On October 5, 2006, the ECJ issued its decision in the case C-290/05 (Nádasdi).
Context: Internal taxation – Registration duty on motor vehicles – Used motor vehicles – Importation
Article in the EU VAT Directive
Article 33 of the Sixth VAT Directive (Article 401 of the EU VAT Directive 2006/112/EC).
Article 401 (Other taxes, duties and charges)
Without prejudice to other provisions of Community law, this Directive shall not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties or, more generally, any taxes, duties or charges which cannot be characterised as turnover taxes, provided that the collecting of those taxes, duties or charges does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.
Facts
C-290/05
- Having purchased a used private motor vehicle for EUR 6 000 in Germany on 2 May 2004, Mr Nádasdi lodged an application to be assessed for registration duty with the Debreceni Fővámhivatal (Debrecen Main Customs Office) on 13 May 2004.
- By decision of 14 May 2004, that authority imposed a duty of HUF 150 000, which Mr Nádasdi paid on the same day. It issued him with the certificate of payment of the duty, indicating the date of 14 May 2004.
- Consequently, in the exercise of its power of review, the Vám- és Pénzügyőrség Észak-Alföldi Regionális Parancsnoksága, by Decision No 8074/2004 of 11 November 2004, amended the decision of the Debreceni Fővámhivatal, increased the amount of the registration duty payable by Mr Nádasdi to HUF 390 000 and ordered him to pay the balance of HUF 240 000 by no later than 15 days after the decision had become final.
- According to the grounds of Decision No 8074/2004, the amount of the registration duty was amended on account of the adoption of Law No XII of 2004 amending Law No CX of 2003 on registration duty (a regisztrációs adóról szóló 2003. évi CX. törvény módosításáról rendelkező 2004. évi XII. tőrvény), which entered into force on 14 May 2004, the new tariff scale being applicable in cases where the certificate of payment of the duty was issued after the entry into force of Law No XII of 2004.
- Mr Nádasdi brought an action before the referring court for judicial review of Decision No 8074/2004.
Case C-333/05
- Having purchased a used private motor vehicle in Germany on 28 December 2004, Mrs Németh applied to the Kecskeméti Fővámhivatal (Main Customs Office, Kecskemét) for assessment of the registration duty. In accordance with Regulation KöHÉM No 6/1990, which is a regulation of the Ministry of Transport, Communication and Construction, the Bács-Kiskun Megyei Közlekedési Felügyelet (Traffic Inspectorate of the County of Bács-Kiskun), classed that vehicle in environmental category 7.
- Taking account of the technical and environmental characteristics of that vehicle, the Kecskeméti Fővámhivatal set the amount of the registration duty at HUF 390 000.
- Ruling on the objection lodged by Mrs Németh against that decision, and acting as an administrative body of appeal, the Vám- és Pénzügyőrség Dél-Alföldi Regionális Parancsnoksága confirmed that decision.
- Mrs Németh then brought an action before the referring court to challenge that confirmatory decision. She takes the view that the Law on registration duty infringes Community law. She maintains that that duty is, in essence, a customs duty payable on import and as such is prohibited within the European Community by Articles 23 EC and 25 EC. However, should it not be classified as a customs duty or as a levy having equivalent effect to a customs duty, it may be possible to regard it as a tax prohibited by Articles 90 EC to 93 EC, or even as a turnover tax prohibited by Article 33 of the Sixth Directive, with the result that it may not be imposed.
Questions
C-290/05
C-333/05
(1) May a tax imposed by a Member State, such as the Hungarian registration duty, be considered to be a customs duty or a measure having equivalent effect?
(2) If the first question is answered in the negative, may a tax imposed by a Member State, such as the Hungarian registration duty – which requires payment of a tax as a precondition for the registration and placing into circulation of a passenger vehicle – be considered to be a type of import duty?
(3) If the second question is answered in the negative, is a tax imposed by a Member State, such as the Hungarian registration duty, compatible with the requirements of Article 90 EC or with Article 33 of the [Sixth] Directive … , or does that duty infringe the common system of value added tax?
(4) As Community law now stands, is a tax imposed by a Member State, such as the Hungarian registration duty, compatible with the provisions of Community law when the amount of the registration duty payable on new and used passenger cars – leaving aside the environmental classification of the vehicles – is identical, does not in any way reflect the depreciation in value of used vehicles and is wholly independent of the date on which the vehicle was placed in circulation and of the time during which it remained in (lawful) circulation?
