COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council on simplifying the transfer of motor vehicles registered in another Member State within the Single Market

This report only commits the Commission's services involved in its preparation and does not prejudge the final form of any decision to be taken by the Commission.

TABLE OF CONTENTS

COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT......................... 2

1........... Procedural issues and consultation of interested parties.................................................... 8

1.1........ Identification................................................................................................................... 8

1.2........ Organisation and timing................................................................................................... 8

1.3........ Consultation and expertise.............................................................................................. 8

1.4........ Scrutiny by the Commission Impact Assessment Board................................................... 8

2........... Policy context – Problem definition.................................................................................. 9

2.1........ Policy context................................................................................................................. 9

2.2........ Problem definition......................................................................................................... 10

2.2.1..... In which Member State should the motor vehicle be registered?..................................... 10

2.2.2..... The administrative burden of re-registration................................................................... 11

2.3........ The objectives of motor vehicle registration - Underlying causes of the problem.............. 15

2.4........ Action taken by the Commission (baseline scenario)...................................................... 16

2.5........ The size of the problem: who is affected, in what ways and to what extent?.................... 16

2.5.1..... Summary...................................................................................................................... 19

2.5.2..... Figures about the size of the problem............................................................................. 19

2.5.3..... Estimation of the costs of the current system (baseline scenario)..................................... 20

2.5.3.1.. Administrative costs...................................................................................................... 20

2.5.3.2.. Other impacts: Profit loss.............................................................................................. 21

2.5.3.3.. Additional costs for car rental companies....................................................................... 21

2.5.3.4.. Other costs................................................................................................................... 21

2.6........ Foreseen evolution of the problem................................................................................. 22

2.7........ EU right to act.............................................................................................................. 23

3........... Objectives.................................................................................................................... 24

3.1........ General policy objectives.............................................................................................. 24

3.2........ Specific policy objectives.............................................................................................. 24

3.3........ Operational policy objectives........................................................................................ 24

4........... Policy options............................................................................................................... 24

4.1........ Assumptions................................................................................................................. 24

4.2........ Description of policy options......................................................................................... 25

5........... Analysis of impacts....................................................................................................... 29

5.1........ Base-line option............................................................................................................ 29

5.2........ Option 1: Single registration for the entire life of the motor vehicle (“single registration).... 29

5.2.1..... Qualitative assessment.................................................................................................. 29

5.2.2..... Reduction of administrative costs................................................................................... 31

5.3........ Option 2: No re-registration in the Member State of destination if the holder remains the same person 32

5.3.1.1.. Qualitative assessment.................................................................................................. 32

5.3.1.2.. Reduction of administrative costs................................................................................... 36

5.4........ Option 3: registration in the Member State of the holder of the vehicle and simplified re-registration 37

5.4.1.1.. Qualitative assessment.................................................................................................. 37

5.4.1.2.. Reduction of administrative costs................................................................................... 39

5.5........ Option 4: Registration in the Member State where the motor vehicle is primarily used and simplified re-registration.................................................................................................................................... 40

5.5.1..... Qualitative assessment.................................................................................................. 40

5.5.2..... Reduction of administrative costs................................................................................... 42

5.6........ Option 5: Optimising the electronic exchange of information among national registration authorities 42

5.6.1..... Reduction of administrative costs................................................................................... 43

6........... Comparing the options.................................................................................................. 44

6.1........ Public consultation........................................................................................................ 44

6.2........ Administrative burden................................................................................................... 44

6.3........ Comparison of the qualitative impacts............................................................................ 45

6.4........ Comparison of all impacts............................................................................................. 45

6.5........ Sensitivity analysis......................................................................................................... 46

6.6........ Form of the legislative instrument................................................................................... 47

7........... Monitoring and evaluation............................................................................................. 47

8........... Annexes....................................................................................................................... 49

8.1........ Annex 1: Public consultation and surveys....................................................................... 49

8.1.1..... Results of the public consultation................................................................................... 49

8.1.1.1.. General overview.......................................................................................................... 49

8.1.1.2.. Results......................................................................................................................... 51

8.1.1.3.. Conclusion and subsequent steps.................................................................................. 63

8.1.2..... Survey of national registration authorities....................................................................... 64

8.1.3..... Understanding Citizens’ and Businesses’ Concerns with the Single Market: A View from the Assistance Services.................................................................................................................................... 67

8.2........ Annex 2: legal context of car registration in the internal market....................................... 73

8.2.1..... Type-approval of new motor vehicles............................................................................ 73

8.2.1.1.. New motor vehicles and their trailers............................................................................. 73

8.2.1.2.. New two or three-wheeled motor vehicles.................................................................... 73

8.2.1.3.. Agricultural or forestry tractors...................................................................................... 74

8.2.2..... Registration of motor vehicles........................................................................................ 74

8.2.3..... The role of registration in the field of transport............................................................... 75

8.2.3.1.. Hiring of vehicles for the carriage of goods.................................................................... 75

8.2.3.2.. Periodic roadworthiness tests........................................................................................ 76

8.2.3.3.. Recommendation 2010/378/EU (Periodic inspections of vehicles).................................. 77

8.2.3.4.. Technical roadside inspection of the roadworthiness of commercial vehicles................... 80

8.2.3.5.. Recommendation 2010/379/EU (Roadside checks)....................................................... 80

8.2.4..... Motor insurance........................................................................................................... 81

8.2.5..... Cross-border car crime................................................................................................ 81

8.2.6..... End-of life vehicles........................................................................................................ 82

8.2.7..... Jurisprudence of the Court of Justice on car registration since 2000................................ 84

8.3........ Annex 3: Summary of national rules and practices with respect to motor vehicle registration 90

8.3.1..... Belgium........................................................................................................................ 90

8.3.2..... Bulgaria........................................................................................................................ 91

8.3.3..... Czech Republic............................................................................................................ 92

8.3.4..... Denmark...................................................................................................................... 92

8.3.5..... Germany...................................................................................................................... 93

8.3.6..... Estonia......................................................................................................................... 95

8.3.7..... Ireland.......................................................................................................................... 96

8.3.8..... Greece......................................................................................................................... 97

8.3.9..... Spain............................................................................................................................ 98

8.3.10... France.......................................................................................................................... 99

8.3.11... Italy............................................................................................................................ 100

8.3.12... Cyprus....................................................................................................................... 102

8.3.13... Latvia......................................................................................................................... 103

8.3.14... Lithuania..................................................................................................................... 103

8.3.15... Luxembourg............................................................................................................... 105

8.3.16... Hungary..................................................................................................................... 106

8.3.17... Malta......................................................................................................................... 108

8.3.18... Netherlands................................................................................................................ 111

8.3.19... Austria....................................................................................................................... 112

8.3.20... Poland........................................................................................................................ 114

8.3.21... Portugal...................................................................................................................... 115

8.3.22... Romania..................................................................................................................... 116

8.3.23... Slovenia..................................................................................................................... 118

8.3.24... Slovakia..................................................................................................................... 119

8.3.25... Finland....................................................................................................................... 120

8.3.26... Sweden...................................................................................................................... 122

8.3.27... United Kingdom......................................................................................................... 123

8.3.28... Transferring motor vehicles to another Member States - Temporary and professional (or ‘commercial’) registration schemes in the EU...................................................................................................... 127

8.3.28.1....................................... The seller drives the motor vehicle with his own registration plates 127

8.3.28.2......................... The buyer seeks registration of the motor vehicle in his own Member State: 127

8.3.28.3............................................... The buyer seeks temporary registration of the motor vehicle: 127

8.3.28.4............. The professional seller drives the motor vehicle with his professional number plates: 133

8.4........ Annex 4: figures and statistics...................................................................................... 138

8.4.1..... Affected groups.......................................................................................................... 138

8.4.2..... Background statistics.................................................................................................. 142

8.4.2.1.. Methodological remarks............................................................................................. 142

8.4.2.2.. Car registrations in the EU.......................................................................................... 144

8.4.2.3.. Car-rental and leasing sector....................................................................................... 150

8.4.3..... Economic Impacts...................................................................................................... 153

8.4.3.1.. Methodology and assumptions.................................................................................... 153

8.4.3.2.. Impact on administrative costs..................................................................................... 153

8.4.3.3.. Other economic impact: loss of profits......................................................................... 156

8.4.3.4.. Other economic impacts on the car-rental sector......................................................... 158

8.4.3.5.. Other economic impacts: the 2nd hand vehicle market................................................. 160

8.4.3.6.. Sensitivity analysis....................................................................................................... 161

