIS DIRECTIVE:

TITLE I GENERAL PROVISIONS

Article 1 Prohibition on imposing taxes in certain circumstances

1. A Member State shall not impose excise duties, registration taxes and/or other consumption taxes, such as the taxes listed in Annex I, but excluding the taxes listed in Annex II, on private motor vehicles registered in other Member States and brought into that Member State permanently in connection with the transfer of normal residence of a private individual from another Member State, subject to the conditions laid down below.

2. A Member State shall not impose excise duties, registration taxes, other consumption taxes and/or road taxes, such as the taxes listed in Annex I and Annex II, on private motor vehicles registered in other Member States and used temporarily on its territory, subject to the conditions laid down below.

3. The provisions of paragraphs 1 and 2 shall also apply to the normal spare parts, accessories and equipment of the motor vehicle.

4. This Directive shall not apply to value added tax.

Article 2 Definitions

For the purposes of this Directive:

(a) 'commercial vehicle` means any road vehicle which, by its design or equipment, is suitable for and intended for transporting, whether for payment or not:

- more than nine persons, including the driver,

- goods,

as well as any road vehicle for special use other than transport as such;

(b) 'private vehicle` means any road vehicle, including its trailer, if any, other than a commercial vehicle;

(c) 'business use` of a motor vehicle means the use thereof in the direct exercise of an activity carried out for consideration or financial gain;

(d) 'private use` means any use other than business use;

(e) 'residence` means normal residence as defined in Article 3;

(f) a person's 'family` shall be deemed to mean his spouse, his immediate ancestors and descendants and those of his spouse.

TITLE II NORMAL RESIDENCE

Article 3 General rules for determining normal residence

1. For the purposes of this Directive, 'normal residence` means the place where a person usually lives, that is for 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.

2. Notwithstanding paragraph 1, the normal residence of a person whose occupational ties are in a different place from his personal ties, and who consequently lives in turn in different places situated in two or more Member States, shall be regarded as being the place of his personal ties, provided that he returns there regularly.

3. Where a person is living in a Member State in order to carry out a task of a definite duration, and as a result has his occupational ties in a different place from his personal ties, his place of residence shall be regarded as being the place of his personal ties, irrespective of whether he returns there regularly.

4. Attendance at a university or school in another Member State shall not imply transfer of normal residence.

5. A change in a person's marital status shall not, of itself, imply a change of residence.

6. Individuals shall give evidence of their place of normal residence by any appropriate means, such as their identity card or any other valid document.

7. Without prejudice to Article 12, where the competent authorities of the Member State of destination have doubts as to the validity of a statement as to normal residence made in accordance with this Article, or for the purpose of certain specific controls, they may request additional information or evidence either from the individual making the statement or from the competent authorities of the other Member State concerned.

TITLE III TRANSFER OF RESIDENCE

Article 4 Conditions under which tax is not payable following a transfer of residence

1. The provisions of Article 1(1) shall apply where the following conditions are fulfilled:

(a) the motor vehicle has been acquired under the general conditions of taxation in force in the domestic market of one of the Member States and is not subject, as a result of its being brought to another Member State, to any exemption from or refund of any of the taxes referred to in Article 1(1) in the Member State from which it is brought.

These two conditions shall be deemed to be fulfilled if the vehicle bears a standard registration plate of the Member State of registration, all types of temporary plate being excluded.

For the purposes of this Directive, the general conditions of taxation shall be deemed to include diplomatic and consular arrangements, agreements concerning international organisations and their members, arrangements governing forces which are party to the North Atlantic Treaty or the civilian staff accompanying them;

(b) the person transferring residence has had the use of the vehicle for a period of at least six months prior to the transfer of residence;

(c) the motor vehicle is brought into the Member State to which the person transfers his residence not later than 12 months after such transfer.

2. In the case of vehicles acquired under the diplomatic and consular arrangements or other arrangements mentioned in the third indent of paragraph 1 (a), Member States may increase the period mentioned in paragraph 1 (b) to 12 months.

TITLE IV TEMPORARY USE OF A VEHICLE

Article 5 General conditions under which tax is not payable when a vehicle is used temporarily in a Member State other than that of registration

1. The provisions of Article 1(2) shall apply in respect of a motor vehicle used temporarily in a Member State, other than the Member State in which it is registered, for a period, continuous or otherwise, of not more than six months in any 12 months, provided that:

(a) the person using the vehicle has his normal residence in a Member State other than the Member State of temporary use;

(b) the vehicle is only the subject of private use;

(c) the vehicle is not hired out in the Member State of temporary use, or lent to a resident of that State, other than as provided for in Article 6.

2. The period of six months referred to in paragraph 1 shall be increased to nine months in the case of a person whose occupational ties are not in the Member State of his normal residence and who uses in the Member State of his occupational ties a vehicle registered in the Member State of his normal residence.

