COMMISSION STAFF WORKING DOCUMENT Principles of taxation of motor vehicles according to EU law as interpreted by the Court of Justice Accompanying the document Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee Strengthening the Single Market by removing cross-border tax obstacles for passenger cars
Date: 2012-12-14
Institutions: European Commission
Subjects: VAT, free movement of goods, interpretation of the law, judgment of the Court (EU), motor car, single market, tax reform, vehicle registration

EUROPEAN 
COMMISSION 

Brussels, 14.12.2012  
SWD(2012) 429 final 

COMMISSION STAFF WORKING DOCUMENT 

Principles of taxation of motor vehicles 
according to EU law as interpreted by the Court of Justice 

Accompanying the document 

Communication from the Commission to the European Parliament, the Council and the 
European Economic and Social Committee 

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

{COM(2012) 756 final} 

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COMMISSION STAFF WORKING DOCUMENT 

Principles of taxation of motor vehicles 
according to EU law as interpreted by the Court of Justice 

Accompanying the document 

Communication from the Commission to the European Parliament, the Council and the 
European Economic and Social Committee 

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

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

3. 

3.1. 

3.2. 

Introduction .................................................................................................................. 5 

Vehicles and VAT........................................................................................................ 5 

VAT on new vehicles................................................................................................... 5 

VAT on second-hand vehicles ..................................................................................... 7 

Vehicles and Registration taxes ................................................................................... 7 

General principles ........................................................................................................ 7 

Registration taxes and Article 110 TFEU .................................................................... 8 

3.2.1.  Principles...................................................................................................................... 8 

3.2.2.  Three principles defined by the Court........................................................................ 10 

3.2.2.1.  Fairness of the tax system .......................................................................................... 10 

3.2.2.2.  Establishment of means of redress............................................................................. 11 

3.2.2.3.  Principle of transparency............................................................................................ 11 

3.3. 

Registration taxes and the permanent and temporary transfer of a motor-driven 
vehicle in another Member State................................................................................ 11 

3.3.1.  Directive 83/182/EEC: temporary introduction of a motor-driven road vehicle ....... 12 

3.3.2.  Directive 2009/55/EC on permanent introduction of personal property of individuals

.................................................................................................................................... 13 

3.3.3.  Special cases............................................................................................................... 14 

3.4. 

3.5. 

3.6. 

Cross-border leasing of motor-driven vehicles .......................................................... 15 

Company car used by an employee or an administrator ............................................ 16 

Car registered in a Member State and borrowed by a resident of another Member 
State............................................................................................................................ 17 

3.7. 

Interaction of vehicle registration taxes with other taxes........................................... 17 

3.7.1.  Registration taxes and VAT ....................................................................................... 17 

3.7.2.  Registration taxes and charges having an equivalent effect to customs duties.......... 18 

4. 

5. 

Other issues ................................................................................................................ 18 

Conclusions ................................................................................................................ 19 

Annex I Overview of application by Member States of car registration and circulation taxes 20 

Annex II Conditions for the application of a refund for vehicles permanently moved to 
another Member State .............................................................................................................. 21 

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Annex III Member State allowing that vehicles registered in another Member State which 
arrived in their country as a result of a hire contract, are hired to a resident without the 
obligation to re-register and pay registration tax (Option under Article 9(1) of Directive 
83/182/EEC)............................................................................................................................. 23 

Annex IV Overview of passenger car taxation in Member States ........................................... 24 

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1. 

INTRODUCTION  

The present Staff Working Document aims at giving an overview of the main legal issues that 
arise in the field of vehicle taxation and the level of protection available to EU citizens and 
economic operators that can be derived from EU law and the case law of the Court of Justice 
of the EU (hereinafter "the Court")1. 

2. 

VEHICLES AND VAT  

Taxation  of  the  supply2  of  vehicles  is  subject  to  a  differentiated  VAT  regime  depending  on 
whether the vehicle is new or second-hand. 

2.1. 

VAT on new vehicles 

The supply of new vehicles within the same Member State is subject to VAT according to the 
standard  rules  (i.e.  the  supplier  charges  output  VAT  on  the  retail  price  of  the  vehicle).  In  a 
cross-border scenario according to Article 2(1)(b)(ii) of Directive 2006/1123 (hereinafter the 
"VAT  Directive")  the  sale  of  a  new  vehicle  is  treated  for  VAT  purposes  as  an  intra-
Community  acquisition  of  goods  and,  as  such,  taxable  in  the  Member  State  of  destination, 
regardless  of  whether  the  supplier  and/or  the  customer  is  a  taxable  person  or  a  non-taxable 
person (e.g. a private customer).  

However, for this rule to apply, it is necessary that:  

• 

• 

The goods at stake are "means of transport"; and 

The means of transport are considered "new". 

According to Article 2(2)(a) of the VAT Directive, "means of transport" are:  

(i) motorised land vehicles the capacity of which exceeds 48 cubic centimetres or the power 
of which exceeds 7,2 kilowatts; 

(ii) vessels exceeding 7,5 metres in length, with the exception of vessels used for navigation 
on the high seas and carrying passengers for reward, and of vessels used for the purposes of 
commercial,  industrial  or  fishing  activities,  or  for  rescue  or  assistance  at  sea,  or  for  inshore 
fishing; 

1 

2 

3 

The  principles  developed  by  the  jurisprudence  of  the  Court  and  illustrated  in  this  Staff  Working 
Document are in principle applicable to any type of motor vehicle including motorcycles, small vans, 
boats although almost all the judgments delivered by the Court have dealt with registration taxes levied 
on passenger cars. 
In a judgment of 16 February 2012, case C-118/11 Eon Aset Menidjmunt OOD, the Court has clarified 
that also the financial leasing of a vehicle may have to be treated as the supply of a good, rather than the 
supply  of  a  service,  if  certain  requirements  are  fulfilled,  namely  the  transfer  of  the  ownership  to  the 
lessee on expiry of the contract, the transfer of all rewards and risks incidental to the ownership of the 
vehicle to the lessee, and the equivalence of the value of the leasing payments with the market value of 
the vehicle. 
Directive 2006/112/EC on the common system of value added tax, OJ L 347 of 11.12.2006, p. 1. 

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(iii)  aircraft  the  take-off  weight  of  which  exceeds  1  550  kilograms,  with  the  exception  of 
aircraft used by airlines operating for reward chiefly on international routes. 

Pursuant to Article 2(2)(b) of the VAT Directive, means of transport are "new" where:  

(i) for motorised land  vehicles, the supply takes place within six  months of  the  date  of  first 
entry into service or the vehicle has travelled for no more than 6 000 kilometres; 

(ii)  for  vessels,  the  supply  takes  place  within  three  months  of  the  date  of  first  entry  into 
service or the vessel has sailed for no more than 100 hours; 

(iii)  for  aircraft,  the  supply  takes  place  within  three  months  of  the  date  of  first  entry  into 
service or the aircraft has flown for no more than 40 hours. 

Where  a  private  individual  buys  a  new  means  of  transport  in  one  Member  State  and  then 
transports it himself (or where it is transported by the vendor, or by a third party on behalf of 
the vendor or the acquirer) to another Member State, such private individual is performing an 
intra-Community  acquisition  of  that  means  of  transport  in  the  Member  State  of  arrival,  and 
VAT has to be paid in the Member State of the customer's residence. This specific regime is 
aimed  at  avoiding  that  private  customers  buy  new  means  of  transport  in  the  Member  State 
with  the  lowest  VAT  rate  and  transport  them  to  their  country  of  residence,  hence  distorting 
competition among Member States4.  

According  to  the  Court  of  Justice,  in  order  to  classify  a  transaction  as  an  intra-Community 
acquisition,  it  is  necessary  to  conduct  an  overall  assessment  of  all  the  relevant  objective 
evidence, such as the amount of time spent on transporting the good in question, the place of 
registration and usual use of the good, the place of residence of the purchaser and the presence 
or absence of links between the purchaser and the Member State of supply or another Member 
State. Account must also be taken, as far as possible, of the purchaser’s intentions at the time 
of  the  acquisition,  provided  that  they  are  supported  by  objective  evidence.  The  Court 
eventually  considers  that  the  essential  issue  is,  in  fact,  to  determine  the  Member  State  in 
which the final, permanent use of the means of transport will take place5. 

However, there is no double taxation because the supply will be exempt from output VAT in 
the country of origin, and in addition deduction of previously paid input VAT will apply in 
that country. If output VAT is wrongly charged in the country of the supplier, a refund of this 
VAT  will  apply  according  to  the  rules  in  force  in  that  country.  If  the  supplier  of  the  new 
means  of  transport  is  a  non-taxable  person,  he  may  have  to  submit  a  special  declaration  in 
order  to  obtain  a  refund  of  the  input  VAT  included  in  the  original  acquisition  price  of  the 
vehicle. If the acquirer is a non-taxable person, he will have to declare the acquisition as an 
intra-Community acquisition in the Member State to which the vehicle is transported and pay 
the output VAT there, but he will not be entitled to deduct that payment as input VAT.  

Often the services of the European Commission receive complaints addressing the issue of the 
refund of output VAT in the country of the seller. It is necessary to remind that normally the 
seller of the vehicle, and not the acquirer, will be the one who has to ask for the refund of any 
output  VAT  (wrongly)  charged  on  the  supply  in  the  Member  State  of  departure  from  the 
competent authorities there. The acquirer will normally have to rely on his contractual relation 

4 

5 

For a purchase of a new sailing boat and transport by the owner to his country of residence, see case C-
84/09 X v Skatteverket.  
See case X v Skatteverket, paragraphs 44, 45, 47 and 50. 