8.5........ Annex 5: European Vehicle and Driving Licence Information System (EUCARIS)........ 162

8.5.1..... Treaty concerning a European Vehicle and Driving Licence Information System (EUCARIS) 162

8.5.2..... Bilateral exchange of information................................................................................. 162

8.5.3..... The exchange of vehicle registration data through EUCARIS in EU law........................ 163

8.5.4..... The functioning of the electronic exchange of vehicle registration data through EUCARIS 164

8.5.5..... Financial aspects......................................................................................................... 165

8.5.6..... Technical aspects........................................................................................................ 167

8.5.6.1.. Introduction................................................................................................................ 167

8.5.6.2.. National Registries...................................................................................................... 167

8.5.6.3.. An EUCARIS application in each Member State......................................................... 167

8.5.6.4.. Presentation................................................................................................................ 168

8.5.6.5.. Applications............................................................................................................... 168

8.5.6.6.. Communication........................................................................................................... 172

8.5.6.7.. Technical infrastructure............................................................................................... 172

8.5.6.8.. Security...................................................................................................................... 173

8.5.6.9.. Operational system management................................................................................. 175

8.6........ Annex 6: Discarded option.......................................................................................... 178

8.7........ Annex 7: SME Test.................................................................................................... 180

1. Procedural issues and consultation of interested parties

1.1. Identification

Lead DG: DG ENTR - Agenda Planning/WP Reference: 2011/ENTR/010.

1.2. Organisation and timing

Work on the Impact Assessment started in the second half of 2010. An Impact Assessment Steering Group chaired by DG ENTR was set up and met 5 times, on 7 December 2010, 27 May, 22 September, and 11 and 20 October 2011. SG, SJ, DG ECFIN, COMP, EMPL, MOVE, ENV, MARKT, TAXUD, SANCO and JUST were invited to the meetings, at which representatives of SG, DG MOVE, TAXUD and MARKT attended and contributed to the discussions. DG JUST and DG COMP provided written comments.

1.3. Consultation and expertise

External expertise was used for mainly gathering data about the magnitude of the current problems and the extent to which a simplification of the registration procedure for motor vehicles previously registered in another Member State can be enhanced. Different surveys were organised, the results of which are summarised in Annex 1.

From March to May 2011, a public consultation of stakeholders, consisting of tailor made questionnaires for citizens, economic operators and public authorities, was carried out through I.P.M. (Your Voice in Europe). A summary of the public consultation results is enclosed in annex 1 and is also available on the Europa web site[1]. The Commission’s minimum standards have all been met.

A conference was organised on 21 June 2011 to present preliminary results of the public consultation, and to provide an additional forum for debate and exchange of information between different stakeholders, and in particular for public authorities in charge of registration in the Member States[2].

1.4. Scrutiny by the Commission Impact Assessment Board

The Impact Assessment Board of the European Commission assessed a draft version of the present impact assessment and issued its opinion on 16 December 2011. The Impact Assessment Board made several recommendations and, in the light of the latter, the final impact assessment report firstly strengthens the evidence base of the problem definition, for instance by giving clearer references to the jurisprudence of the ECJ. Secondly, it provides a more detailed explanation of the content and impacts of the options, in particular for the package of preferred options. Thirdly, the report gives a better supported comparison of options by presenting an integrated overview of all relevant costs and benefits. Finally, it presents the future monitoring arrangements more clearly, and indicates how the Directive will be evaluated.

2. Policy context – Problem definition

2.1. Policy context

The free movement of goods is one of the cornerstones of the European Union. This principle constitutes an important pillar of the single market and allows citizens and enterprises to purchase or sell products in another Member State. Unfortunately, the single market still comprises considerable barriers.

The obligation to register, in the receiving Member State, a motor vehicle previously registered in the Member State of origin has been a source of complaints and court cases for decades. Notwithstanding the further integration of the single market, car registration problems remain a frequent barrier for citizens and businesses. Europeans moving to another Member State often experience difficulties when taking their car along with them. They can face complex and burdensome registration procedures, demands for paperwork in the host country which was not delivered in the home country, and they may have to pay additional taxes and duties. Citizens purchasing a car in another country and taking it back with them to the country where they live face the same problems regarding registration procedures.

The Europe2020 Strategy for smart, sustainable and inclusive growth[3] already pointed out that businesses and citizens are faced every day with the reality that bottlenecks to cross-border activity remain despite the legal existence of the single market. Motor vehicle registration problems are a typical example of these bottlenecks and were identified in the first EU Citizenship Report[4] as one of the main obstacles faced by citizens when exercising their rights under EU law in their daily lives. Moreover, they were also highlighted as one of the 20 main concerns with the Single Market as it stands now, in a list compiled by the Commission[5]. In its opinion of 11 March 2011, the High Level Group of Independent Stakeholders on Administrative Burdens supported a possible Commission initiative to simplify registration conditions and formalities. In addition, the Group called upon the national authorities to strive for improved registration processes as soon as possible, in particular concerning mutual recognition of the necessary documentation, and to refrain from burdensome requests for supplementary documentation[6].

2.2. Problem definition

All Member States have a vehicle registration system of motor vehicles. It constitutes the administrative authorisation for their entry into service in road traffic, involving their identification and the issuing of a registration number. At the end of the registration procedure, Member States issue a registration certificate which certifies that the vehicle is registered in a Member State. The registration certificate also contains the name and address of the person in whose name a vehicle is registered (the ‘holder’ of the registration certificate who is not necessarily the owner of the motor vehicle[7]).

The registration of a new motor vehicle[8] is a very simple administrative formality which most Member States have organised very efficiently.

Yet, when the motor vehicle is registered in one Member State and frequently used in another, the question of which Member States the motor vehicle should be registered in arises. If it needs to be re-registered in another Member State, the administrative formalities to obtain the registration in the receiving Member State are often burdensome and cause delays. The two problems are obviously interlinked: a person or a business is only confronted with the formalities of re-registration when they are forced to re-register a motor vehicle that is already registered in another Member State[9].

2.2.1. In which Member State should the motor vehicle be registered?

Citizens who move to another Member State, cross-border workers, car-rental companies and people leasing a motor vehicle in another Member State are often obliged to register it on the territory where they live or where the motor vehicle is used, although it is already registered in another Member State. This is for example the case when certificate holders change their residence and move permanently to another Member State with their motor vehicle. However, it is a tedious problem for citizens that live part of the year in one Member State and the other part in another, as well as for cross-border commuters who use, in their own Member State, a motor vehicle registered by their employer in another Member State. In this case, the motor vehicle is registered in one of the Member States but the holder is often asked by the other Member State to register it there[10].

Example: Cross-frontier workers residing in Finland and employed in another Member State were not allowed to use company vehicles which were made available by their employers established in another Member State and registered in the latter State, unless these motor vehicles were registered in Finland. The Court of Justice ruled that this was incompatible with the Treaty (judgement of 23 February 2006, Commission v. Finland, Case C-232/03).

Traders of second-hand motor vehicles, which are usually SMEs, are confronted with the same problem when they purchase a motor vehicle in another Member State. For them, the problem is often aggravated by the difficulty of transferring individual motor vehicles bought in another Member State to their home country since temporary registrations tend to be fairly restrictive and so-called ‘professional registrations’ for motor vehicles are often not recognised in other Member States. A similar problem as regards pinpointing the Member State where the motor vehicle needs to be registered occurs for people wishing to lease a motor vehicle from, and registered by, a leasing company established in another Member State. Finally, it is also a problem for car-rental companies that wish to move a part of their fleet to another Member State to meet seasonal demands.

Example: A Belgian national, residing in Belgium but working in Luxembourg, was stopped in Belgium for a roadside control, when he was driving a vehicle registered in Luxembourg. He was charged with having, while residing in Belgium, failed to register a vehicle that he intended to put into circulation in Belgium, even though that vehicle was already registered abroad (judgement of the Court of Justice of 15 December 2005, Case C-152/04).

2.2.2. The administrative burden of re-registration

In practice, when Member States do not accept that people living on their territory use a motor vehicle registered in another Member State, they oblige the holder of the motor vehicle to re-register it on their territory. However, formalities of re-registration for a motor vehicle being transferred from one Member State to another are often very burdensome and lengthy. Transferring a motor vehicle for a longer period to another Member State leads to new paperwork in the receiving Member State and, usually, also the paperwork to cease the registration of the vehicle in the Member State of origin.

The additional burden is principally caused by the fact that the registration authorities of the receiving Member State have little or no information about the motor vehicle, except the information that they can find on the registration certificate. If the vehicle were to be re-registered in the same Member State, registration authorities could rely on the information in their national databases.