Article 6 Specific cases of private use where taxation is not permitted

In addition to the cases covered by Article 5, the provisions of Article 1(2) shall apply in respect the following cases:

(a) a private vehicle belonging to a car rental firm, where that vehicle is in the Member State of temporary use as a result of a rental contract which ended in that Member State and which:

(aa) is re-rented to a person other than a resident of the Member State of temporary use, subject to the limitation that the period of any such re-renting must terminate within two months of the end-date of the original contract under which the vehicle was returned to the car rental firm in the current Member State, save where the vehicle is re-rented to a non-resident with a view to being removed from that State within thirty days from the date of the new rental period;

(bb) is re-rented to a resident of the Member State of temporary use with a view to being removed from that State within fifteen days from the beginning of the new rental period, or

(cc) is returned by an employee of the car rental firm to the country where it was originally rented even if such employee resides in the Member State of temporary use;

(b) a private vehicle registered in another Member State and rented from a car rental firm under a rental contract which commenced in that Member State by a resident of the Member State of temporary use, subject to a limit of eight days use;

(c) a private vehicle used, while the person who brought the vehicle to the Member State of temporary use is in that Member State, by members of his family, whether or not such family members have their normal residence in the Member State of temporary use;

(d) a private vehicle used by any person, provided that the person who brought the vehicle to the Member State of temporary use is also on board the vehicle;

(e) a private vehicle registered in another Member State and used by a resident of the Member State of temporary use following temporary immobilisation of his vehicle as a result of breakdown or accident in the other Member State, where such use is confined to the period during which the user's own vehicle is being repaired and in any event does not exceed a maximum period of two months;

(f) a private vehicle registered in another Member State which belongs to or is hired by an undertaking established in the Member State in which it is registered and which is used by an employee of such undertaking, or by a member of the family of such employee, where such user has his normal residence in the Member State of temporary use. This category shall not be subject to any time limit;

(g) a private vehicle registered in the country of normal residence of the user and used regularly for the journey from his residence to his place of work in another Member State, and vice versa. This category shall not be subject to any time limit;

(h) a private vehicle registered in the Member State of his normal residence used by a student in the Member State in which he is pursuing his studies, where such Member State is not that of his normal residence.

Article 7 Cases of business use where taxation is not permitted

1. A Member State shall not impose the taxes specified in Article 1(2) on a private vehicle used temporarily on its territory for business purposes, provided that:

(a) the person using the vehicle has his normal residence in a Member State other than the Member State of temporary use.

This condition need not apply in the case of a person who has his normal residence in the Member State of temporary use, where that person is an employee of an undertaking established in another Member State and is using a vehicle which belongs to or is hired by that undertaking and which is registered in the Member State where the undertaking is established;

(b) the vehicle is not used in the Member State of temporary use to carry passengers for hire or material reward of any kind, or for the industrial and/or commercial transport of goods, whether for reward or not;

(c) the vehicle is not hired out or lent in the Member State of temporary use;

(d) the vehicle is registered in the Member State of normal residence of the user;

(e) the vehicle has been acquired under the general conditions of taxation of the Member State of normal residence of the user and is not subject to any refund of any of the taxes referred to in Article 1(2) by virtue of its being used in another Member State.

This condition shall be deemed to be satisfied if the vehicle bears a standard registration plate of the Member State of registration, all types of temporary plate being excluded;

(f) any periodic vehicle taxes ordinarily payable in the Member State of registration are paid.

2. The provisions of paragraph 1 shall apply without any time limit.

Article 8 Provisions concerning irreparable damage to vehicles

Where a private vehicle registered in another Member State is used temporarily in a Member State without imposition of the taxes referred to in Article 1(2) in accordance with the provisions of this Directive, and that vehicle becomes badly damaged as a result of a duly proven accident, breakdown or criminal or malicious act which occurs within that Member State, where the cost of the requisite repairs exceeds the market value of the vehicle, and where the vehicle is disposed of with a view to being scrapped or destroyed, no subsequent demand for any of the taxes referred to in Article 1(2) shall be made by the Member State of temporary use. The competent authorities of Member States may require proof of the damage and/or of the proper disposal of the vehicle.

Article 9 Permanent use in a Member State other than that of normal residence

1. Where a person wishes to use a vehicle in a Member State other than that in which he has his place of normal residence for a period in excess of that provided for in Article 5, for example on an ongoing basis in connection with a secondary residence, the Member State in question shall register such vehicle.

2. Where the provisions of paragraph 1 apply, the Member State of registration shall be entitled to impose such taxes as would ordinarily be payable in connection with and following registration of such vehicle.

3. The Member State in which the owner of a vehicle as described in paragraph 1 has his place of normal residence may refuse to allow use of such vehicle on its territory.

TITLE V FINAL PROVISIONS

Article 10 Infringements and sanctions

1. Where a vehicle is used in a Member State temporarily and the provisions of this Directive are not complied with, such vehicle shall not be deemed to have been brought to that Member State permanently, and taxes shall not automatically be deemed to be payable. In such instance, notwithstanding any sanctions applied, the individual concerned may choose either to remove the vehicle from the Member State of temporary use or to have it registered, and to pay taxes, in the normal way in that Member State.

2. In applying sanctions, Member States shall take into account the good faith of the individuals concerned and the absence of any intention of fraud.