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with the seller in order to obtain from him the repayment of output VAT that was included in 
the acquisition price, but is ultimately not due to the exemption of the sale in the country of 
origin. In addition, some further aspects are worth mentioning: 

• 

• 

If the vehicle is sold by a dealer, often he might require his customer to pay also the 
output VAT on top of the net purchase price as a "guarantee" as long as he has not 
yet received the evidence that the vehicle has actually exited the country. Indeed, the 
seller  needs  that  type  of  evidence  for  being  entitled  to  an  exemption  of  his  supply 
from output VAT and to a deduction of his own original input VAT. 

If the vehicle is sold by a non-taxable person, often the price is fixed on the basis of 
the market price and without bearing in mind that output VAT will be imposed again 
on  the  acquirer  in  the  Member  State  of  destination  (while  the  seller  will  even  be 
entitled  to  obtain  a  refund  of  his  own  original  input  VAT).  If  this  aspect  is  not 
tackled  in  the  sales  contract  between  the  parties,  there  are  no  possible  means  to 
oblige the seller to pay to the acquirer the VAT which he might have been refunded. 

In both cases the issues are of a contractual nature and fall in the realm of the national courts. 

2.2. 

VAT on second-hand vehicles 

Within the same Member State, as a rule every supply performed by a taxable person acting 
as such is subject to VAT, therefore if the supply of the second-hand vehicle (i.e., a means of 
transport  not  considered  "new"  in  the  sense  of  paragraph  2.1)  is  performed  by  a  taxable 
person that person will charge VAT on the sale of a second-hand vehicle irrespective of the 
capacity  of  his  customer.  If  the  supplier  is  however  a  non-taxable  person  (e.g.,  a  private 
individual) the supply of the second-hand vehicle will not be subject to VAT. 

Between two Member States, if the second-hand vehicle is supplied, and in connection with 
that supply it is transported from one Member State to another, the supply will have a cross-
border character and will give rise to taxation in the Member State of destination if both the 
supplier and the customer are taxable persons.  

If the supplier is a taxable person for VAT purposes and the customer is a private individual, 
the supply will not be considered an intra-Community transaction and will be subject to VAT 
only  in  the  country  of  the  supplier.  Therefore,  in  the  situation  e.g.  of  a  private  individual 
residing  in  France  who  decides  to  purchase  a  second-hand  vehicle  from  a  German  supplier 
who  is  a  taxable  person,  the  supply  will  be  charged  with  VAT  at  the  rate  applicable  in 
Germany,  regardless  of  whether  the  vehicle  is  transported  to  France  by  the  supplier  or  the 
customer. 

If  the  supplier  and  the  customer  are  non-taxable  persons  (in  particular,  private  individuals), 
there is no VAT67.  

6 

Articles 311-325 of the VAT Directive foresee a special scheme for second hand goods supplied by a 
taxable dealer,  the  so-called "margin  scheme".  Several  conditions  must  be fulfilled on  the side of  the 
taxable dealer for being subject to this special scheme (which, in any case, is an optional scheme for 
him). This special scheme applies to the supplies of second-hand goods performed by a taxable dealer 
where  the  goods  have  been  supplied  to  that  taxable  dealer  within  the  Community  by  a  non-taxable 
person,  by  another  taxable  person  who  is  not  entitled  to  a  deduction  or  by  another  taxable  dealer.  In 
practice the purchase of a vehicle from a taxable dealer who applies the special scheme will entail that 
no VAT is charged separately on the supply. The margin scheme does not apply where the means of 
transport  is  "new"  in  the  terms  defined  by  the  VAT  Directive  (see  paragraph  2.1)  and  the  means  of 

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3. 

VEHICLES AND REGISTRATION TAXES 

3.1. 

General principles 

Vehicle taxation is not harmonised at EU level8. This entails that Member States enjoy a wide 
level  of  freedom  in  determining  whether  to  apply  registration  taxes  on  vehicles  that  are 
intended to be used on their territory and also in determining the level of taxation9.  

The Court has stated10 that the Treaty does not offer any guarantee that a transfer of residence 
of a citizen or a worker would be tax neutral as regards taxation. The transfer would be to that 
person’s  advantage  or  disadvantage  in  terms  of  taxation,  depending  on  the  circumstances. 
Therefore, any disadvantage suffered as compared to the pre-transfer situation would not be 
contrary to EU law, provided the individual is not treated less favourably than residents of the 
respective Member State subject to the same tax.  

There  are  nevertheless  some  limits  to  the  Member  States’  freedom,  which  consist  in  the 
general  principles  enshrined  in  the  Treaty  on  the  Functioning  of  the  European  Union 
(hereinafter  the  "TFEU")  as  interpreted  by  the  Court  and  limited  secondary  legislation, 
namely two Directives that will be analysed in paragraph 3.211.  

3.2. 

Registration taxes and Article 110 TFEU  

3.2.1.  Principles 

In a cross-border scenario, there is often the misconception that registration taxes are levied 
upon the crossing of borders, simply because they are applied after a vehicle, on which a tax 
might  already  have  been  paid  in  the  Member  State  of  origin12,  has  been  transferred  into 
another Member State. In that sense, the taxable event seems to be linked with the crossing of 
borders. This however is usually not the case. 

7 

8 

9 
10 

11 

12 

transport is dispatched or transported from one Member State to another. Where the scheme applies, the 
taxable dealer will be subject to VAT only on his profit margin (i.e., the equal to the difference between 
the selling price charged by the taxable dealer and the purchase price paid by him). 
Articles 326-332 of the VAT Directive allow Member States which, before 31 December 1992, had put 
in  place  a  special  tax  arrangement  other  than  the  "margin  scheme",  to  continue  to  apply  those 
arrangements pending the adoption of the definitive arrangements concerning the VAT system. 
Harmonisation  in  the  field  of  indirect  taxes  has  been  difficult  to  achieve  due  to  the  unanimity 
requirement under Article 113 TFEU.  
Annex IV provides an overview of the very different tax bases and levels applied by Member States. 
Judgment of 15 July 2004, case C-365/02, Marie Lindfors, ECR [2004] Page I-7183, paragraph 34 and 
Judgment of 29 April 2004, case C-387/01, Harald Weigel, Ingrid Weigel v. Finanzlandesdirektion für 
Vorarlberg, ECR[2004] Page I-4981, paragraph 55. 
The  simplification  of  procedures  related  to  the  re-registration  and  de-registration  is  addressed  in  a 
proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  simplifying  the  transfer  of 
motor vehicles registered in another Member State within the Single Market COM(2012)164. Although 
the  proposed  Regulation  does  not  deal  with  taxation,  the  situations  described  in  this  Staff  Working 
Document concerning the use of cars in a Member State other than the one of registration may have to 
be  reconsidered  at  a  later  stage  in  the  light  of  the  outcome  of  discussions  on  the  aforementioned 
proposal.  
This  depends  on  whether  a  Member  State  applies  such  tax.  An  overview  of  the  practice  of  Member 
States,  which  can  be  found  in  Annex  I  to  this  Staff  Working  Document,  shows  that  18  of  the  27 
Member States apply a registration tax. 

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Registration taxes are applied also to vehicles bought on the domestic market as new and only 
once when the vehicle is put in circulation for the first time in the country. They therefore fall 
under  the  category  of  internal  taxes  that  are  as  such  subject  to  the  principle  of  non-
discrimination contained in Article 110 TFEU.  

Article 110 of the TFEU states that:  

"No Member State shall impose, directly or indirectly, on the products of other Member States 
any  internal  taxation  of  any  kind  in  excess  of  that  imposed  directly  or  indirectly  on  similar 
domestic products. 

Furthermore,  no  Member  State  shall  impose  on  the  products  of  other  Member  States  any 
internal taxation of such a nature as to afford indirect protection to other products." 

The purpose of Article  110  is  to  avoid that internal taxation burdens more  heavily products 
from other Member States as to afford a competitive advantage to domestic similar ones.  

A preliminary remark in this respect is that the principle of non-discrimination requires that a 
tax  is  not  calculated  according  to  different  criteria13  depending  on  whether  the  goods  are 
domestic  or  imported.  The  Court14  has  declared  that  taxation,  although  based  on 
environmental grounds, which differentiates between domestic and imported products or that 
leads,  if  only  in  certain  cases,  to  a  higher  taxation  being  imposed  on  the  imported  products 
would not comply with Article 110 TFEU. 

An  important  premise  to  the  application  of  Article  110  TFEU  is  also  the  existence  of  a 
"similar  domestic  product". The Court15 has explained that the fact that there is no national 
production of motor vehicles does not signify that a Member State does not have a market of 
second-hand  vehicles.  Imported  used  cars  and  used  cars  bought  locally  constitute  similar  or 
competing products for the purpose of Article 110 TFEU16. 