Example: The Polish legislation required imported second-hand vehicles to undergo roadworthiness test prior to their registration, whereas domestic vehicles with the same characteristics were not subject to such a requirement. The Court of Justice ruled that this rule breached the principle of free movement of goods. According to the Court, the same objective could be attained through the recognition of the proof issued in another Member State showing that a vehicle registered in the territory of that State has passed a roadworthiness test, together with cooperation by the registration authorities with their counterparts in other Member States concerning any data that may be missing (judgement of 5 June 2008, Commission v. Poland, Case C-170/07).

The amount of paperwork in the receiving Member State and its burdensome effect are to a large extent determined by the modalities of the registration process which vary widely between Member States[11]. The first step is the formal de-registration of the motor vehicle. These formalities usually consist of collecting the required documents which vary from country to country, visiting the competent office, submitting personal data and motor vehicle data (e.g. proof of ownership, registration document, chassis number). The insurance company must also be informed. In the case that the motor vehicle is driven on public roads after de-registration towards the destination country, one must usually apply for a temporary number plate, submit all necessary data about the vehicle and its owner, and arrange for insurance coverage. The next administrative phase of transferring a vehicle to another Member States is the heaviest: re-registration in the receiving Member State. It involves a number of administrative steps and, more importantly, various new controls and checks, such as the submission of a certificate of conformity and national roadworthiness tests:

· Type-approval or individual approval. For new motor vehicles, the manufacturer, in his capacity as the holder of the EC type-approval, issues an EC certificate of conformity which shows that the vehicle has been manufactured in conformity with the approved vehicle type. The EC certificate of conformity must accompany each new EC type-approved vehicle. However, EU legislation does not require that the certificate of conformity remain with the vehicle after registration. In most Member States the EC certificate of conformity is kept by the authorities once the vehicle is registered. Nevertheless, several Member States oblige applicants to submit a copy of the certificate of conformity which is usually only required for the first registration of the vehicle. This constitutes a serious problem for many citizens who have to contact the manufacturer for a copy of the certificate, and pay a fee to receive it. In addition, this process usually takes a few weeks.

Example: Austria required that, for the purposes of their first registration in Austria, motor vehicles previously registered in other Member States and which have not undergone, because of their age, a Community type-approval procedure, had comply with limit values in respect of pollutant emissions and noise which are stricter than those they initially had to comply with as set out in EU law. However, motor vehicles with the same characteristics and which were already authorised to use the roads in Austria were not subject to that requirement in cases of their re-registration in that Member State. Therefore, the Court of Justice considered that this requirement constituted a breach of the principle of free movement of goods (judgement of 11 December 2008, Commission v. Austria, Case C-524/07).

· Roadworthiness tests. Several Member States oblige the person seeking the re-registration of a vehicle from another Member State to undergo a roadworthiness test prior to the registration procedure, despite the fact that the person is already in possession of valid documents delivered by another Member State. This test is either similar to the regular (annual) test that applies to national vehicles or can be even more demanding and, consequently, also more expensive. At the moment many Member States do not recognise the content of the roadworthiness certificate issued by another Member State or, if they need information about the vehicle, they do not demand the necessary data from their counterparts in other Member States.

Example: The Court of Justice indicated that, by requiring motor vehicles previously registered in another Member State to undergo a test as to their general condition prior to registration and without taking any account whatsoever of tests that may have already been carried out by those Member States, some persons concerned may be deterred from registering vehicles previously registered in other Member States. The Court argued that a similar result could be achieved by less restrictive measures, such as recognition of the proof issued in another Member State showing that a vehicle registered in the territory of that State has passed a roadworthiness test, together with cooperation by the registration authorities with their counterparts in other Member States concerning any data that may be missing (Judgement of 20 September 2007, Commission v. the Netherlands, Case C-297/05).

· Lack of administrative cooperation: National registration authorities complain about the difficulties that they are facing to contact their colleagues in other Member States. Almost 60% of the public authorities which participated in the public consultation are dissatisfied with the current system for the exchange of information between registration authorities[12]. The practical difficulties to obtaining missing data could lead to additional delays for re-registration. Directive 1999/37/EC allows Member States to ‘exchange information at bilateral or multilateral level in particular so as to check, before any registration of a vehicle, the latter's legal status, where necessary in the Member State in which it was previously registered. Such checking may in particular involve the use of an electronic network.’ However, no specific network was created for the implementation of this provision of the Directive. Yet, according to the case-law of the Court of Justice, the objectives of road safety and the protection of the environment can be attained through the recognition of the proof issued in another Member State showing that a vehicle registered in the territory of that State has passed a roadworthiness test, together with cooperation by the competent authorities with their counterparts in other Member States concerning any data that may be missing[13].

The 651 citizens and 151 businesses responding to the public consultation mentioned the following problems:

|| Problem || Business

1 || The vehicle reg. authorities required additional technical checks or certificates || 69.5 %

2 || Long and complicated procedures || 67.8 %

3 || The registering country required a new roadworthiness test, even though the vehicle had passed one in another EU country || 50.8 %

4 || Differences in registration requirements between countries || 37.3 %

5 || Required to supply technical information you did not have || 32.2 %

6 || The authorities did not recognise some of the technical documentation submitted || 30.5 %

7 || The authorities refused requests to have the vehicle registered there || 27.1 %

8 || The vehicle was not EU type-approved (new type approval requested) || 20.3 %

9 || Unable to temporarily transfer a vehicle from one EU country to another || 18.6 %

10 || Other || 18.6 %

11 || A valid EU type-approval certificate was not recognised by reg. authorities in the receiving country || 13.6 %

12 || Required to submit an EU type-approval certificate || 11.9 %

|| Problem || Citizens

1 || Long and complicated procedures || 81.6 %

2 || The vehicle reg. authorities required additional technical checks or certificates || 67.9 %

3 || The registering country required a new roadworthiness test, even though the vehicle had passed one in another EU country || 54.3 %

4 || Differences in registration requirements between countries || 44.7 %

5 || Required to supply technical information you did not have || 26.7 %

6 || Other || 25.4 %

7 || Required to submit an EU type-approval certificate || 20.7 %

8 || The vehicle was not EU type-approved (new type approval requested) || 18.2 %

9 || A valid EU type-approval certificate was not recognised by reg. authorities in the receiving country || 17.3 %

10 || The authorities did not recognise some of the technical documentation submitted || 15.2 %

11 || Unable to temporarily transfer a vehicle from one EU country to another || 12.4 %

12 || The authorities refused requests to have the vehicle registered there || 8.8 %

· The modalities of the re-registration process constitute not only a general problem for citizens and enterprises, but equally for national registration authorities. In the public consultation, 95% of national registration authorities reported procedural problems with cross-border re-registration procedures.

2.3. The objectives of motor vehicle registration - Underlying causes of the problem

The principle of national registration of motor vehicles is very old and was consolidated by the Convention on Road Traffic, signed in Vienna on 8 November 1968[14]. The main objective of national motor vehicle registration is the administrative authorisation for the entry into service in road traffic of a motor vehicle. This procedure is used for three purposes:

– Vehicle identification in traffic. The motor vehicles registration number allows identifying the owner or user of the registration number, for law enforcement and road safety purposes.

– The registration data are used for the taxation of motor vehicles[15]. There exists a close link between the obligation to register a motor vehicle and the payment of motor vehicle taxes.

– The registration data are also used for the organisation of the roadworthiness tests.

Consequently, the main causes of the problem are the concerns of national administrations to obtain the national registration of motor vehicles in order to ensure road safety, to prosecute traffic offences and to levy national registration and/or circulation taxes.

In addition, the problem will also be influenced by two interrelated gaps:

– An information gap: Citizens and businesses often do not sufficiently know or understand their rights and do not know where to look for information or help on the registration of a motor vehicle previously registered in another Member State. Likewise, registration authorities fail to sufficiently understand the rules and how to apply them;

– An implementation gap: In several areas, a gap can be noted between the application of the principles set out in the jurisprudence of the Court of Justice and the way it is implemented and applied in practice. For motor vehicle registration issues, there is still a lack of co-operation amongst relevant administrations operating in a cross-border context and to difficulties in resolving problems and obtaining redress where things go wrong.

2.4. Action taken by the Commission (baseline scenario)

Besides starting infringement procedures, the Commission published interpretative communications summarising EU law on the subject[16]. However, EU law and the jurisprudence of the Court of Justice on the subject keep evolving so that most interpretative communications on car registration are quite quickly outdated, including the one published in 2007. Moreover, an interpretative Communication is non-binding, and so far has not acted as effective guidance or a constraint on Member States.

