Commission of the European Communities v Hellenic Republic.
Date: 2007-09-20
20. Moreover, retail prices published in magazines are indicative only, and cannot therefore represent a reliable, fixed point of reference. Those prices could, however, be taken into account by a complaints commission in the event that a vehicle owner claimed that there was a substantial difference between those prices and the value adopted on customs clearance.
22. Thirdly, in relation to the possibility of challenging the application of the fixed method of calculation before the complaints commissions, the Hellenic Republic contends that the setting up of those commissions, in conjunction with the application of an objective scale of depreciation, is intended to avoid, in all cases, the charging of a registration tax which infringes Article 90 EC. The Greek legislation is consistent with the case-law, according to which the fact that the owner of an imported vehicle has the possibility of challenging the application of the fixed scale to his vehicle, by demonstrating that it leads to taxation higher than the amount of the residual tax incorporated in the value of similar second-hand vehicles already registered in the national territory, will prevent any possible discriminatory effects of a system of taxation based on such a scale. The setting up of the complaints commissions is a response, moreover, to the requirements set out by the Commission in its Proposal for a directive on passenger car related taxes (COM(2005) 261 final), in particular to the conditions specified in Article 10(3) of that proposed directive on scales of values.
24. In relation to the taxation of imported second-hand vehicles, the Court has held that Article 90 EC seeks to ensure the complete neutrality of internal taxation as regards competition between products already on the domestic market and imported products (see, inter alia, Case C‑387/01 Weigel  [2004] ECR I‑4981, paragraph 66; Joined Cases C‑290/05 and C‑333/05 Nádasdi and Németh  [2000] ECR I‑10115, paragr aph 46; and Case C‑313/05 Brzeziński  [2007] ECR I‑0000, paragraph 28).
25. It is settled case-law that the first paragraph of Article 90 EC is infringed where the taxation on the imported product and that on the similar domestic product are calculated in a different manner on the basis of different criteria which lead, even if only in certain cases, to higher taxation being imposed on the imported product (see, inter alia, Commission  v Greece , paragraph 20, and the case-law cited there; Case C‑393/98 Gomes Valente  [2001] ECR I‑1327, paragraph 21; and Case C‑101/00 Tulliasiamies and Siilin  [2002] ECR I‑7487, paragraph 53).
26. The Court has thus held that the first paragraph of Article 90 EC is infringed when a Member State charges on second-hand vehicles from another Member State a tax the amount of which, calculated without taking the vehicle's actual depreciation into account, exceeds the amount of the residual tax incorporated in the value of similar second-hand vehicles already registered in the national territory (Case C‑345/93 Nunes Tadeu  [1995] ECR I‑479 paragraph 20, and Gomes Valente,  paragraph 23).
27. In applying Article 90 EC, and in particular when comparing the taxes applicable to imported second-hand cars with those applicable to second-hand cars purchased at home, which are similar or competing products, it is necessary to have regard not only to the rate of direct or indirect internal taxation on domestic or imported products but also to the basis of assessment and the detailed rules for levying the tax in question (see Case 74/76 Iannelli & Volpi  [1977] ECR 557, paragraph 21; Case C‑47/88 Commission  v Denmark  [1990] ECR I‑4509 paragraph 18; and Nunes Tadeu , paragraph 12).
28. More specifically, a Member State may not charge tax on imported second-hand motor vehicles based on a value which is higher than the real value of the vehicle with the result that they are taxed more heavily than similar second-hand cars on the domestic market (see, to that effect, Commission  v Denmark , paragraph 22). The taxable value imputed to the imported second-hand vehicle by the revenue authorities should faithfully reflect the value of a similar second-hand vehicle already registered on the domestic market (see, inter alia, Weigel , paragraph 71).
29. In that regard, the Court has held that the taking into account of the actual depreciation of the vehicles need not necessarily involve an assessment or expert examination of each of them. To avoid the administrative burden inherent in such a system, a Member State may establish, by means of fixed scales determined by statute, regulation or administrative provision and calculated on the basis of criteria such as a vehicle’s age, mileage, general condition, propulsion method, make or model, a value for second-hand vehicles which, as a general rule, would be very close to their actual value ( Gomes Valente,  paragraph 24, and Weigel , paragraph 73).
30. Such scales must, in any case, take account of the fact that the annual depreciation in the value of cars is in general considerably more than 5%, that 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. Moreover, a vehicle starts to depreciate as soon as it is purchased or brought into use (see, to that effect, Commission  v Greece , paragraph 22, and Tulliasiamies and Siilin , paragraph 78).
31. According to settled case-law, in order for a system of taxation of imported second-hand cars which takes into account the actual depreciation of the vehicles on the basis of general criteria to be compatible with Article 90 EC, it must 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 ( Gomes Valente , paragraph 26; see also, to that effect, Commission  v Greece  paragraph 29, and Brzeziński , paragraph 40).