Moreover, with respect to Article 110 TFEU it is necessary to highlight that Member States 
might  decide  to  impose  taxes  on  vehicles  as  a  matter  of  environmental  policy  or  broader 
public policy by means of new legislation. In Nádasdi17, the Court decided that Article 110 
TFEU is not designed to prevent Member States from introducing new taxes or from changing 

13 
14 

15 

16 

17 

Case C-387/01, Weigel, paragraph 67. 
Judgment of 2 April 1998, case C-213/96 Outokumpu Oy, ECR [1998] Page I-01777, paragraph 34 and 
Judgment of 18 January 2007, case C-313/05 Maciej Brzezinski v. Dyrektor Izby Celnej w Warszawie, 
ECR [2007] Page I-00513, paragraph 29. 
Judgment of 11 December 1990, case C-47/88, Commission of the European Communities v. Kingdom 
of Denmark, ECR [1990], Page I-04509, paragraph 17. 
For  limitations  to  the  application  of  Article  110  TFEU  in  situations  where  no  national  production  of 
vehicle exists in a Member State, see Judgment of 17 June 2003, C-383/01, De Danske Bilimportører v. 
Skatteministeriet, ECR [2003] Page I-06065, paragraphs 38-39. The Court held that a registration duty 
imposed on new imported motor vehicles is not covered by the prohibitions laid down in Article 110 
TFEU where there is no similar or competing domestic production. In particular, that provision does not 
provide a basis for censuring the excessiveness of the level of taxation which the Member States might 
adopt for particular products, in the absence of any discriminatory or protective effect. 
Judgment  of  5  October  2006,  joined  cases  C-290/05  and  C-335/05  Ákos  Nádasdi  v  Vám-  és 
Pénzügyőrség  Észak-Alföldi  Regionális  Parancsnoksága  (C-290/05)  and  Ilona  Németh  v  Vám-  és 
Pénzügyőrség Dél-Alföldi Regionális Parancsnoksága (C-333/05), ECR [2006] Page I-10115. 

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the rate or basis of assessment of existing taxes18. However, in case Tatu19, the Court clarified 
that although Member States have the power to make new tax arrangements, such powers are 
not unlimited. In this respect Article 110 TFEU would be deprived of meaning and purpose if 
Member States could introduce new taxes which had the purpose or the effect of discouraging 
the sale of imported products in favour of the sale of similar domestic products available on 
the  domestic  market  which  have  been  placed  on  the  market  before  those  taxes  entered  into 
force.  

Finally, the Court20 decided in the context of Article 110 TFEU that when a registration tax is 
imposed only once in the lifetime of a vehicle, the amount of that tax is incorporated in the 
value  of  the  vehicle.  A  second-hand  vehicle,  which  was  first  registered  and  on  which 
registration  tax  was  paid  as  new,  incorporates  in  its  value  a  "residual  tax"  that  diminishes 
proportionally  with  the  depreciation  of  the  vehicle.  The  Court  considered  that  a  system  of 
taxation  should  be  capable  of  guaranteeing  that  the  tax  due  on  a  second-hand  vehicle 
transferred from another Member State does not exceed, even if only in certain cases, the 
amount  of  the  "residual  tax"  incorporated  in  the  value  of  similar  vehicles  already 
registered in the national territory. 

To explain this principle it may be useful to take the following example: 

Assuming  that  a  new  vehicle  has  a  value  of  10.000  EUR  on  which  a  tax  of  2.500  EUR  is 
applied then it will have an overall value of 12.500 EUR (registration tax included). In that 
circumstance the tax amounts to 20% of the total value of the new vehicle. Assuming that the 
same vehicle after 5 years has lost 30% of its value and that it will be worth 8.750 EUR on the 
second-hand market, the tax “incorporated” in the value of that vehicle will also have reduced 
its value by 30% (although being still 20% of the total second-hand value), i.e. it will be 1.750 
EUR.  The  principle  expressed  by  the  Court  implies  that  the  registration  tax  on  a  similar 
second-hand  vehicle  in  terms  of  age,  type,  make,  model  and  other  criteria  cannot  exceed 
1.750 EUR.  

When calculating the registration tax on second hand vehicles transferred from one Member 
State to another, the element to take into account is therefore not the value of the vehicle as 
indicated in the invoice between the acquirer and the seller, but the "residual tax" incorporated 
in the value of a similar vehicle in the Member State of destination. 

18 

19 

20 

In  particular,  in  Nádasdi  the  Court  declared  that  notwithstanding  the  introduction  of  a  new  tax,  the 
comparison  that  should  be  made  for  the  assessment  of  a  potential  discrimination  under  Article  110 
TFEU, is not between imported products which were subject to the "new" tax and domestic similar ones 
which  did  not  bear  the  "new"  tax,  but  between  imported  products  and  similar  domestic  ones  both 
registered after the "new" tax has been introduced. In this case the final outcome was that the specific 
tax which was based on technical and environmental characteristics of the vehicle (as such legitimate 
and  objective)  did not  comply  with  Article  110  TFEU  because  it  did not  take  into  account  the  actual 
depreciation of the vehicle. 
Judgment  of  7  April  2011,  case  C-402/09  Ioan  Tatu  v  Statul  român  prin  Ministerul  Finanţelor  şi 
Economiei and Others, paragraphs 52 and 53. 
Case C-47/88 Commission v Denmark, paragraph 20, and Judgment of 9 March 1995, case C-345/93 
Fazenda Pública and Ministério Público v Américo João Nunes Tadeu, paragraph 13. 

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3.2.2.  Three principles defined by the Court  

3.2.2.1.  Fairness of the tax system 

To ensure that the tax due on a second-hand vehicle transferred from another Member State 
does not exceed the amount of the residual tax incorporated in the value of similar vehicles 
already registered in the national territory, Member States, when levying a registration tax on 
second-hand vehicles, must take into account the loss of value due to the use that the vehicle 
has suffered over the years. 

Some Member States perform an individual assessment or expert examination of each single 
vehicle (for example Denmark). However, the Court has accepted that a Member State may 
establish  the  value  of  a  second-hand  vehicle  by  means  of  fixed  scales  determined  by 
regulation or administrative provisions and calculated on the basis of objective criteria. Such 
scales and criteria must ensure that the value of the second-hand vehicle is established at an 
amount very close to its actual value. In this respect, the Court has highlighted that a system 
of taxation of imported second-hand vehicles which takes into account the actual depreciation 
of  the  vehicles  on  the  basis  of  general  criteria  should  be  structured  in  such  a  way,  making 
allowance  for  the  "reasonable  approximations"  inherent  in  any  system  of  that  type,  as  to 
exclude any discriminatory effect. 

The case law of the Court has set out useful principles on the degree of precision that fixed 
scales and criteria should afford in order to reflect the actual loss of value of a second-hand 
vehicle that is transferred from another Member State.  

For example, the Court21 has decided that a system where the depreciation of either the value 
of the  second-hand  vehicle, or  of the tax, stops at 10%  of the initial  value of the vehicle as 
new does not guarantee that the amount of tax does not exceed the "residual tax" incorporated 
in the value of a similar vehicle already registered in the national territory. In other words a 
depreciation that stops at 10% while typically the value of a vehicle depreciates further is not 
enough to reflect the real loss of value and ends up in over taxation of second-hand vehicles. 

The  Court22  has  also  found  that  the  annual  depreciation  in  the  value  of  cars  is  in  general 
considerably more than 5%, that depreciation is not linear, especially in the first years when it 
is much more marked than subsequently, and that vehicles continue to depreciate more than 
four years after being put into circulation. A vehicle starts to depreciate as soon as it is bought 
or brought into use. 

Moreover,  the  Court23  has  pronounced  on  a  taxation  scale  for  imported  second-hand  cars, 
which  was  based  on  a  single  criterion  of  depreciation,  holding  that  it  was  not  sufficient  to 
ensure that the value of the second-hand vehicle is established at an amount close to the actual 
value of the second-hand vehicle. Other factors of depreciation have to be taken into account, 
such as the make, the model, the kilometres driven, the method of propulsion, the mechanical 
state or the state of maintenance of the vehicle. 

21 
22 

23 

Cases C-47/88 Commission v Denmark and C-345/93 Nunes Tadeu.  
Judgment of the Court of 23 October 1997, case C-375/95, Commission of the European Communities 
v. Hellenic Republic ECR [1997] Page I-05981, and Judgment of 19 September 2002, case C-101/00, 
Tulliasiamies, Antti Siilin, ECR [2002] Page I-07487. 
Judgment  of  27  February  2001,  case  C-393/98,  Ministério  Público  and  António  Gomes  Valente  v 
Fazenda  Pública  ECR  [2001]  Page  I-01327,  paragraph  28,  and  case  C-74/06,  Commission  v  Greece, 
paragraph 40.  

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A  tax  on  a  second-hand  vehicle  may  be  determined  by  means  of  a  differentiated  tax  rate 
depending on e.g. the capacity, horse power, CO2 emission, applied to the value of a second-
hand vehicle, or may consist in a specific amount per horse capacity, CO2 emissions etc. The 
fairness of the system is guaranteed not only by a correct determination of depreciation scales 
but also by a correct determination of the taxable value of second hand vehicles on which the 
tax is calculated24.  

3.2.2.2.  Establishment of means of redress 

Member  States'  judicial  systems  have  to  offer  the  possibility  to  challenge  either  the 
application of the statutory scales in their individual case or the individual assessments of the 
tax if their tax systems do not allow an adequate determination of the real value of the vehicle. 

The Court25 has however clarified that a Member State is not compelled by EU law to provide 
that the means of redress are made available for free, if the cost of the procedure is reasonable 
and  represents  only  an  insignificant  amount  compared  to  the  amount  of  registration  tax  at 
stake.  