Furthermore, although the Commission has already issued these different interpretative communications, it cannot be claimed that they have considerably reduced the number of problems. National registration authorities are aware – or should be aware – of the existence of the latest interpretative communication but usually apply national law in the case of conflict between national rules and the interpretative communication.

There are no indications that citizens and enterprises would be aware of the existence of the communication, and it seems unrealistic to expect that the communication – which outlines the main elements of EU law and the jurisprudence of the Court of Justice – would be very helpful for them in case of a conflict.

2.5. The size of the problem: who is affected, in what ways and to what extent?

There are around 300 million registered motor vehicles[17] in the EU (which consist mainly of M1 passenger vehicles and N1 light duty motor vehicles)[18]. Around 13 million new vehicles were registered in 2010. The number of car-title transfers is about three times as high as first registrations, with an average number of 40 million vehicles that are transferred to a new holder[19]. Around 8% of these (3.5 million) correspond to vehicles transferred between Member States[20]. De- and re-registration are unevenly distributed across Member States. The main “net exporter” of cars to be re-registered in another Member State is by far Germany (1,697,000: almost 50%). It is followed by Italy (423,000: 12%), Netherlands (309,000: 9%) and France (271,585: 8%). Concerning “net importers”, the highest number by far of re-registration of cars coming from another Member State takes place in Poland, (1,123,583: 30% of all re-registrations). It is followed by Greece (404,000: 11%), Lithuania (253,000: 6.5%), Romania (225,000: 6.5%) and the Czech Republic (207,000: 6%).

Citizens are in the first to be affected by re-registration problems. As EU integration proceeds, more people may wish to move from one country to another; or to have holiday homes in other Member States, leaving their cars there. More than 3 million people arrived for a permanent stay in Member States in 2007, with more than 2 million arriving in Spain, Germany and the United Kingdom combined[21].

Persons living in one Member State and using a motor vehicle registered by their employer in another Member State are also affected by the problem. In total, about 780,000 people in the EU (including EEA/EFTA) were cross-border commuters in the year 2006/2007 (including commuters using other means of transport)[22].

Citizens are also the main group of customers for the intra–EU second-hand market of motor vehicles. While the new-car market is increasingly being shaped by commercial customers, more and more private customers are tapping into the used-car market. Overall, used cars are newer and have better technology today than they did in the 1980s. In terms of quality, “young used cars,” which once belonged to car-rental agencies or served as company cars or demonstration vehicles, are very difficult to distinguish from new cars. But they can be purchased at just a fraction of the original price[23]. The assumption in this impact assessment is that second-hand traders, which are mostly SMEs, are directly affected by the problems identified in this document. Although one can assume that these traders will not register the motor vehicles purchased in another Member State and that the registration will be done by the customer, a professional second-hand trader will be in a position to provide its (potential) clients with all the paperwork, including roadworthiness certificates and inspection results. Moreover, these firms face the problem of transferring individual motor vehicles since temporary registration tend to be fairly restrictive and so-called ‘professional registrations’ for motor vehicles are often not recognised in other Member States. However, a fairly recent phenomenon on the second-hand market of motor vehicles is the so-called ‘car supermarkets’ which undertake practically no sales of new cars but mainly of pre-registered cars. Pre-registered cars are often “like new” cars except that, through the mechanism of pre-registration, the dealer or vehicle manufacturer can sell at a lower price without having to lower the price of all its inventory. Sales in this form do not enter the statistics as sales of new cars and it is therefore difficult to assess their magnitude. It is common that car supermarkets selling new cars source these cars from abroad. This often implies some variation in specifications. For more flexible buyers, car supermarkets can be a good way to get a new car quickly and cheaply. Car supermarkets engaged in selling imported new cars have so far benefited from large price differences between Member States and are thus an established part of the distribution landscape in many countries, including Belgium and the Netherlands, Italy and the UK. Future trends may be favourable to this new retail format. According to a survey by UK trade magazine Auto Trader, one in five UK owners have bought from a car supermarket, and one in three would consider buying from one in the future[24].

In theory, leasing companies could face registration problems, at least if they are the holder of the registration certificate and the vehicle is used by a person established in another Member State. Leasing firms retain the ownership of the leased motor vehicles throughout the life of the contract whereby they convey to the lessee, in return for a payment or series of payments, the right to use the motor vehicle for an agreed period of time[25]. Leasing firms usually also offer long term automotive rental contracts. This is a specific kind of leasing, whereby businesses outsource their vehicle fleet needs to a leasing company which provides the necessary passenger cars, vans or trucks to the client, along with any required related services, including maintenance, insurance, fuel management and/or tyre replacements. Automotive assets, i.e. passenger cars and commercial vehicles, accounted for about 55% (€124.1 billion) of total new leasing contracts agreed in 2010, remaining the largest individual asset segment of the European leasing market. It is estimated that European leasing companies financed some 5.8 million passenger cars in 2010[26]. There are indications that employers increasingly rely on leasing arrangements rather than ownership when providing cars to their employees. In practice, however, many leasing companies seem to prefer that the client appears, in the national motor vehicle register and on the registration certificate, as the holder of the vehicle while the leasing company appears as the legal owner. By not being the formal holder of the vehicle, a leasing company can avoid any liability for the settlement of traffic offences or for the payment of road taxes.

Car-rental companies are equally affected by the problem but in a very different manner. These companies rent out motor vehicles to private or professional clients for a relatively short period of time in order to meet their respective transport needs. Besides the traditional car-rental services (as a means of transport to complete a train or plane journey or as a replacement vehicle), truck rental is a growing sector. The EU fleet for short-term rental is estimated at 1.4 million vehicles, split into about 1 million cars and 400,000 light commercial vehicles. Car-rental fleets are usually very new, in particular for large cross-border companies, as vehicles remain in the fleet for about 6-9 months, and are subsequently bought back by manufacturers.

Registration authorities are very much affected by the problem. During the public consultation, public authorities highlighted that the main problems for them relate to differences between Member States in registration procedures and to the exchange of information required for re-registering motor vehicles. In addition, not all Member States de-register motor vehicles automatically after receiving notification, and this leads to even longer and more complicated re-registration procedures for all concerned. Furthermore, the re-registration of a motor vehicle previously registered in another Member State is sometimes used for legalising stolen vehicles or vehicle documents. Stolen vehicles are often sold with their identity changed, for example through ‘cloning’ (i.e. a practice whereby a vehicle is stolen and then its genuine identity markings removed and changed to reflect the identity of a legitimate vehicle that is currently in use on the road, so that the stolen vehicle assumes the identity of the legitimate vehicle and two vehicles are now being used with the same vehicle registration number) or ‘ringing’ (i.e. the practice where a stolen vehicle’s identity is swapped with that of a salvaged vehicle). This can only be prevented by a close cooperation between registration authorities[27].

2.5.1. Summary

Who is affected? || Affected by the problem in which Member State should the vehicle be registered || Affected by the modalities of the registration

Citizens purchasing a second-hand motor vehicle in another Member State || No || Yes

Citizens moving permanently to another Member State with their vehicle || No || Yes

Citizens living part of the year in another Member State || Yes || Yes

Citizens working across borders with a company car || Yes || Yes

Intra–EU second-hand market of motor vehicles || No || Yes

Leasing and car-rental enterprises || Yes || Yes

National registration authorities || Yes || No

2.5.2. Figures about the size of the problem

Precise statistics about the exact number of difficulties encountered during the re-registration process do not yet exist. The current statistics only relate to the number registrations that were granted and do not provide any information on the length of the procedure, the number of persons that have given up during the procedure, the number of persons who are the subject of conflicting registration rules or the number of persons that avoided the re-registration by keeping their original registration number, for example to avoid or evade taxes or the payment of penalties for local traffic violations. Most of the difficulties encountered by persons who wish and fail to re-register their vehicle in another Member States are not or incidentally reported to national authorities, consumer organisations or the Commission. Difficulties faced by persons who still have a legally valid vehicle registration in another Member State but who are obliged to register their vehicle in the Member State where they work or live, are equally not reported.