33. As regards, first, the basis for calculation of the taxable value, the Court considers that while, as suggested by the Commission, the authorities of a Member State may refer to a guide indicating the average prices of second-hand vehicles in the national market or to a list of average current prices used as a reference in the sector ( Gomes Valente , paragraph 25, and Weigel , paragraph 74), the Hellenic Republic cannot be criticised for taking as a basis the wholesale price of the corresponding vehicle current at the time when the imported vehicle was put into circulation on the international market.
34. The Court has held, in the context of assessing the compatibility of national legislation with Article 90 EC, that national legislation may take the value of a new vehicle as the basis for determining the taxable value of an imported second-hand vehicle, provided that the vehicle used as a reference for calculating the tax on an imported second-hand car is a similar vehicle, which implies that account must be taken of the model, type and other characteristics such as propulsion method and equipment (see, to that effect, Tulliasiamies and Siilin , paragraphs 73 to 76).
36. As regards, secondly, the depreciation scale, as stated in paragraph 30 of this judgment, the depreciation of a vehicle starts as soon as it is purchased or put into use. Moreover, the Court has held that the charging on imported second-hand vehicles of a registration tax for which the basis of assessment is at least 90% of the value of the vehicle when new constitutes generally manifest overtaxation of those vehicles in comparison with the residual registration tax in the case of previously-registered second-hand cars bought on the national market, whatever their age or condition (see, to that effect, Commission  v Denmark , paragraph 20).
37. As observed in paragraph 29 of this judgment, the Court has set out, without intending the list to be exhaustive or obligatory, the objective criteria on which a fixed scale may be based. The Court has thus referred to the age of the vehicle, but also to its mileage, its general condition, its propulsion method, its make or model.
38. In the present case, it is common ground that the Greek legislation makes provision for depreciation only from when the vehicle is six months old and has covered more than 6 000 kilometres. It follows, first, that the Hellenic Republic applies to second-hand cars imported from another Member State a system of taxation under which the tax due is equal to the tax chargeable on a similar new vehicle for the first six months counting from the date when those cars are put into circulation, whatever the number of kilometres covered. The same is true for imported second-hand cars between 6 and 12 months old which have covered less than 6 000 kilometres.
39. Second, although the wholesale price which serves as the basis for the evaluation of imported second-hand cars does take account of the type of the vehicle, that is to say, of engine capacity, model and other technical features such as propulsion method, it is nevertheless clear that the scale of depreciation which is then applied in order to determine the taxable value is based on a single criterion, namely the age of the vehicle. Just because there is a condition that the vehicle should have covered more than 6 000 kilometres if it is between 6 and 12 months old does not mean that the scale should be regarded as taking the mileage of a vehicle into account, especially since that represents a threshold of use below which no depreciation is applied if the vehicle is less than a year old.
40. However, where a vehicle is used intensively in its first few years, wear and, accordingly, depreciation will be much more significant than where the vehicle is subject to so‑called ‘normal’ use. Since the legislation at issue does not take mileage into account in the calculation of depreciation of such a vehicle, the rate of depreciation corresponding to its age will be applied to it. In that event, the value of the vehicle concerned, which is the basis of the registration tax, will obviously be set at an overly high level, and that will lead to the charging of a tax the amount of which, calculated without taking into account the actual depreciation of the vehicle, will exceed the amount of the residual tax incorporated in the value of similar second-hand vehicles already registered on national territory.
41. Contrary to the Hellenic Republic’s assertion, the fact that, in such cases of intensive use of a vehicle, it is open to the owner to challenge the application of the fixed scale is not sufficient to prevent a system of taxation from contravening Article 90 EC.
42. As is clear from paragraph 29 of this judgment, while a Member State may avoid the administrative burden of an assessment system based on the expert examination of each vehicle by resorting to a fixed scale, such a scale must nevertheless enable a value to be established for second-hand vehicles that will, as a general rule, be very close to their actual value.
43. It follows from the foregoing that, given the failure to take account of mileage, the scale adopted by the legislation at issue does not, as a general rule, lead to a reasonable approximation of the actual value of imported second-hand vehicles.
46. In that regard, firstly, for such a system to be compatible with the first paragraph of Article 90 EC, the criteria on which the fixed method of calculating the depreciation of vehicles is based must be made known to the public ( Tulliasiamies and Siilin , paragraph 87).
50. Secondly, the compatibility with Article 90 EC of a system of taxation of imported second-hand vehicles which takes account of the actual depreciation of the vehicles on the basis of general criteria presupposes that the owner of such a vehicle is able to challenge the application of such a fixed method of calculation to the vehicle in order to demonstrate that it leads to taxation exceeding the amount of the residual tax incorporated in the value of similar used vehicles already registered in the national territory ( Tulliasiamies and Siilin , paragraph 88).