3. The control procedures applied by the competent authorities of the Member States shall not be framed in such a way as to restrict the free movement of goods and persons required by the Treaty. In cases where the provisions of this Directive are infringed, penalties shall not be so disproportionate to the gravity of the infringement that they become an obstacle to the free movement of goods and persons.

Article 11 Calculation of tax, where payable

In cases where a used motor vehicle is brought permanently from one Member State to another, in circumstances other than those governed by this Directive, and the latter Member State imposes a registration tax or similar tax such as the taxes listed in Annex I on that vehicle, the Member State in question shall ensure that the amount of tax charged shall not be greater than the amount of residual tax contained in the value of a vehicle of similar age, characteristics and condition on the domestic market of that Member State.

Article 12 Settlement of disputes

1. Where the practical application of this Directive gives rise to difficulties, the competent authorities of the Member States concerned shall take the necessary decisions by mutual agreement.

2. In particular, where a person claims to have transferred his place of normal residence from one Member State to another, and that claim is disputed by the competent authorities of either of those States, the competent authorities of both States shall consult each other to decide which place of residence should be used for the purposes of deciding where the vehicle should be subject to taxation. Similarly, where a person claims to be using a vehicle temporarily in one Member State whilst his place of normal residence is in another Member State, and that claim is disputed by the competent authorities of the Member State in which the vehicle is being used, the competent authorities of both States shall consult each other to decide which residence should be used for the purposes of taxing the vehicle. The Member State to which the user claims to have transferred his normal residence, or in which he claims to be using the vehicle temporarily, shall not impose the taxes referred to in Article 1 pending the outcome of such consultations.

3. If Member States do not come to an agreement within six months of the date of the claim by the individual concerned, they shall refer the question to the Commission. The Commission, after having examined the arguments put forward by the two Member States and, if the Commission considers it appropriate, by the individual concerned, will issue a decision establishing which residence shall be used for the purposes of taxing the vehicle.

Article 13 Repeals

The following Directives shall cease to have effect on 1 July 1998:

- Directive 83/182/EEC,

- Directive 83/183/EEC as amended by Directive 89/604/EEC.

Article 14 Implementation of the Directive

1. Member States may retain or introduce provisions which are more favourable to users than those laid down in this Directive, in order to allow temporary use of vehicles registered in other Member States, or permanent transfer of vehicles from other Member States, without imposition of the taxes referred to in Article 1.

2. Member States may not, by virtue of this Directive, apply within the Community tax treatment which is less favourable than that applied in connection with imports or use of vehicles brought directly from third countries.

3. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 1 July 1998. Member States shall forthwith inform the Commission thereof.

When Member States adopt these measures, they shall contain a reference to this Directive or shall be accompanied by such reference on the occasion of their official publication. The methods of making such reference shall be laid down by the Member States.

4. Member States shall communicate to the Commission the texts of the main provisions of national law which they adopt in the field governed by this Directive.

Article 15 Addressees

This Directive is addressed to the Member States.

(1) OJ L 105, 23.4.1983, p. 59.

(2) OJ L 105, 23.4.1983, p. 64.

(3) OJ L 376, 31.12.1991, p. 1.

ANNEX I

BELGIUM

- Taxe de mise en circulation

DENMARK

- Registreringsafgift af motorkøretøjer

GERMANY

-

GREECE

- Special consumption tax (EFK)

- Registration tax (EPET)

SPAIN

- Impuesto Especial sobre Determinados Medios de Transporte

FRANCE

- Taxe sur les certificates d'immatriculation des véhicules à moteur

IRELAND

- Vehicle registration tax

ITALY

- IET

- APIET

LUXEMBOURG

-

NETHERLANDS

- Belastung Personenauto's en Motorrijwielen

AUSTRIA

- Normverbrauchsabgabe

PORTUGAL

- Imposto Automovel

FINLAND

- Autovero

SWEDEN

- Sales tax

UNITED KINGDOM

-

ANNEX II

BELGIUM

- Taxe de circulation sur les vehicules automobiles/Verkeersbelasting up de autovoertuigen

- Taxe compensatoire des accises/

- Taxe de circulation complémentaire;

DENMARK

- Vægtafgift af motorkøretøjer

GERMANY

- Kraftfahrzeugsteuer (Kraftfahrzeugsteuergesetz - 1979)

- Kraftfahrzeugsteuer (Durchführungsverordnung - 1979)

GREECE

- ÔÝëç êõêëïöïñßáò

SPAIN

- Impuesto sobre vehiculos de traccion mecanica

- Tributos Locales sobre circulation de vehiculos automoviles

FRANCE

- Taxe différentielle sur les véhicules à moteur

- Taxe sur les véhicules des sociétés

IRELAND

- Motor vehicle excise duties

ITALY

- Tassa sulla circolazione degli autoveicoli

LUXEMBOURG

- Taxe sur les véhicules automoteurs

NETHERLANDS

- Motorrijtuigenbelasting

AUSTRIA

- Kraftfahrzeugsteuer

PORTUGAL

- Imposto municipal sobre veiculos

- Imposto de circulação

FINLAND

- Moottoriajoneuvovero

- Windscreen sticker tax

SWEDEN

- VägtrafikskattUNITED KINGDOM

- Vehicle excise duty