Nevertheless, in the period 2000-2011, the Commission handled 114 official complaints about car registration problems while the Court of Justice delivered 17 judgments and orders about car registration (see Annex 2). The SOLVIT annual report for 2010 indicates that cases concerning driving licences and vehicle registrations cumulatively account for 6% of the overall case load, with an increase of 5% compared to 2009[28]. An analysis of questions and problems handled by Your Europe Advice (YEA, former Citizens Signpost Service) and SOLVIT in 2009 shows the following results:

Database || Category level 1 || Category level 2 || Nbr of cases in database

SOLVIT || Motor vehicle registration || || 128

YEA || Motor-vehicles || Import type-approval and registration || 714

Several National Registration Authorities have also acknowledged in the public consultation that they receive a substantial share of complaints on re-registration from national SOLVIT centres. With respect to vehicle registration, a substantial share of cases concerned the importation into the Member State of motor vehicles purchased in another Member State. Another large share involved enterprises that want to use their vehicles in a Member State different from that of first registration.

2.5.3. Estimation of the costs of the current system (baseline scenario)

The duration of the process of de-registration is estimated to take an average of 1 week. For re-registration in another Member State, the process lasts on average 4 weeks. The total duration of the process is around 5 weeks. This has been estimated on the basis of data received in the public consultation and from interviews with Member States. For calculation purposes, the basic assumption is that 3.5 million vehicles are transferred to another Member State per year.

2.5.3.1. Administrative costs

The unit cost of de-registration and re-registration procedures is estimated at €400 for citizens and for businesses and €29 for public authorities (this reflects the effective time devoted to this procedure as well as the fees paid). The total current annual administrative costs are estimated (on the basis of the Standard Costs model) at around EUR 1400 million for citizens and for businesses and EUR 100 million for public authorities, which totals around EUR 1500 million euro.

Estimated annual costs || EUR million

Citizens and companies || || 1,400

Public authorities || || 100

Total administrative costs || || 1,500

2.5.3.2. Other impacts: Profit loss

Other economic impacts for companies derive from not being able to use the car while the de-registration/re-registration procedure is on going. This loss of profits is estimated at around 336 million.

|| Estimated annual costs (EUR million)

Profit loss || 336

2.5.3.3. Additional costs for car rental companies

Additionally, there are specific impacts for car rental companies resulting from the nature of their business. One impact is the high costs of one-way rental associated to the costs of repatriation of the car. In most cases, companies decide not to re register the car in the country of destination because of excessive costs. Either they rent it to a client with the same nationality of the number plate of the vehicle or they drive it back. This cost is passed on to the final consumer through higher prices. The overall cost of this amounts to EUR 418 million annually. There is also a loss of profits derived from lower demand due to the very high price of this service. This is estimated at EUR 202 million. Finally, companies face the constraint of not being able to meet peak seasonal demand due to the impossibility of easily moving fleet from one Member State to another. As a result, they suffer a loss of profits of around EUR 16 million annually.

|| Estimated annual costs (EUR million)

One-way rentals costs || 418

Loss of demand || 202

Peak seasonal demand loss || 16

Additional costs for car rental companies || 636

The current procedures generate significant administrative and other costs for citizens, businesses and public authorities that amount to EUR 2472 million annually.

2.5.3.4. Other costs

Other possible costs for private citizens (having to resort to other transport solutions or reduce their mobility) and for businesses (such as cost of having a larger fleet than otherwise needed in a given country or the depreciation of the vehicle) have not been quantitatively estimated. The number of vehicles is also a conservative estimation. Therefore, real costs could be higher.

2.6. Foreseen evolution of the problem

· The percentage of citizens working in a different Member State than their Member State of origin has shown an increasing trend in the last few years amounting to around 6 million in 2010, which represents around 3% of total workers in the EU. The number of cross-border workers has increased 30% since 2005, reaching around 1 million in 2010. One can expect this trend to continue in coming years.

· Cross-border exchange of information on road safety related traffic offences will improve profoundly. Directive 2011/82/EU facilitating the cross-border exchange of information on road safety related traffic offences[29] will have to be transposed by Member States (except Denmark) by 7 November 2013[30]. The objective of the Directive is to improve road safety by establishing a system of information exchange between the State of the offence and the State of registration on the most serious road safety infringements. It serves to identify the vehicle owner who has committed an offence in a Member State other than the one where his vehicle is registered. The Member State of the offence would then be in a position to prosecute and sanction him. The offences covered by the Directive include speeding, non-use of a seat-belt, failing to stop at a red traffic light and drink-driving. The Directive also sets out the exchange procedures (data, responsible authorities and network) and the establishment of an EU network for this exchange of information.

· Obtaining information about the payment of road and circulation taxes will become much easier. The new Council Directive 2011/16/EU on administrative cooperation in the field of taxation[31] lays down the rules and procedures under which the Member States must cooperate with each other to exchange information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Member States concerning, inter alia, road and circulation taxes. The Directive also contains provisions for the electronic exchange of information and will be applied from 1 January 2013 onwards. In addition, Council Directive 2010/24/EU concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures[32] lays down the rules under which the Member States must provide assistance for the recovery in a Member State of any claims which arise in another Member State with respect to, inter alia, road and circulation taxes. This Directive is applied from 1 January 2012.

2.7. EU right to act

The cross-border aspects of car registration continue causing problems within the internal market. For example, there were 17 judgements and orders of the Court of Justice on the obstacles, caused by car registration related matters, to the free movement of goods, services and persons[33].

Current problems and differences in administrative rules at national level as regards the re-registration of motor vehicles previously registered in another Member State impede the free movement of these vehicles within the EU. The EU has therefore the right to act on the basis of Article 114 TFEU, in order to ensure the proper functioning of the single market for second-hand motor vehicles purchased in another member state, for citizens transferring a motor vehicle to another Member State of residence, for citizens using a motor vehicle registered in the Member State of employment, as well as for car-rental firms (and to a lesser extent leasing firms) which, due to registration requirements for themselves or their client, encounter barriers for the cross-border use of these vehicles.

In order to comply with the subsidiarity principle, the initiative should however not consider options concerning the re-registrations within the same Member State, or the transfer of a motor vehicle within the same Member State. The proportionality of the remaining policy options will be subsequently assessed in this report.

During the public consultation, a signification majority in each category of stakeholders considered that action should be taken at EU level to improve the current situation. All public authorities that contributed to the consultation are in favour of action being taken at EU level.

3. Objectives

3.1. General policy objectives

The general objective of this initiative is to improve the functioning of the single market through the elimination of administrative barriers related to the re-registration procedure of motor vehicles, which currently hinder the free movement of goods.

3.2. Specific policy objectives

The specific objectives of this initiative are:

· To harmonise, streamline, and simplify the procedures for re-registration of motor vehicles previously registered in another Member State, for citizens, employees, employers, car rental and leasing companies, and registration authorities;

· To consequently reduce the administrative burdens of all actors involved without hindering road safety or the prevention of crimes and fraud;

3.3. Operational policy objectives

The operational objectives to be accomplished by this initiative are the following:

– To determine in which Member State a motor vehicle transferred between Member States should be registered;

– To reduce the time of de- and re-registration procedures;

– To reduce the administrative burden on citizens and undertakings by limiting the number of documents necessary to carry out the re-registration procedure and by facilitating data exchange between national registration authorities.

4. Policy options

4.1. Assumptions

The policy options were developed on the basis of the following assumptions:

· The first registration of a new motor vehicle in the EU usually takes place in the Member State of residence/establishment of the applicant (i.e. the future holder of the registration certificate) although new motor vehicles are sometimes registered by a car dealer in one Member State and subsequently purchased by a customer residing in another Member State.

· Member States remain free to exercise their power of taxation with respect to motor vehicles on the basis of the territory on which the vehicle is actually used, or the residence of the driver. For example, circulation taxes are levied by the Member State in which the motor vehicle is registered or the Member State where the vehicle is essentially used.

· None of the options concern the re-registrations within the same Member State, or the transfer of a motor vehicle within the same Member State.

4.2. Description of policy options

One policy option was discarded at an early stage, as set out in Annex 6 of this impact assessment. The policy options to be assessed would be the following:

· Baseline option: infringement proceedings and interpretative communications published by the Commission.

· Option 1: Single registration for the entire life-cycle of the motor vehicle (“Single Registration”): The motor vehicle is registered once in the EU for its entire life-cycle. Motor vehicles keep their original registration until they reach the end-of-life status. When the vehicle is transferred to a new holder, the original registration is maintained.

· Option 2: the holder keeps his/her registration throughout the EU but a transfer of the vehicle to a new holder requires a new registration: Every holder (i.e. the holder of the registration certificate) keeps his/her own registration until the vehicle is transferred to another holder. In other words, motor vehicles should not be re-registered when the holder changes his/her residence to another Member State. In that case, however, he/she should inform the authorities of their new Member State which in turn should inform their counterparts in the Member State of registration. A transfer of the vehicle to another holder, however, would require re-registration.