3.2.2.3.  Principle of transparency 

The  third  principle  stated  by  the  Court26  is  a  direct  consequence  of  the  requirement  to 
predispose appropriate means of redress and consists in the transparency of the tax system. In 
order  to  be  challenged,  criteria  of  depreciation  need  to  be  brought  to  the  knowledge  of  the 
public.  

3.3. 

Registration taxes and the permanent and temporary transfer of a motor-driven 
vehicle in another Member State  

Although  "positive  harmonisation"  by  means  of  EU  legislative  acts  has  been  difficult  to 
achieve due to the unanimity requirement, the EU legislator has sought to provide a solution 
for specific cross-border situations. In particular, the aim of the EU legislator has been to seek 
the elimination of certain tax obstacles that affect the movement of private individuals within 
the Internal Market by means of Directive 83/182/EEC27 and Directive 2009/55/EC28 (which 
codified  the  changes  performed  on  the  formerly  applicable  Directive  83/183/EEC29).  These 
Directives have however a limited application as it will be explained hereinafter. 

3.3.1.  Directive 83/182/EEC: temporary introduction of a motor-driven road vehicle 

When an individual moves temporarily to another Member State, this latter Member State is 
obliged to exempt from turnover tax, excise duties and any other consumption tax30 a number 

24 
25 
26 
27 

28 

29 

30 

See case C-47/88 Commission v Denmark, paragraph 18. 
See case C-74/06 Commission v Greece, paragraph 56. 
See case C-393/98 Gomes Valente, paragraph 34.  
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 of 23.04.1983, 
p. 59-63. 
Council  Directive  2009/55/EC  of  25  May  2009  on  tax  exemptions  applicable  to  the  permanent 
introduction from a Member State of the personal property of individuals, OJ L 145 of 10.06.2009, p. 
36-41.  
Council  Directive  83/183/EEC  on  tax  exemptions  applicable  to  permanent  imports  from  a  Member 
State of the personal property of individuals, OJ L 105 of 23.04.1983, p. 64-65. 
Further to those taxes, Article 1 of Directive 83/182/EEC provides for an exemption from other taxes 
listed in the Annex to the Directive.  

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of  items  that  an  individual  may  bring  along  e.g.  a  motor-driven  road  vehicle  (including 
trailers), caravans, pleasure boats and private craft31. However, the exemption does not apply 
if  the  vehicle  has  not  been  acquired  or  imported  according  to  the  general  conditions  of 
taxation in force on the domestic market of a Member State, or when it has been subject by 
reason of its exportation to any exemption from or refund of turnover tax, excise duty or any 
other consumption tax. Moreover, the exemption does not apply to commercial vehicles. 

There are a number of conditions that must be fulfilled. First and foremost, the "importation" 
of  the  vehicle  to  another  Member  State  needs  to  be  temporary:  this  means  a  period, 
continuous  or  otherwise,  of  not  more  than  six  months  in  any  12  months,  provided  that  the 
individual  i)  has  his  normal  residence  in  a  Member  State  other  than  the  Member  State  of 
temporary  importation,  ii)  employs  the  means  of  transport  for  his  private  use,  iii)  does  not 
dispose or hires out in the Member State of temporary importation or lends the vehicle to a 
resident of that State.  

The main function of Directive 83/182/EEC is that of designating one place of residence in 
order to ensure that the taxing rights in regard to vehicles temporarily imported is allocated to 
one Member State only, namely the Member State in which the individual concerned has his 
place  of  normal  residence.  The  essential  condition  is  thus  that  the  individual  maintains  his 
normal  residence  in  a  Member  State  other  than  the  one  where  he  temporarily  moves.  The 
criteria for determining the concept of "normal residence" is the place where a person usually 
lives  for  at  least  185  days  in  each  calendar  year  because  of  personal  and  occupational  ties 
which show close link between that person and the place where he is living. Where those ties 
are  not  concentrated  in  a  single  Member  State,  primacy  is  given  to  personal  ties  over 
occupational ones, provided that the person returns to the place of his personal ties regularly. 
However, the requirement to return to the place where the personal ties are located does not 
need to be met when the person is living in a Member State in order to carry out a task of a 
definite duration32. This provision had the purpose to treat in an equal way frontier workers 
who have the possibility to return regularly to the place where their personal ties are located 
and  workers  who,  without  changing  their  residence,  do  not  have  the  possibility  to  return 
"regularly" in their home country due to distances between Member States. 

Finally,  special  regimes  are  foreseen,  where  no  specific  time  limit  apply,  to  students  who 
move  to  another  Member  State  from  the  Member  State  of  their  normal  residence  for  the 
purpose of pursuing their studies and for cross-border workers where a vehicle is registered in 
the  country  of  normal  residence  of  the  user  and  where  the  vehicle  is  used  regularly  for  the 
journey from the residence to the place of work in an undertaking in another Member State 
and vice versa.  

In  practice,  it  might  not  always  be  easy  to  determine  where  the  normal  residence  of  an 
individual is located.  

The  Court33  has  highlighted  that  all  relevant  facts  must  be  taken  into  consideration  in 
determining the "normal residence" as the centre of personal interest of the person concerned, 
namely  the  actual  presence  of  the  person  concerned  and  of  the  members  of  his  family, 
availability of accommodation, the place where the children actually attend school, the place 

31 
32 

33 

In addition, also bicycles, tricycles and saddle-horses. 
Case C-144/08 Commission of the European Communities v Republic of Finland, ECR [2009] Page I-
00097. 
Judgment of 12 July 2001, case C-262/99 Paraskevas Louloudakis and Elliniko Dimosio, ECR [2001] 
Page I-05547, paragraph 55. 

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13 

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where the business is conducted, where property interests are situated, where can be identified 
administrative  links  to  public  authorities  and  social  services,  in  as  much  as  those  factors 
express the intention of that person to confer a certain stability on the place of connection, by 
reason of the continuity arising from a way of life and the development of normal social and 
occupational  relationships.  In  a  nutshell,  in  a  situation  where  a  person  has  arranged  his 
professional  and  personal  life  equally  split  between  two  Member  States,  prevalence  will  be 
given to the State where a person has shown intention to give stability to the private and social 
sphere.  The  Court  has  also  stated  that  it  is  for  the  national  judge  to  make  an  overall 
assessment of the elements relating to the ties with place of residence and that Member States 
are not required to resort to a mutual agreement where the determination of normal residence 
raises difficulties34. 

Article 3 of the Directive provides that the exemption for the temporary importation is subject 
inter alia to the condition that the vehicle is not disposed of, hired out or lent to a resident of 
the Member State of importation. This provision reflects the aim of the Directive which is to 
facilitate  the  mobility  of  citizens  without  offering  ways  to  circumvent  the  payment  of  the 
taxes on vehicles. This provision however represents an obstacle when the lending or hiring 
out is performed against consideration and is made in the framework of a car rental. In that 
respect the prohibition to re-hire out a vehicle to a resident of the State of importation would 
exclude a number of potential lessees. Vehicles belonging to a car-hire firm with a head office 
in the Union may be re-hired only to non-residents with a view to being re-exported, if they 
are in the country as a result of a hire contract which ended in that country. They may also be 
returned by an employee of the car-hire firm to the Member State where they were originally 
hired even if the employee is a resident of the Member State of importation. 

3.3.2.  Directive 2009/55/EC on permanent introduction of personal property of individuals  

The Directive provides for an exemption for personal property introduced permanently from 
another Member State by private individuals from consumption taxes which normally apply 
to such property. The exemption does not apply to Value Added Tax, excise duty and specific 
and/or periodical duties and taxes connected with the use of the property such as for example 
motor vehicle registration fees, road taxes and television licences.  

The Directive subjects the exemption to a number of conditions, in particular: 

• 

• 

• 

• 

34 
35 

the  exemption  shall  be  granted  only  if  the  private  individual  transfers  his  normal 
residence to the Member State of destination; 

"normal  residence"  is  defined  in  the  same  terms  as  "residence"  for  the  purpose  of 
temporary importation35;  

the vehicle must have been acquired under the general conditions of taxation in force 
in the domestic market of the Member State of origin without having been subject to 
any exemption or refund of consumption tax upon the exit; 

Member  States  may  require  that  the  person  must  have  had  the  actual  use  of  the 
vehicle for a period of at least sixth months before the change of residence; 

Paragraphs 57 and 59 of Louloudakis. See footnote 33. 
See paragraph 3.3.1. above. 

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14 

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• 

• 

• 

the competent authorities of the Member State of destination in the case of doubts as 
to  the  validity  of  a  statement  as  to  normal  residence,  or  for  the  purpose  of  certain 
specific controls, may ask for any information they require or for additional proof; 

the vehicle must be introduced not later than 12 months after the transfer of normal 
residence; 

the motor-driven  road  vehicle shall not be disposed of, hired  out or lent during  the 
period of 12 months following the tax exempt introduction, except in circumstances 
duly justified to the satisfaction of the competent authorities of the Member State of 
destination. 

The  material  scope  of  the  Directive  which  explicitly  excludes  from  the  exemption  duties 
connected with the use of the vehicle has represented the main obstacle for the application of 
the exemption contained therein to registration taxes on vehicles. 

