WRITTEN QUESTION E-0341/01

by Karla Peijs (PPE-DE) and Bartho Pronk (PPE-DE) to the Commission

(13 February 2001)

Subject: Imposition of special tax on use of cars with a foreign number plate

Dutch nationals posted to a foreign country who are resident abroad for a relatively long period are hit by the Netherlands tax inspectorate. If they hire a car abroad in order to visit the Netherlands for the weekend and, at the end of the weekend, take it back to the foreign country concerned, they are required by the Netherlands tax authorities to pay in full the amount of the special tax in respect of the rental charge for the car.

1. Why can a person temporarily posted abroad not hire a car there that does not have a Netherlands number plate when he/she wishes to travel home?

2. This special tax on use (a non-harmonised tax) is levied in the Netherlands. Does the Commission consider it appropriate for the Netherlands to impose this tax in the case of people travelling back to the Netherlands using cars hired abroad?

3. Does the Commission consider it appropriate, in cases where the person in question is employed by the European Central Bank and consequently enjoys the immunity accorded by his/her status as an ECB official, that the Netherlands should impose the special tax? Does the Commission not regard this as contrary to the principles of the internal market?

4. Does this problem also exist in other Member States?

Answer given by Mr Bolkestein on behalf of the Commission

(3 May 2001)

The Commission would inform Honourable Members of the European Parliament that, on the question of temporary tax-exempt use of a vehicle in a Member State other than that where the vehicle is registered, the basic criterion laid down in Directive 83/182/EEC(1) is that of the normal residence of the user of the vehicle, a detailed definition of the term normal residence being given in Article 7 of the Directive and in relevant ECJ case law. A person's normal residence is the place where he has his personal ties, where his proprietary interests lie and where he spends most of the year.

The following distinction has to be made:

- If the person's normal residence is in Germany, in the city where the Central European Bank has its headquarters, and if he works there, he may use a wholly tax-exempt car with German plates in any other Member State, including the Member State of which he is a national (or which is his State of origin) for a maximum six months a year.

- On the other hand, if he is normally resident in the Member State of which he is a national and/or which is his State of origin (in which case he will be only temporarily resident in Germany), the Directive does not allow him to use, even temporarily, a wholly tax-exempt vehicle rented in another Member State in the Member State where he is normally resident. The Directive is based on the principle that as a rule, the tax exemption applies in Member States other than that of the user's normal residence. There are exceptions but the example quoted by the Honourable Member is not among them.

However, it should be noted that:

(a) Under Article 9 of the Directive Member States may apply more liberal arrangements. They may authorise prolonged temporary or exceptional use and have discretion regarding the conditions subject to which tax is charged. Member States often use this option to deal with situations such as the one described by the Honourable Members. It is probably under this provision that the Netherlands charges the periodic tax (Motorrijtuigenbelasting) on non-exempt vehicles not covered by the mandatory provisions of the Directive when such vehicles are used in the Netherlands.

(b) Under a new proposal for a Directive(3), amending the above Directive, the Commission provided for the possibility of tax-exempt use of a private vehicle registered in another Member State and rented from a car rental firm under a rental contract which commenced in that Member State by a resident of the Member State of temporary use, subject to a limit of eight days use. The proposal was forwarded to the Council in February 1998 and Parliament handed down a favourable opinion on 18 June that year but the proposal remains before the Council.

In similar cases in other Member States the Commission has taken the view that practices such as the one described in point (a) seem to strike a balance between the free movement of vehicles in the European internal market and the legitimate financial interests of Member States with regard to vehicle taxation. Here, the Commission departments have contacted the Netherlands authorities to clarify whether, in this particular case, the tax involved is the Motorrijtuigenbelasting or another tax, and check what it involves.

On the question of what, in practice, is the normal residence of the person to whom this question refers, for practical reasons this has to be decided by the national authorities in accordance with the provisions of Article 7 of the Directive and relevant ECJ case law.

As to the provisions applicable to officials and other servants of the European Communities, the Commission does not see how the Protocol on the privileges and immunities of the European Communities (particularly its Article 12) which also applies to the European Central Bank(2) could prevent taxation by a Member State other than that of the headquarters of the body concerned of the private use of an official's vehicle, particularly if the official maintains his normal residence in the Member State of his nationality or origin.

(1) Council Directive 83/182/EEC of 28 March 1983 on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another (OJ L 105, 23.4.1983, pp. 59-63).

(2) Under Article 23 which was added in Article 9(5) of the Treaty of Amsterdam.

(3) Council Directive 83/182/EEC of 28 March 1983 on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another (OJ L 105, 23.4.1983, pp. 59-63).