· Option 3: registration in the Member State of the holder of the vehicle and simplified re-registration. When the holder moves his/her residence to another Member State or when the vehicle is transferred to another holder in another Member State, the motor vehicle would have to be re-registered but a simplified registration procedure would apply. This simplified procedure would limit the paperwork and the number of controls, through a detailed list of documents which may or may not be requested, and an explicit prohibition to request supplementary documents.

· Option 4: registration in the Member State where the motor vehicle is primarily used and simplified re-registration. The motor vehicle should be registered in the Member State of primary use of the motor vehicle, even when the holder of the registration certificate resides permanently or is established in another Member State. Thus, the motor vehicle must be registered in the Member State where the motor vehicle is primarily used. The registration procedure, however, would be simplified as under option 3.

· Option 5: optimising the electronic exchange of information among national registration authorities. The technical information about the motor vehicle and the latest registration details in the Member State where the motor vehicle was registered would be electronically gathered by the registration authorities in the Member State of destination, through the EUCARIS system[34].

PROBLEMS || CAUSES || OBJECTIVES || OPTIONS

It is not clear where and when a motor vehicle registered in a Member State has to be registered in another Member State || - Each Member State has its own registration system with different requirements: not recognition of registration documents delivered or request of further information and/or undergo technical inspections - There is the obligation to register the vehicle permanently used in the territory of a MS despite the fact the vehicle is already registered in another MS. However it is not clear what it is understood by “permanently used” -Legal uncertainty: Cross-border workers and citizens in general do not know their right and how to proceed when facing conflicting registration requirements from two Member States (Imperfect information - market failure). || Improve the functioning of the single market a) remove the legal uncertainty by clarifying registration procedure b) clarify the rights and obligations of actors involved in the registration procedure || Option 1: single registration in the Member State of first registration Option 2: registration in the Member State of residence/ establishment at the moment of registration. No re-registration when change of residence to another Member State. Option 3: registration in the Member State of the holder of the vehicle and simplified re-registration Option 4: registration in the country of use and simplified re-registration

Re-registration procedures are very burdensome and lengthy || -There is hardly any exchange of information between registration authorities so that the Member State of destination has no information on the motor vehicle previously registered in another Member State. Registration authorities can only rely on the information present on their national databases (Imperfect information - market failure). - Procedural problems with cross-border re-registration procedures: citizens and businesses often do not sufficiently know or understand their rights and do not know where to look for information or help on the registration of a motor vehicle previously registered in another Member State. Likewise, registration authorities fail to sufficiently understand the rules for cross-border cases and how to apply them (Imperfect information- market failure). - Procedures and information requirements are defined too broadly in the existing European legislation. (Inadequately defined legal framework –regulatory failure) - lack of trust among national registration authorities - Burden of proof is put on the applicant who has to provide documents and information not always at his disposal || Improve the functioning of the single market: a) Harmonise, streamline and simplify the procedure of re-registration procedure b) reduce the lead-time of de- and re- registration procedures c) reduce the administrative burden and the burden of proof on the applicant d) facilitate data exchange between national registration authorities to eliminate the lack of trust e) mutual recognition of documents delivered by another European registration authorities. || Option 1: no re-registration Option 2: no re-registration if the holder moves his/her residence or its establishment to another Member State. Re-registration when the vehicle is transferred to a new holder. Option 3: simplified re-registration in the Member State to which the holder moved his/her residence or its establishment, or in the Member State of the new holder. Option 4: simplified re-registration in the Member State where the vehicle is primarily used. option 5: optimising the exchange of information among national registration authorities

5. Analysis of impacts

5.1. Base-line option

As described above. It serves as a reference against which the other options are assessed.

5.2. Option 1: Single registration for the entire life of the motor vehicle (“single registration)

5.2.1. Qualitative assessment

· This option would have vast negative impacts on road safety (roadworthiness tests), traffic enforcement and car crime, motor insurance, the second-hand market and the levying of registration and circulation taxes. Without complementary measures, this option would cut the link between the registration and the owner or user of the car thus making it impossible to identify them through the motor vehicle register. In fact, one of the current objectives of motor vehicle registration is to identify the holder of the motor vehicle. The negative consequences would be the following:

– This option would impede the effective organisation of roadworthiness testing since it would be difficult to find the owner or user of the car. In addition, since roadworthiness tests must be performed in the Member State of registration, the holders of the vehicles would have to drive back, at regular intervals, to the Member of registration for these tests.

– As it would be possible to freely transfer a motor vehicle within the European Union on a permanent basis without any further requirements, it would be very difficult to track the actual holder in case of traffic offences or car crime. It would also be difficult to know where traffic fines and/or notifications should be sent. Another difficulty would be the tracking of stolen vehicles as the requirement to re-register the vehicle or to inform the Member State of its existence on their territory would be removed.

– Specific problems would also arise in cases of repeated offences by a vehicle belonging to a non-resident. According to current European legislation such situations must be reported to the authorities in the EU country where the vehicle is registered. The country in which the offences have been committed may then request that their counterpart in the Member State where the vehicle is registered take action against the offender. Under this option this would no longer be possible or at least would be very difficult as the country where the car is first registered is not necessarily the country where the offender has his residence.

– Through a single registration, registration taxes would be paid, where applicable, only once in the whole life of the motor vehicle. This would suppose an important loss of revenues for Member States.

– There are comparable problems for circulation taxes which are usually paid in the Member State where the vehicle is registered or in the Member State where the vehicle is essentially used. As a consequence, it could be possible that the holder would be requested to pay circulation taxes in two Member States when the vehicle is transferred to another Member State. It would be difficult to prevent this double taxation.

– For the same reasons, it would complicate the effective functioning of the compulsory insurance against civil liability for motor vehicles (“motor insurance”). Under this option it would be very difficult for insurance companies to know in which Member State the motor vehicle would be primarily used. As a consequence insurance companies would not be able to apply the localisation of risk principle that is used to calculate their premiums. A not notified change of residence would not only affect the calculation of the premium but could also undermine the validity of the insurance contract. The insurer may not be authorised to provide its services in the Member State of destination or may not willing to do so (due, inter alia, to their difficulties to calculate the risk in another Member State).

– This option might have negative consequences for the functioning of Council Decision 2004/919/EC on tackling vehicle crime with cross-border implications. This Decision implicitly uses the registration process as a tool for tracking stolen vehicles so that this option would most probably require new actions to tackle vehicle crime with cross-border implications.

– Finally, since the first holder of the motor vehicle would be the only person known to the registration authorities, this option would discourage them from transferring the motor vehicle to another person since the latter would remain unknown to registration authorities and so that only the former would be contacted for any difficulties caused by the new holder (e.g. non-payment of taxes, road offences etc).

· Positive impacts:

– Citizens bringing their vehicle into the country of residence: Under this option, citizens would be able to move permanently with their vehicles from one Member State to another without any further administrative obligation as regards their vehicles. This would suppose the elimination of re-registration and de-registration procedures for motor vehicles already registered elsewhere in the EU. Thus, citizens would save significant time and money. As a consequence there would be no differences between driving the vehicle permanently in one Member State or in several. Furthermore, by linking the registration to the vehicle, citizens would further avoid the re-registration if the holder of the motor vehicle changes.

– Cross-border workers. Although Directive 83/182/EC and 2009/55/EC provide guidance for taxation purposes, it is currently not clear where the vehicle has to be registered when the cross-border worker has both personal and occupational interests in two Member States, or when a cross-border worker lives in one Member State but uses a company motor vehicle registered by the employer in another Member State. This option would immediately solve all uncertainty with regard to which Member State should register the motor vehicle and would have a positive effect on cross-border workers.

– Leasing companies: The positive aspect of this option is that it would facilitate cross-border leasing since the residence of the holder of the certificate would determine where the vehicle should be first registered. Yet, the negative aspects outlined above would have an important impact on leasing companies who are the formal holders of the registration certificate and that would be responsible for transferring the ownership of the vehicle.

– Car-rental companies: This option would allow car rental companies to meet seasonal demand as they would be able to move their fleet freely across the European Union thus removing an important barrier to cross-borders rentals. As a direct consequence of the removal of the current barriers to the free movement of services, one could expect more competition and lower prices for consumers. Car rental companies would have fewer costs as they would not have to repatriate the vehicles in trucks to the Member State of registration. From an environmental point of view, this option would contribute to the reduction of CO2 emissions generated by the current repatriation system. One could also envisage that this option would provide indirect positive impacts on European tourism. However, the negative impacts set out above would start taking effect when the car-rental companies decide to remove the vehicle from their stock (e.g. by selling it or by returning it to the manufacturer).