The  Court36  has  taken  the  view  that  registration  taxes  are  not  connected  with  the  act  of 
importation but that their taxable event is the use of the vehicle on the national roads. As a 
consequence, Member States retain the right to impose them also when they are levied upon 
the permanent transfer of a residence.  

However, some Member States grant an exemption on a pure unilateral basis37 and require the 
respect of a number of conditions.  

3.3.3. 

Special cases 

In a number of particular situations, double taxation is unavoidable and cannot be mitigated 
by  means  of  the  two  Directives  referred  to  in  points  3.3.1  and  3.3.2  or  the  case  law  of  the 
Court. 

An example is the taxation of a pleasure boat, which might be subject to a (registration) tax in 
Member  State  A  because  the  boat  bears  the  flag  of  that  Member  State.  It  is  therefore 
registered in the naval registrars of Member State A, but the owner of the boat is also subject 
to a property tax on the pleasure boat in Member State B, which is his State of residence. In 
this case unrelieved double taxation arises since EU law does not prevent both Member States 
from levying charges or levies on the same pleasure boat. 

Double taxation may also arise if an individual leaves his car permanently in the place where 
his holiday house is located. The car might have already been subject to registration tax when 
it was registered as new in the country of residence but the Member State where the holiday 
house  is  located  would  not  be  prevented  from  levying  a  second  registration  tax  on  that 
vehicle.  

36 

37 

The Court in Cases C-387/01 Weigel, C-365/02 Marie Lindfors, and judgment of 16 June 2005, case C-
138/04  Commission  of  European  Communities  v.  Kingdom  of  Denmark,  did  not  endorse  the 
Commission´s  position  that  registration  taxes  fall  under  the  scope  of  the  exemption  of  Directive 
83/183/EEC, now Directive 2009/55/EC. 
For an overview of Member States that exempt from registration taxes where a permanent transfer of a 
residence occurs, see Section 4.1 of the Communication.  

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15 

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3.4. 

Cross-border leasing of motor-driven vehicles  

Registration taxes represent an obstacle where the lessor is established in one Member State, 
being  also  the  Member  State  of  registration  of  the  vehicle,  and  is  leased  to  a  lessee  who  is 
established  in  another  Member  State.  In  such  a  scenario  the  fleet  of  the  leasing  company 
would  be  registered  and  hence  bear  registration  plates  of  Member  State  A.  If  the  vehicle  is 
leased to a lessee established in Member State B and Member State B levies a registration tax, 
the lessor (or the lessee) could be required to pay in full on the leased vehicle the registration 
tax in Member State B. 

For  such  situations,  the  Court38  has  established  the  principle  that  where  a  vehicle  is  leased 
from a company established in one Member State and is actually used on the road network of 
another Member State, the latter may impose an obligation for that vehicle to be registered in 
its territory39 and hence levy registration tax.  

Having established that as such taxation of the Member State of the lessee is not prohibited by 
EU law, it remains to be determined to which extent and with which modalities that power of 
taxation can be exercised. 

The Court40 has found that the freedom to provide services does not preclude a Member State 
from imposing a car registration tax on leased motor vehicles. However, in order to respect 
the principle of proportionality, the amount of tax has to be proportionate to the duration 
of the registration of the vehicle in the Member State where it is used41.  

The  Court  has  also  found  that  the  time  period  prescribed  for  completing  the  necessary 
formalities should not be so short as to constitute an unjustifiable obstacle to the freedom to 
provide  services.  In  the  material  case  the  disproportionality  of  the  time-limit,  which  was  of 
three days, was quite evident. In some other circumstances, however, where the time limit is 
10 or 15 days, such disproportion might be less evident42. 

38 
39 

40 
41 

42 

Judgment of 21 March 2002, case C-451/99 Cura Anlagen, paragraph 40.  
According  to  the  proposal  for  Regulation  COM(2012)164,  a  Member  State  may  only  require  the 
registration of a vehicle if the holder of the certificate of the leased car has his normal residence on its 
territory. However, the proposal deals only with the administrative authorisation required for the entry 
into  service  of  a  vehicle  on  the  road  traffic,  without  interfering  with  the  taxing  powers  of  Member 
States.  
Case C-451/99, Cura Anlagen, paragraph 69. 
Concerning  the  VAT  treatment  of  leasing  of  vehicles,  by  virtue  of  the  modifications  introduced  by 
Directive 2008/8/EC  (OJ  L 44  of  20.2.2008,  p. 11),  as  from  1  January  2010  the  long-term  leasing  of 
vehicles is taxable i) in the country where the customer is established in a business-to-business (B2B) 
relation (new Article 44 of the VAT Directive), ii) in the country where the supplier is established in a 
business-to-consumer (B2C) relation (new Article 45 of the VAT Directive). The "short-term" leasing 
(not  more  than  90 days  for  vessels  or 30 days  for  any other  means  of  transport)  is  taxable where  the 
means of transport is put at the disposal of the customer in a B2B and B2C relation (new Article 56 of 
the  VAT  Directive).  As  from  1  January  2013,  the  long-term  hiring  of  a  means  of  transport  to  a  non-
taxable person is subject to VAT where the customer is established. Special rules apply for the long-
term  hiring of boats  to  a  non-taxable  person  (new Article  56  of  the  VAT  Directive).  Certain  detailed 
aspects on the application of the new rules on hiring of means of transport introduced with Directive 
2008/8/EC have been further clarified by Articles 38-40 of Regulation EU 282/2011 of 15 March 2011 
(OJ L 77 of 23.3.2011, p. 1). 
On  how  the  proposed  Regulation  COM(2012)164  may  impact  the  obligation  to  re-register  a  leased 
vehicle,  see  footnote  11.  The  aforementioned  proposal  does  not  alter  the  taxing  rights  of  Member 
States. 

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The Court has confirmed this line of reasoning in subsequent cases43.  

3.5. 

Company car used by an employee or an administrator 

A vehicle is increasingly becoming part of the "salary package" or the financial treatment of 
cross-border workers or self-employed persons and situations where a person is employed or 
works  for  a  company  established  in  a  Member  State  other  than  that  of  his  residence  are 
frequent. The Court has been called upon in a number of cases to scrutinise the effects and the 
compatibility  with  the  free  movement  of  workers  and  the  freedom  of  establishment  of 
registration  taxes  in  situations  where  the  worker  or  the  self-employed  use  a  vehicle  made 
available to him by his employer44.  

The  Court  considered  that  the  legislation  and  administrative  practice  of  a  Member  State 
restricts  the  free  movement  for  workers  and  breaches  EU  law  in  so  far  as  they  allow 
employees  resident  in  that  Member  State  and  employed  in  another  Member  State  to  use  a 
company vehicle registered in that other Member State only subject to the condition that a tax 
is  paid  for  that  purpose,  where  the  vehicle  is  neither  intended  to  be  essentially  used  on  a 
permanent basis in the Member State of residence of the employee, nor is actually so used45.  

A similar hindrance arose where the vehicles were put at the disposal of persons holding the 
function of administrators of companies established in another Member State46. 

The Court has also clarified that it is for the national judge to assess in which way the vehicle 
has  been  used  and  that  when  a  company  vehicle  is  not  used  permanently  or  intended  to  be 
used in that way in the Member State of residence of the user, the obligation to register is not 
justified  if  the  self-employed  worker  may  additionally  use  the  company  vehicle  for  private 
purposes47. 

43 

44 

45 

46 

47 

v. 

van 

2010, 

Inspecteur 

case  C-91/10  VAV-Autovermietung  GmbH 

Order  of  27  June  2006,  case  C-242/05  G.M.  van  de  Coevering  v.  Hoofd  van  het  District  Douane 
Roermond van de rijksbelastingdienst ECR [2006] Page I-05843; Order of 22 May 2008, case C-42/08 
M.  Ilhan  v.  Staatssecretaris  van  Financiën  ECR  [2008]  Page  I-00083;  Order  of  the  Court  of  29 
September 
de 
Belastingdienst/Douane Zuid, kantoor Rosendaal. 
The  situations  envisaged  here  are  different  from  the  situation  envisaged  in  Article  5  of  Directive 
83/182/EEC on tax exemptions for certain means of transport temporarily imported into one Member 
State  from  another.  Article  5  of  Directive  83/182/EEC  provides  that  the  exemption  from  the  tax  that 
comes  in  the  scope  of  that  Directive  applies  without  any  time  limit  (i.e.  without  the  constraint  of  6 
months in any twelve  months) where the vehicle registered in the country of normal  residence of the 
user  is  used  regularly  for  journeys  from  the  place  of  residence  of  the  worker  to  the  place  of  work  in 
another Member State. Hence, Article 5 presupposes that the vehicle has been registered in the Member 
State  where  the  user  resides.  The  case  law  analysed  in  this  section,  on  the  contrary,  envisages  the 
opposite situation, i.e. where the vehicle is not registered in the country of residence of the user but in 
the country of residence of the employer. As a consequence, it would be the country of residence of the 
user  that  requires  the  payment  of  the  registration  tax  under  the  principle  that  typically  the  vehicle  is 
registered and has borne the tax of the State of residence of the user or the owner. 
Judgment of 15 September 2005, case C-464/02 Commission of the European Communities v Kingdom 
of Denmark, ECR [2005] Page I-079279, paragraphs 76-79. 
Judgment  of  15  December  2005,  joined  cases  C-151/04  and  152/04  Criminal  proceedings  against 
Claude  Nadin,  Nadin-Lux  SA  (C-151/04)  and  Jean-Pascal  Durré  (C-152/04),  ECR  [2005]  Page  I-
11203, paragraph 55. 
See case Nadin, paragraph 53. 