AG Opinion
C-290/05
(1) In order to determine whether a tax imposed on motor vehicles when they are first placed on the road in a Member State is compatible with the first paragraph of Article 90 EC in so far as it applies to second-hand vehicles, the effect of that tax on the cost of such vehicles newly imported from another Member State must be compared with the effect of the residual amount of tax on the cost of similar second-hand vehicles which have already been placed on the road in the first Member State and which have already borne that same tax at an earlier stage. A comparison with second-hand vehicles already placed on the road in the Member State before the introduction of that tax is not relevant.
(2) A tax imposed on second-hand motor vehicles when they are first placed on the road in a Member State, the amount of which is calculated without taking the vehicle’s actual depreciation into account, so that when applied to such vehicles imported from other Member States it exceeds the amount of residual tax incorporated in the value of similar second-hand vehicles already registered in the national territory, is, to the extent of that excess charge, incompatible with the first paragraph of Article 90 EC.
(3) That incompatibility is not affected by the fact that the tax in question is intended to pursue aims related to environmental protection or is levied solely on the basis of objective criteria relevant to such protection.
C-333/05
Questions 1 and 2
– A tax imposed on motor vehicles when they are first placed on the road in a Member State, regardless of their place of manufacture and to the exclusion of imported vehicles which are not intended for use on the road, is not a customs duty on imports or a charge having equivalent effect for the purposes of Articles 23 and 25 EC, nor does it give rise to formalities connected with the crossing of a frontier for the purposes of Article 33(1) of Sixth Council Directive 77/388/EEC.
Question 3 (first part) and question 4
– Where such a tax applies without distinction to new vehicles manufactured in the Member State which imposes it and to new vehicles manufactured in other Member States, and provided that it does not have the effect of favouring the sale of the former over that of the latter, it is to that extent compatible with the first paragraph of Article 90 EC.
– A tax imposed on second-hand motor vehicles when they are first placed on the road in a Member State, the amount of which is calculated without taking the vehicle’s actual depreciation into account, so that when applied to such vehicles imported from other Member States it exceeds the amount of residual tax incorporated in the value of similar second-hand vehicles already registered in the national territory, is, to the extent of that excess charge, incompatible with the first paragraph of Article 90 EC.
– In the absence of any other domestic products which are not similar to new or second-hand motor vehicles but which are nevertheless in a competitive relationship with them, even if only partially, indirectly or potentially, there is no scope for an assessment of such a tax under the second paragraph of Article 90 EC.
Question 3 (second part)
– A tax which applies only to passenger cars and motor caravans, which is levied at rates fixed according to their technical characteristics, which is charged only when a vehicle is first placed on the road in a Member State, and which makes no provision for deduction of any comparable tax paid at any earlier stage, cannot be characterised as a turnover tax within the meaning of Article 33(1) of Sixth Council Directive 77/388.
Decision
1. A tax such as that imposed in Hungary by Law No CX of 2003 on registration duty (a regisztrációs adóról szóló 2003. évi CX. törvény), which does not apply to private motor vehicles by reason of the fact that they cross the frontier, does not constitute a customs duty on imports or a charge having equivalent effect within the meaning of Articles 23 EC and 25 EC.
2. The first paragraph of Article 90 EC has to be interpreted as precluding a tax such as that imposed by the Law on registration duty in so far as
– it is charged on used vehicles when they are first placed in circulation in the territory of a Member State, and
– its amount, which is determined exclusively by the vehicles’ technical characteristics (engine type, engine capacity) and their environmental classification, is calculated without taking the depreciation of the vehicles into account, in such a way that, when applied to used vehicles imported from other Member States, it exceeds the amount of that duty included in the residual value of similar used vehicles which have already been registered in the Member State of importation.
A comparison with used vehicles placed into circulation in the Member State in question before the introduction of that duty is not relevant.
3. Article 33 of the Sixth Directive does not preclude the levy of a tax such as that imposed by the Law on registration duty for which turnover is not the basis of assessment and which does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.
Personal comments/VATupdate
Source:
Similar ECJ cases
How did countries implement the case? Your feedback appreciated! Let us know
Newsletters
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- For an overview of ECJ cases per article of the EU VAT Directive, click HERE