– Intra-EU trade of second-hand vehicles: this option would eliminate the administrative barrier of registration and would therefore have a positive impact on EU market of second-hand vehicles.

– Registration authorities. In theory, this option would remove the legal uncertainty and potential contradiction of different national registration requirements. There would be no difficulties for national registration authorities since they would only register new motor vehicles and they would remain registered until their scrapping. In practice, however, the negative impacts on road safety (roadworthiness tests), traffic enforcement, motor insurance and the levying of circulation taxes would heavily complicate the functioning of the registration authorities.

5.2.2. Reduction of administrative costs

The elimination of the need for de-registration and re-registration would remove the administrative costs for businesses and citizens as well as for public authorities that exist in the baseline scenario. This would deliver savings of EUR 1,500 million annually. The profit loss would also be eliminated, because the vehicle could now be used without interruption. This would allow savings of around EUR 336 million annually. The specific costs for car rental companies would also disappear with this policy option (EUR 636 million) as they would be able to transfer cars across borders without constraints.

OPTION 1: SINGLE REGISTRATION

|| Estimated annual savings compared to the baseline option (EUR million)

Citizens and businesses || 1400

Public authorities || 100

Total administrative costs ( A) || 1,500

Profit loss (B) || 336

Savings on one-way rentals costs || 418

Savings on loss of demand || 202

Peak seasonal demand || 16

Total additional savings car rental companies (C) || 636

TOTAL ( A+B+C) || 2,472

This option would allow savings (administrative costs) estimated at EUR 2,472 million annually.

5.3. Option 2: No re-registration in the Member State of destination if the holder remains the same person

5.3.1.1. Qualitative assessment

During the public consultation, 54.9 % of businesses, 69.7 % of citizens and 41.7 % of public authorities replied that the current situation could be improved by a new EU system that recognises vehicles already registered in another Member State. For 23.4% of businesses, 15.4% of citizens and 16.7% of public authorities this measure alone would not completely solve the current problems, and should be accompanied by additional measures.

· Positive impacts:

– In order to assess the impacts on citizens moving to another Member State, one should distinguish three sub-options:

(a) Sub-option 2a: Under this sub-option, citizens moving their residence to another Member State would be able to move with their vehicles without any further administrative obligation as regards their vehicles. This would suppose that re-registration and de-registration would only take place when there would be a new holder or on a voluntary basis. The abolition of all administrative formalities would have a very positive impact on this group of citizens if they could move residence.

(b) Sub-option 2b: citizens moving to another Member State could keep their original vehicle registration but would have to inform their own registration authorities about their new residence. The de-registration process is replaced by an information obligation which is still less burdensome and much lighter than a formal de- and re-registration procedure.

(c) Sub-option 2c: citizens moving to another Member State could keep their original vehicle registration but would have to inform the registration authorities of their new Member State about their new residence. This would also be less burdensome and much lighter than a formal registration procedure, although there might be a minor language barrier.

– Cross-border workers: this option would solve the problem of cross-border workers since it would determine in which Member State the motor vehicle must be registered so that the second Member State could not claim registration on its territory.

– Leasing companies: this option would also be favourable for them since it would determine in which Member State the motor vehicle must be registered.

– Car-rental companies: This option would allow car rental companies to meet seasonal demand as they would be able to move their fleet freely across the European Union. There would be no differences between national and cross-borders rentals. Furthermore and as a direct consequence of the removal of the current barriers to the free movement of services, one could expect more competition and lower prices for consumers since car-rental companies could stop repatriating their vehicles in trucks to the Member State of registration. This option would also contribute to a reduction of the CO2 emissions generated by the current repatriation system. One could also envisage that this option would have an indirect positive impact on European tourism.

– Registration authorities. Sub-option 2a (no formalities) would significantly reduce the workload that national authorities currently have as regards re-registration procedures for motor vehicles arriving from another Member State. Sub-options 2b (the holder should inform the Member State of registration) and 2c (the holder should inform the Member State to which he/she moves his/her residence) would slightly reduce the administrative burden for the Member State since the information transmitted by the citizens would to have to be handled.

· Negative impacts:

– Road safety (roadworthiness tests) and traffic enforcement. Since roadworthiness tests must be performed in the Member State of registration, the holders of the vehicles would have to drive back, at regular intervals, to the Member of registration for these tests. The impact on the effectiveness of traffic enforcement would be neutral in all situations, except in the case where people change their residence to another Member State:

(a) Sub-option 2a (no formalities): In cases like these, it would be very difficult, sometimes impossible, to find the residence details within another Member State, for invitations to roadworthiness tests and for the prosecution of road offences.

(b) Sub-option 2b (the holder should inform the Member State of registration): The objective of the information obligation is to ensure that it would be possible to find the address of the new residence within another Member State, for the sending of invitations to roadworthiness tests and for the prosecution of road offences.

(c) Sub-option 2c (the holder should inform the Member State to which he/she moves his/her residence): same impact as sub-option 2b.

– Car taxation. The right of Member States to levy registration tax and circulation tax is generally based on the registration of the car in the Member State where the owner is resident or where the vehicle is permanently used.

(a) Sub-option 2a (no formalities): If the holder of the registration certificate moves from one Member State to another, the levy of taxes related to vehicles will also in practice become difficult. Another aspect is that it would be very difficult to levy circulation taxes on these transferred cars. The consequences for taxation of transferring leasing companies and short term rental companies' cars are not foreseeable.

(b) Sub-options 2b (the holder should inform the Member State of registration) and 2c (the holder should inform the Member State to which he/she moves his/her residence): The exchange of information between authorities might mitigate the risk that the “taxable event” (i.e. the event or transaction that results in a tax consequence for the party who executes the event) for the levy of registration tax (and circulation tax) remains unknown for the receiving Member State. However, this depends on the efficiency of the administrative systems and collaboration of the owner of the vehicle.

– This option has a negative impact on motor insurance where people change their residence to another Member State. As there would be no need, under this option, to re-register the vehicle, it would be very difficult for insurance companies to apply the localisation of risk principle that is used to calculate their premiums.

(a) Sub-option 2a (no formalities): A not notified change of residence would not only affect the calculation of premiums but could also undermine the validity of the insurance contract. The insurer may not be authorised to provide its services in the Member State of destination or may not be willing to do so (due, inter alia, to their difficulties to calculate the risk in another Member State). As a consequence the insurance contract may be considered invalid by the insurer, and in case of accident, the victims' damages would be covered by the guarantee fund which is funded by the motor insurers providing their services in that particular Member State. Increased uninsured driving increases motor insurance premiums for law-abiding motorists.

(b) Sub-options 2b (the holder should inform the Member State of registration) and 2c (the holder should inform the Member State to which he/she moves his/her residence): Without any complementary measure, this option has a negative impact on motor insurance. The simple notification of change of residence without any further requirements (i.e. new registration plate) would not allow insurance companies to easily identify their vehicles, nor to calculate the insurance premiums as they can not apply the localisation of risk principle. The EU insurance system mainly relies on this so-called localisation of risk principle which is used by insurers to calculate their premiums. According to the current European legislation on motor insurance[35] the motor vehicle may - provided it is compliant with the national registration rules - be insured by an insurer established in the Member State of registration or by an insurer established in any other Member State. Under this option there is a risk that insurers may not be informed by the insured of the change of residence. However a change of residence would not only affect the calculation of the insurance premium, but also and more importantly, the coverage of insurance services. The insurer may not be authorised to provide its services in the Member State of destination or may not be willing to do so. A failure of notification of the change of residence would suppose that the insurance contract may be considered invalid by the insurer. Moreover, decoupling the Member State of registration and the Member State where the vehicle habitually circulates may be burdensome or even impossible to the functioning of the claims handling system which guarantees the protection of road traffic accident victims, which is one of the main objectives of the Motor Insurance Directive. The reason for this is that the bodies responsible for compensating those victims of accidents caused by uninsured or 'foreign' vehicles may no longer be able to determine which insurer or compensation body is responsible for covering the damages caused. This might cause financial damage to those bodies in Member States with much transit traffic for example.

· Neutral impact

– Market of second-hand motor vehicles. This option would not eliminate the current registration barriers that new holders often are confronted with when there is a change of holder. Under this option, vehicles would still be deregistered in the Member State of the previous holder and would have to go through the registration process of the Member State of the new holder. For the second-hand market, this option would be identical to the baseline option.