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3.6. 

Car  registered  in  a  Member  State  and  borrowed  by  a  resident  of  another 
Member State 

Recently, the Court48 was asked to examine situations where a foreign-registered vehicle was 
lent  to  private  persons  by  family  members  or  friends  and  on  which  the  full  registration  tax 
was levied by a Member State upon the first use of its road network.  

The Court considered that the loan of a vehicle falls under the free movement of capital49. 

The Court then held that if a vehicle, which is not registered in a Member State, is intended to 
be essentially used in this Member State on a permanent basis, or if in fact it is used in that 
way, the charging of vehicle tax on the first use on the road network in that Member State of 
foreign-registered vehicles is justified.  

Conversely,  if  a  vehicle  is  not  intended  to  be  used  essentially  in  a  Member  State  on  a 
permanent basis, or is not, in fact, used in that way, the charging of a registration tax would 
not be justified and the use of that vehicle should be exempted from such tax50. 

3.7. 

Interaction of vehicle registration taxes with other taxes  

The relationship between registration taxes on vehicles and other indirect taxes is of relevance 
because  on  the  one  hand  it  may  determine  an  increase  of  the  overall  tax  burden  on  the 
registration  of  a  vehicle  and  on  the  other  hand  it  may  provide  an  answer  to  the  incorrect 
conviction that registration taxes are a form of duty levied upon the crossing of frontiers. 

3.7.1.  Registration taxes and VAT 

In relation to the supply of a "new" vehicle51 more than one tax might be due. In particular, 
the supply as such of the new vehicle will be subject to VAT while the putting in circulation 
of  the  vehicle  will  be  subject  to  a  registration  tax.  The  issue  is  whether  or  not  the  taxable 
amount for VAT purposes should include the registration tax, i.e. whether the registration tax 
becomes part of the taxable amount for VAT purposes, so that the output VAT of the supplier 
will be higher. The customer, however, will only be able to deduct the VAT charged on the 
registration tax - as input VAT - if he is a taxable person for VAT purposes.  

According  to  the  VAT  Directive52,  the  taxable  amount  for  VAT  purposes  shall  include  i) 
taxes,  duties,  levies  and  charges  and  ii)  incidental  expenses,  but  shall  not  include  amounts 
received by a taxable person from the customer as repayment of expenditure incurred in the 
name and on behalf of the customer and entered in the supplier´s books in a suspense account.  

According to settled case-law53, the Court has stated that if taxes, duties, levies and charges 
are to fall within the basis of assessment for the purposes of VAT, even though they do not 

48 

49 

50 
51 

52 
53 

Judgment of 26 April 2012, joined cases C-578/10, C-579/10, C-580/10 L.A.C. van Putten, P. Mook, G. 
Frank. 
The Court has found that a loan free of charge for cross-border use falls under the free movement of 
capital and, in particular, falls under heading XI of Annex I to Directive 88/361, regardless of whether 
loans are for consideration or free of charge (paragraphs 31 and 32 of the judgment van Putten). 
Paragraph 54 of the judgment van Putten. 
The observations in this paragraph also apply where the object of the supply does not qualify as a "new" 
vehicle in the sense of the VAT Directive (paragraph 2.1); see paragraph 2.2. 
Articles 78 and 79 of the VAT Directive.  
Judgment  of  28  July  2011,  case  C-106/10,  Lidl  &  Companhia  v  Fazenda  Pública,  paragraph  33  and 
case-law cited. 

EN 

18 

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represent any added value and do not constitute the financial consideration for the supply of 
the goods, they must be directly linked to that supply. In this regards, the Court54 considered 
that,  where  there  are  different  events  that  trigger  liability  for  both  taxes,  registration  tax 
should not be regarded as directly linked to the supply itself. 

For  example,  the  Court  dealt  with  a  case  from  Denmark55  where  a  motor  vehicle  was 
purchased from an authorised dealer who also dealt with the registration of the vehicle in the 
purchaser’s  name  and  the  provision  of  number  plates  before  supplying  the  car.  As  a 
consequence,  the  registration  duty  was  paid  by  the  dealer  on  account  of  a  contractual 
obligation to supply to the purchaser a vehicle which was registered in the purchaser’s name. 
The  Court  ruled  in  general  terms  that  this  registration  duty,  for  which  the  occurrence 
triggering liability was not the supply of the vehicle but rather its first registration within the 
Danish territory, was not one of the "taxes, duties, levies and charges" within the meaning of 
the VAT Directive and, therefore, not to be included in the taxable amount for VAT purposes. 

Conversely,  however,  the  Court56  decided  that  where  a  registration  duty  is  linked  to  the 
supply  of  a  vehicle,  rather  than  its  actual  registration,  and  where  the  relevant  national 
legislation  indicates  the  supplier  as  the  taxpayer  owing  the  duty,  it  must  be  included  in  the 
taxable  amount  for  VAT  purposes  if  it  is  passed  on  to  the  customer  together  with  the  sales 
price of the vehicle concerned. 

3.7.2.  Registration taxes and charges having an equivalent effect to customs duties 

With  respect  to  registration  taxes  on  vehicles  there  is  often  the  misconception  that  they  are 
levies equivalent or similar to customs duties (prohibited between Member States by Article 
30 TFEU). The misunderstanding originates from the fact that often citizens are required to 
pay registration taxes on their second-hand vehicle when they move to another Member State. 
Given the fact that a registration tax might already have been paid on the same vehicle when it 
was  purchased  as  new,  the  conclusion  that  is  often  drawn  is  that  the  tax  is  levied  in  the 
Member State of "destination" because the vehicle has been moved from one Member State to 
another. 

A tax such as a registration tax is not levied by reason of a vehicle crossing the frontier of the 
Member  State,  but  normally  upon  the  first  registration  of  the  vehicle  in  the  territory  of  that 
State for the purpose of being placed in circulation there57. As the Court explained in several 
cases58,  such  a  tax  forms  part  of  the  general  system  of  internal  taxation  on  goods  and  must 
therefore  be  examined  in  the  light  of  Article  110  TFEU.  In  addition,  a  motor  vehicle  tax 
applied without distinction to vehicles assembled or manufactured in the Member State where 
it  is  levied  and  to  both  new  and  used  imported  vehicles,  is  not  a  customs  duty  or  a  charge 
having an effect equivalent thereto.  

54 

55 
56 

57 
58 

Judgment  of  1  June  2006,  case  C-98/05  De  Danske  Bilimportører  v.  Skatteministeriet,  ECR  [2006] 
Page I-04945 and Judgment of 22 December 2010, case C-433/09 Commission v. Austria. 
Case C-98/05 De Danske Bilimportører v. Skatteministeriet. 
Judgment of 20 May 2010, case C-228/09 Commission v Republic of Poland ECR [2010] Page I-00070 
and case C-106/10 Lidl & Companhia v Fazenda Pública. 
See De Danske Bilimportører v. Skatteministeriet, footnote 54. 
Cases  C-393/98  Nunes  Tadeu;  C-290/05  Nádasdi  and  C-333/05  Németh;  C-134/07  Piotr  Kawala  v 
Gmina Miasta Jaworzna ECR [2007] Page I-10703; C-313/05 Brzeziński and C-387/01 Weigel. 

EN 

19 

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4. 

OTHER ISSUES  

An  issue  that  often  arises  together  with  the  liability  to  pay  taxes  levied  on  vehicles  is  the 
liability with respect to fines and sanctions. This is a sensitive field that traditionally remains 
in the realm of the powers of Member States. The case law of the Court has recognised that in 
the absence of Community legislation in the field of penalties for infringement of Community 
legislation, Member States are empowered to choose the penalties which seem appropriate to 
them.  

However,  the  power  of  discretion  is  subject  to  the  principle  of  proportionality.  The  Court59 
considered  that  criminal  penalties  are  linked  to  the  economic  and  social  situation  of  the 
relevant Member State and that the application of criminal penalties to violations of vehicle 
registration rules cannot be considered per se an indication that penalties do not comply with 
the proportionality principle. The Court concluded that the question whether the penalties are 
disproportionate  or  proportionate  was  a  matter  to  be  assessed  case-by-case  and  that  the 
temporary immobilisation of a vehicle and release only upon payment of the fines might be 
disproportionate since it may deny the beneficiary the use of his vehicle. In that respect the 
Court  has  suggested  that  a  solution  more  consistent  with  EU  law  could  be  to  impose  the 
provision of a security. 

5. 

CONCLUSIONS  

The case law of the Court has crystallised important principles that clarify the taxing power of 
Member States, thus also protecting the rights of EU citizens.  

The Commission is continuously engaged in monitoring that Member States' legislation is in 
compliance  with  EU  law  and  that  they  correctly  implement  the  case  law  of  the  Court  in 
relation  to  cross-border  movement  of  workers,  self-employed  persons  and  EU  citizens  in 
general, the freedom to provide services and free movement of capital.  

59 

Judgment  of  7  June  2007,  case  C-154/06  Commission  of  the  European  Communities  v  Hellenic 
Republic, ECR [2006] Page I-00121. 