– Vehicle crime: This option would probably not have any consequences on the functioning of Council Decision 2004/919/EC on tackling vehicle crime with cross-border implications so that this option would not, as an immediate consequence, require new actions to tackle vehicle crime with cross-border implications.

5.3.1.2. Reduction of administrative costs

· Sub-option 2a (no formalities): The simplifications of the procedure eliminating the need for de-registration and re-registration would eliminate the administrative costs for businesses and citizens as well as for public authorities that exist in the baseline scenario. This would deliver savings of EUR 1,500 million annually. The loss of profits would also be eliminated, because the vehicle could in theory be used without interruption. This would allow savings of around EUR 336 million annually. The specific costs for car rental companies would also disappear with this policy option (EUR 636 million) as they would be able to move cars across borders without constraints.

· Sub-option 2b (the holder should inform the Member State of registration): the effective time necessary for the procedure would be significantly reduced compared to the baseline scenario, because the procedure is limited to an information mechanism of the Member State of origin[36]. This would significantly reduce the administrative costs resulting from the process. In this case the unit cost would be €12 for citizens and businesses and €6 for public authorities. The administrative costs for citizens and businesses would be reduced to around EUR 41 million and EUR 22 million for public authorities. Therefore, savings would be EUR 1,359 million for citizens and businesses and EUR 78 million for public authorities, totalling around EUR 1,437 million annually. Loss of profits would also be eliminated (savings around EUR 336 million) because the vehicle could in theory be used without interruption. Car rental companies would not incur costs presented in the baseline scenario (only in a minimal cost of informing the authorities). The costs derived from the 1-way rental expenditure would be almost completely eliminated allowing saving of EUR 408 million annually. An increase in demand could be expected that would generate an additional annual profit of EUR 188 million. They would also be able to move their fleet freely, which would imply a profit of around EUR 15 million annually.

· Sub-option 2c (the holder should inform the Member State to which he/she moves his/her residence): the time necessary for the procedure would be significantly reduced because the procedure is limited to an information mechanism of the Member State of destination. This option would significantly reduce the administrative costs resulting from the process for the different actors. It is assumed that the time (and derived costs) used to inform the authorities would be a bit longer than in the previous option, because the operator will be dealing with an administration that is different from its own[37]. The time spent by public authorities on the procedure would also be reduced compared to the baseline scenario. Administrative costs for citizens and for businesses would be EUR 40 million and for public authorities EUR 44 million. Therefore the savings in terms of reduction of administrative costs for citizens and for businesses would be EUR 1,360 million and for public authorities EUR 56 million, which totals EUR 1,416 million annually. The loss of profits would also be eliminated because the vehicle could in theory be used without interruption (savings around EUR 336 million). Car rental companies would not incur costs presented in the baseline scenario (only in a minimal cost of informing the authorities). The costs derived from the 1-way rental expenditure would be strongly reduced allowing savings of EUR 407 million annually. An increase in demand could be expected that would generate an additional annual profit of EUR 169 million. They would also be able to move their fleet freely, which would imply a profit of around EUR 15 million annually.

OPTION 2: THE HOLDER KEEPS HIS/HER REGISTRATION BUT THE TRANSFER TO A NEW HOLDER REQUIRES A NEW REGISTRATION

|| Estimated annual savings compared to the baseline option (EUR million)

|| Sub-option 2a || Sub-option 2b || Sub-option 2c

Citizens and businesses || 1,400 || 1,359 || 1,360

Public authorities || 100 || 78 || 56

Total administrative costs (A) || 1,500 || 1,437 || 1,416

Profit loss (B) || 336 || 336 || 336

Savings on one-way rentals costs || 418 || 409 || 407

Savings on loss of demand || 202 || 188 || 169

Peak seasonal demand || 16 || 15 || 15

Total additional savings car rental companies (C) || 636 || 612 || 591

TOTAL ( A+B+C) || 2,472 || 2,385 || 2,343

The estimated savings vary between from EUR 2,472 million annually (sub-option 2a) and EUR 2,385 million annually (sub-option 2b) to EUR 2,343 million annually.

5.4. Option 3: registration in the Member State of the holder of the vehicle and simplified re-registration

5.4.1.1. Qualitative assessment

This option is as a consequence of the public consultation, during which 54.9 % of businesses, 69.7 % of citizens and 41.7 % of public authorities replied that the current situation could be improved by a new EU system that recognises vehicles already registered in another Member State (option 2). However, for 23.4% of businesses, 15.4% of citizens and 16.7% of public authorities this measure alone would not completely solve the current problems, and should be accompanied by additional measures. Therefore, option 3 was elaborated in order to organise mutual recognition in the context of the re-registration procedure.

· Positive impacts

– Citizens bringing their vehicle into the country of residence: Under this option citizens would still have to re-register their motor vehicles when transferring them on a permanent basis to another Member State. However the re-registration procedure would be significantly simplified at European level. This would bring about an important reduction of time wasting for citizens. The legal uncertainty about where the motor vehicle has to be registered would also be eliminated. Furthermore clarification will be ensured of when it is required to register a vehicle in another Member State and of all the detailed documents that national registration authorities may request for that purpose. By setting up a European level re-registration procedure, clarifying the role of each actor, and harmonising the documents that could be requested during such a procedure, most of the problems that citizens are currently facing when re-registering their motor vehicles would be solved. Thus the burden of proof on the applicant would also be automatically removed. This option would have a positive impact on citizens as it would decrease the administrative burden.

– Cross-border workers: This option would solve the current problem of cross-border workers as it would entirely eliminate the uncertainty of which Member State the motor vehicle has to be registered in.

– Market of second-hand motor vehicles: this option would imply a reduction of time and costs for second-hand motor vehicle traders. The simplification of the registration procedure would suppose that less time would be needed to complete it. As a consequence important savings as regards the baseline scenario would be expected.

– Leasing companies and on car-rental companies: this option would imply a reduction of time and costs for European companies. By simplifying the procedure we can assume that less time would be needed to complete it. The time that the fleet would be non-operational would then be considerably reduced. Therefore important savings as regard the baseline scenario could be expected. If the re-registration procedure is considerably shortened that would solve the current problem of car-rental. Thus car rental companies would be able to temporarily move their fleet across Europe to reply to peak seasonal demand.

– Registration authorities: This option would have a positive impact on registration authorities. During the public consultation, registration authorities highlighted the problems caused by the many differences between the registration procedures of the Member States. Under this option these differences and discrepancies would be automatically removed. The detailed list of registration documents would be harmonised at European level. This would automatically imply a mutual recognition of documents and an improvement of mutual trust among registration authorities. In administrative terms, we could assume that there would be an increase of efficiency and an important simplification of the re-registration procedure.

– Vehicle crime: This option would have a very positive effect on the functioning of Council Decision 2004/919/EC on tackling vehicle crime with cross-border implications since it would imply direct contact between registration authorities so that it would become extremely difficult to register a motor vehicle that was stolen in another Member State.

· Negative impacts could not be identified.

· Neutral impacts:

– Taxation: this option does not seem to have an impact on tax revenue from the point of view of the loss of tax revenue or from that of the practical applications of tax rules of Member States. However, as de-registration would no longer be required, there is a risk that the application of the refund mechanism for registration taxes would be rendered more difficult.

– Traffic enforcement: This option would not have any impacts on traffic enforcement.

– Road safety and motor vehicle insurance: This option would not have an impact on road safety or on motor vehicle insurance.

5.4.1.2. Reduction of administrative costs

The administrative costs would be reduced because this option would eliminate the need for de-registration and would reduce the time and costs needed for re-registration. In the short term public authorities would still have to do the de-registration procedures[38].

The cost per vehicle would be €145 for citizens and businesses and €13 for public authorities. The administrative costs for citizens would be EUR 510 million for citizens and businesses and EUR 47 million for public authorities, which makes a total of EUR 557 million annually. Therefore, this option would result in savings of EUR 943 million annually. One can assume that the whole duration of the procedure would be shorter (up to 2 weeks instead of 5 weeks). Therefore, the time the car is unused will also be shorter. Profit loss would be EUR 112 million. This would imply savings of EUR 224 million annually. If the procedure is simple enough it might help car rental companies to solve the problems they face with peak demands. This would imply profits of EUR 4 million. The other costs from the baseline scenario would remain.

OPTION 3: REGISTRATION IN THE MEMBER STATE OF THE HOLDER AND SIMPLIFIED RE-REGISTRATION

|| Estimated annual savings compared to the baseline option (EUR million)

Citizens and Businesses || 890

Public authorities || 53

Total administrative costs (A) || 943

Profit loss (B) || 224

Savings on one-