EN 

20 

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Annex I 
Overview of application by Member States of car registration and circulation taxes 

MS 

RT 

Name of the registration tax 

BE 
BG 
CZ 
DK 
DE 
EE 
IE 
EL 
ES 

FR 

X 

Taxe de mise en circulation 

X  Motor vehicle registration duty  

X 
X 
X 

X 

Vehicle Registration Tax (VRT) 
Registration tax 
Impuesto Especial sobre 
Determinados Medios de Transporte 
Taxe sur les certificats 
d’immatriculation des véhicules  

IT 

X 

Imposta provinciale di trascrizione 

Registration tax 

X 
X  Motor vehicle registration tax 

Registration tax 

X 
X  Motor Vehicle Registration Tax 
Belasting van personenauto’s en 
X 
motorrijwielen 

X 

X 

Tax on Motor Vehicles – Imposto 
Sobre Veículos(ISV) 
Registration tax (Taxa de 
înmatriculare) 
X  Motor Vehicle Tax 

X 

Car Tax 

CY 
LV 
LT 
LU 
HU 
MT 
NL 

AT 
PL 

PT 

RO 

SI 
SK 
FI 
SE 
UK 

Name of any other tax applied 
upon registration 

Eco-Malus (Région Wallonne) 

Circulation 
tax 
X 
X 
X 
X 
X 

Luxury tax 

Taxe additionnelle à la taxe sur 
les certificats d’immatriculation 
Malus applicable aux voitures 
particulières polluantes 
Imposta di bollo e imposta sul 
valore aggiunto 
Excise duty 

Normverbrauchsabgabe 
Excise duty levied on vehicles 
before first registration on 
territory of Poland. 

Car pollution tax (taxa pe poluare 
pentru autovehicule) 

X 
X 

X 

X 
X 

X 
X 
X 
X 

X 

X 

X 

X 
X 

X 
X 

EN 

21 

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Annex II 
Conditions for the application of a refund of registration tax for vehicles permanently 
moved to another Member State 

BE 

DK 

Full refund of registration tax for vehicles transferred to another Member State within six months of 
their registration provided the vehicle is permanently registered in that other Member State. 

Section 7 of the Registration Tax Act lays down the detailed rules on the refund of registration tax 
paid on export, i.e. where the vehicle is removed from the register in Denmark with a view to its 
export to another Member State or to a non-EU country.  

The  amount  of  the  refund  is  fixed  at  the  amount  of  the  registration  tax  payable  if  an  identical 
vehicle were imported from abroad. 15% of the amount of tax calculated in this way is deducted, 
with a minimum of DKK 7 500 in the case of private cars. 

The amount of the registration tax that can be refunded is calculated on the basis of the vehicle’s 
original price in Denmark compared with the current market price. This is the normal price of the 
vehicle including VAT and registration duty when sold to a person in Denmark. It corresponds to 
the  price  a  Danish  dealer  can  ask  for  an  equivalent  vehicle  in  a  condition  fit  for  registration, 
including VAT, the dealer mark-up and registration tax. 

ES 

The  basis  of  refund  is  constituted  by  the  market  value  of  the  vehicle  at  the  moment  of  dispatch, 
without it being possible to exceed the value that results of the application of the valuation tables of 
used vehicles. 

The rate of the refund will be the one which was applied when the tax was charged.  

The amount of the refund cannot be superior, in any case, to the amount initially paid. 

NL 

A  refund  of  the  residual  tax  amount  is  granted,  if  the  registration  tax  was  due  after  15  October 
2006. 

Use of fixed scales. 

AT 

PL 

Calculation of the up-to-date value in relation to the initial (or original) value. 

Any entity which acquired the right to have the disposal of a car as its owner and carrying out an 
intra-Community delivery of that car (with paid excise duty) which is not registered in the territory 
of Poland, may apply for excise duty drawback. 

Such entity must apply for excise duty drawback to the head of custom office (within 1 year of the 
intra-Community  delivery)  along  with  bill  of  lading,  duty  documents,  invoice,  specification  of 
delivery or any other documents related to this delivery.  

As a rule excise duty drawback takes place within 30 days from the day of filing the application to 
the head of customs office. Only in particular cases this date may be extended to 90 days. 

PT 

The refund is determined according to the length of time between the issuance of the Portuguese 
registration plate and the date at which the taxpayer submits the application to get the refund: 

•  Refund of 75% in the first year, 50% in the second year and 25% in the third year. 

• 

In  addition,  the  application  should  be  submitted  within  one  year  of  the  date  on  which  the 
vehicle was exported. 

RO 

The refund is granted at the removal from the national fleet. If a vehicle for which the registration 

EN 

22 

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SI 

FI 

tax has been paid in Romania is then removed from the national fleet, the taxpayer who paid the fee 
is refunded the residual value. 

Residual value is the tax that would have been paid for that car if the car had been registered at the 
time of removal from the national fleet. 

The amount of the tax refund is calculated according to actual paying tax data in the Republic of 
Slovenia and use of motor vehicle period data in the Republic of Slovenia in this manner that for 
every  beginning  year  (the  date  of  the  first  registration  of  the  motor  vehicle)  of  the  use  of  motor 
vehicle in the Republic of Slovenia, the tax amount is reduced for 10%. 

The tax refund system came into force in Finland beginning 2010. The tax refund can be granted 
for a vehicle that has been taxed in Finland as of 1 April 2009. 

The amount of the refund is determined in the same way as the registration tax. The general price of 
a vehicle is determined by using the information concerning prices of vehicles on the market.  

The amount of refund is calculated on the basis of the vehicle’s general price by using the effective 
tax rate, which is based on the CO2-emissions of a vehicle. 

Vehicles must be in a roadworthy condition when the use in Finland ends and shall be registered in 
a vehicle register abroad. 

As an administration fee, 300 euro is deducted from the refund. No refund is granted if, after this 
deduction, the amount to be refunded is less than 1 000 euro. 

A refund is not granted if a vehicle has been taken into use (= registered) for the first time more 
than ten years ago. 

EN 

23 

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Annex III 
Member State allowing that vehicles registered in another Member State which arrived 
in their country as a result of a hire contract, are hired to a resident without the 
obligation to re-register and pay registration tax (Option under Article 9(1) of Directive 
83/182/EEC) 

Conditions 

BE 

Registration in Belgium of vehicles registered abroad and brought into circulation by a resident is not 
mandatory  for  a  vehicle  rented  to  a  resident  by  a  professional  service  provider  for  a  non-renewable 
period of maximum 6 months. The rental contract put out in the name of the person who brings the 
vehicle into circulation must be signed and dated and be kept on board the vehicle.  

DK  As  a  general  rule,  persons  resident  in  Denmark  may  use  only  Danish  registered  vehicles.  This  also 
includes lease cars. There is one exception, cf. Registration Order, Section 17(2), according to which a 
person  resident  in  Denmark  may  use  a  foreign  vehicle  in  accordance with  the  Highway  Code  if  the 
vehicle is leased abroad for a period of at most one week, if the driver is permitted to drive the vehicle 
under the lease agreement and provided the vehicle is driven, in accordance with the Highway Code, 
only from the border direct to the place in Denmark where the vehicle is to be returned according to 
the lease agreement. 

ES 

The Spanish legislation that regulates the Excise Duties on Certain Means of Transportation allows the 
use of vehicles registered in another Member State without it being mandatory to pay the tax in Spain, 
only during 30 days. 

Additionally, it is not mandatory to register a vehicle in Spain, if the Excise Duties on Certain Means 
of Transportation is paid, or if it is declared that the activity that the vehicle is going to be applied to 
meets  the  requirements  to  benefit  from  an  exemption  (there  exists,  for  instance,  an  exemption  for 
activities  like  'rent  a  car').  In  the  latter  cases,  it  is  not  mandatory  (by  application  of  the  Spanish 
legislation regulating the Excise Duties on Certain Means of Transportation) to register the vehicle in 
Spain, nor to pay the Excise Duties on Certain Means of Transportation. 

HU  According to the provisions of the Vehicle Traffic Act (1998/1), vehicles with drivers, who have their 
place of residence in Hungary, do not need to have Hungarian car documents or license plates in the 
following cases: 

• 

• 

usage of the vehicle does not last longer, than 30 days; 

the vehicle is used regularly for work purposes abroad. 

NL 

PT 

UK 

Exemption is granted for a maximum period of two weeks. The car should be reported electronically 
in  advance,  through  the  Internet.  For  longer  periods  up  to  three  years,  the  registration  tax  is  levied 
proportionally to the total duration of the agreed lease arrangement. An extension of this regulation to 
lease agreements with a maximum duration of four years has been proposed to Parliament.  

The Portuguese legislation allows that a vehicle that arrived in Portugal as a result of a hire contract is 
re-hired to a resident under the condition that it is re-exported within 4 days.  

The UK does allow a car registered in another Member State, which has arrived in the UK as a result 
of a hire contract, to be hired out to any rental customer (UK resident or otherwise) without the need 
for the car to take-up UK registration. 

EN 

24 

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MS 

BE 

Annex IV 
Overview of passenger car taxation in Member States 

Registration 
taxes based 
on: 

Tax rate/Approximate 
amount of registration 
taxes60 

Annual circulation 
taxes based on: 

Approximate amount 
annually 

Tax due ranges from € 61,5 to 
€ 4957 

Engine power 

Ranges  from  € 57  to  € 1714 
for fiscal horsepower of 20 

Engine  power, 
expressed 
either  in  fiscal 
horsepower  or 
in 
kilowatt 
(kW) 

BG  None 

CZ  None 

DK 

Price  inclusive 
of  VAT  and 
fuel efficiency 

105%  up  to  DKK 62700  and 
180%  of  the  remainder  of  the 
price 

Reduction  of  DKK 4000  for 
for  each 
petrol/diesel  cars 
additional  km  in  excess  of 
16/16,5  km  the  vehicles  runs 
per litre petrol/diesel. 

Increase  of  DKK  1000  for 
petrol/diesel  cars  for  each  km 
less  than  16/18  km  the  car 
runs per litre petrol/diesel 

Engine  power  and 
the 
of 
year 
manufacture 

Max.  BGN 3,69  per  kW 
above 110 kW x 2,8 for a car 
less than 5 years old 

Cylinder 
(cc) in cm3 

capacity 

From 
CZK 4200  

CZK 1200 

to 

Fuel  efficiency  and 
fuel type 

Petrol cars: 

DKK 560 for cars running ≥ 
20  km/litre  to  DKK  19320 
for 
< 
cars 
4,5 km/litre 

running 

Diesel cars: 

DKK 160 for cars running ≥ 
32,1 km/litre  to  DKK 25920 
for 
< 
cars 
5,1 km/litre 

running 

Cc 
and 
emissions 

CO2-

€ 2/ €9.50  per  100  cc  for  a 
petrol/diesel engine 

None 

CO2-emissions 

14% (≤ 120 g/km CO2) with a 
minimum  of  € 280  gradually 
(> 
to 
increasing 
225 g/km  CO2)  with 
a 
minimum of € 720 

36% 

and  € 2  for  each  g/km  CO2 
emission  above  a  certain 
limit  (110  g/km  for  cars 
registered in 2012) 

Ranging from € 160 for CO2 
emissions  <  120 g/km  and 
€ 2 258 for CO2-emissions > 
225 g/km 

DE  None 

EE 

None 

IE 

60

Approximate amount of taxes: a range of the tax due or the maximum tax. 

EN 

25 

   EN 

 
 
 
 
 
 
 
                                                 
 
MS 

Registration 
taxes based 
on: 

Tax rate/Approximate 
amount of registration 
taxes60 

Annual circulation 
taxes based on: 

Approximate amount 
annually 

EL 

Price  inclusive 
of VAT  

Rate  varies  depending  on  the 
cc  and  on  the  pollution  norm 
of the vehicle. 

CO2-emissions 

Rate varies from 0 to € 3,40 
per g/km CO2 for a car with 
CO2-emissions > 251 g/km 

5% is the lowest rate (< 900 cc 
the 
and  Euro-5),  346% 
highest  rate  (>  2000  cc  and 
before Euro-1) 

is 

ES 

Price  exclusive 
of VAT 

Rate is 0 (< 120 g/km CO2) to 
14,75% (≥ 200 g/km CO2) 

Engine power 

Rates  established  by  local 
government 

Rate depending 
on 
the  CO2-
emissions 

The  autonomous  regions  can 
however  set  higher  or  lower 
tax rates 

FR 

IT 

Horsepower. 
The 
CO2/45 
(kW/40)1.6 

formula: 
+ 

Levied  by  the 
regions 

There  is  also  a 
CO2-based 
bonus-malus 
A 
system. 
malus  (tax)  is 
due  above  140 
g/km CO2 

Rates  depend 
on the type and 
the  capacity  of 
the vehicle 

The  rate  varies  between  € 27 
and € 52 per horsepower 

None 

Provincial 
authorities  may 
increase the tax rates by up to 
30% 

Power 
vehicle 

of 

the 

CY 

Cc  and  CO2-
emissions 

€ 0,51 per  cc  (0  –  1650 cc)  to 
€ 7,69 per cc (> 3000 cc) 

and 

Cc 
emissions 

CO2 

Reduction  of  max  30%  for 
CO2-emissions  below  200 
g/km  and  an  increase  of  max 
20% 
CO2-emissions 
for 
exceeding 200 g/km 

LVL 0,3  to  5,0  per  g/km  CO2 
depending 
the  CO2 
on 
emission range 

LV 

CO2-emissions 

LT 

None 

LU  None 

established 

Rates 
by 
regional law, at 90 % to 110 
% of the amount established 
for the previous year 

Rate  varies  between  € 0,04 
and € 0,20 per cc minus 15% 
if CO2 < 150 g/km 

Weight 

LVL 24 for a car < 1500 kg  

LVL 150 for a car > 3500 kg 

None 

CO2  emissions  and 
type of fuel  

€ 306 for a diesel car with of 
200 g/km CO2  

EN 

26 

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MS 

Registration 
taxes based 
on: 

Tax rate/Approximate 
amount of registration 
taxes60 

Annual circulation 
taxes based on: 

Approximate amount 
annually 

kW  and  decreases 
for older cars.  

Maximum 
HUF 345/kW/year 

HU  Cc.  The 

tax 
rate is based on 
the type of fuel 
and 
environmental 
features 

Petrol  cars  up  to  1100 cc  and 
to  1300 cc: 
diesel  cars  up 
to  749000 
HUF  250000 
depending 
emission 
standards 

on 

Petrol  cars  above 3000 cc  and 
diesel  cars  above  3500 cc: 
HUF 3,2  to  9,6 mio per  item 
depending 
emission 
on 
standards 

MT  Registration 
value 

depends 
Rate 
emissions, 
fuel 
length of the car 

on  CO2 
and 
type 

CO2  emissions,  fuel 
type, 
particles 
emissions and age. 

€ 600  for  a  new  petrol  or 
diesel car > 250 g/km CO2 

NL 

AT 

the 
11,1%  of 
catalogue 
net 
and 
price 
depending  on 
fuel  type  and 
CO2  emissions. 
From  2013  the 
registration  tax 
will  only  be 
based  on  CO2 
emissions 

Consumer 
price  exclusive 
of VAT 

As  for  the  CO2-emission  part, 
three  emission  brackets  and  a 
progressive tax rate are fixed. 

Weight  and 
type  

fuel 

€ 800  for  a  petrol  car  ≤ 
1400 kg 

Regional surcharge 

Tax rate: 

Engine capacity 

€ 6.6 per kW above 24 kW 

for 

- 
fuel 
consumption per 3 litres x 2% 

petrol 

cars: 

- for diesel cars: fuel 
consumption per 2 litres x 2% 

If the CO2-emission is above 
160 g/km, the tax increases 

PL 

Price 

The rate is: 

None 

– 18.6 % of the price for a car 
> 2000 cc 

–  3.1%  of  the  price  for  other 
cars 

EN 

27 

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MS 

Registration 
taxes based 
on: 

Tax rate/Approximate 
amount of registration 
taxes60 

Annual circulation 
taxes based on: 

Approximate amount 
annually 

PT 

Cc  and  CO2 
emissions 

For all cars: 

and 

Cc 
emissions 

CO2 

Maximum  € 637  for  a  car  > 
2500 cm3 or > 250 g/km CO2 

-  € 0,97  per  cc  (<  1250  cc) 
minus € 719 

-  € 4,56  per  cc  (>  1250  cc) 
minum € 5,212 

For  petrol/LPG/natural  gas 
cars 

-  € 4,03  per  g/km  CO2  (< 
115 g/km) 

-  to  € 143,39  g/km  CO2  (> 
195 g/km) 

-  minus  amounts  to  deduct 
depending on CO2 

For diesel cars 

-  €  19,39  to  187,97  per  g/km 
CO2 

-  minus  amounts  to  deduct 
depending on CO2 

The  rates  vary  between  0,5% 
to  28%  for  petrol  cars  and 
from  1%  to  31%  for  diesel 
cars 

Cc 

Rates vary from Lei 8 to 290 
for  each  fraction  of  cc  of 
200 cm3 

Engine capacity 

€  193,96 
2500 cm3 

for  a  car  > 

RO  Cc, 

pollution 
the 
and 

norm  of 
vehicle 
vehicle type 

SI 

to 

price 
Selling 
exclusive 
of 
VAT.  The  tax 
rate 
is 
determined 
according 
environmental 
(CO2, 
criteria 
Euro  emission 
standards)  and 
fuel. 
engine 
diesel 
For 
motor  vehicles 
also  Particulate 
Matter 
(PM) 
emissions 

SK 

None 

Engine 
capacity 

cylinder 

EN 

28 

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MS 

FI 

Registration 
taxes based 
on: 

Tax rate/Approximate 
amount of registration 
taxes60 

Annual circulation 
taxes based on: 

Approximate amount 
annually 

Price  inclusive 
of  VAT  and 
this tax 

The  tax  rate  is  between  5  to 
50%  depending  on  the  CO2 
emissions 

CO2 emissions 

€  43  when  CO2  emission  is 
for  CO2 
0 g/km.  € 606 
emission ≥ 400 g/km 

For  other  than  petrol  cars,  a 
reduction or increase applies 
(e.g.  increase  for  diesel  is 
maximum  5,5  times  the  tax 
for petrol) 

SE 

None 

UK  None 

CO2  emissions,  fuel 
type 

For a diesel car the tax is the 
highest:  SEK 1168  +  51  per 
g/km CO2 above 100 g/km 

CO2 emissions 

£ 475  for  a  car  >  255  g/km 
CO2 

EN 

29 

   EN