Transport watchdog studying EU court car tax ruling

The Malta Transport Authority (ADT) and the Association of Car Importers are looking into the implications of a ruling by the European Court of Justice on imported second-hand cars from EU member states.

The court declared that the Polish tax on second-hand cars imported from another EU member state is illegal.

The case was brought before the Luxemburg court by a Polish citizen, Maciej Brzezinski, who sought to recover the tax he had paid on a 15-year-old Volkswagen Golf he had imported from Germany three years ago.

The court ruled that Poland cannot tax second-hand cars from other EU countries "more onerously" than those already registered in Poland. The court concluded that the Polish excise registration system on second-hand cars is incompatible with EU law. Its ruling has a retroactive effect dating back to when Poland joined the EU in May 2004.

Car registration tax imposed in Malta treats second-hand cars differently from new cars. Apart from the tax rate as a percentage of value of the car, it also imposes a minimum rate of tax payable regardless of the value of the second-hand vehicle.

MEP Simon Busuttil told The Times the judgment would have a significant impact on Malta's current tax regime, and the Maltese courts had no option but to follow it.

"Because of this judgment, we may have to revise our car registration tax on second-hand cars purchased from other EU countries. It also means the authorities may face several claims for reimbursement of any undue tax collected in breach of this judgment since May 2004," Dr Busuttil said.

Contacted yesterday, ADT chairman Gianfranco Selvagi said the regulator was still waiting for the actual text of the judgment to study it.

"One can't make sweeping statements as the principle of subsidiarity exists even in these things. Each country has as right to establish its tax levels. The Polish case does not necessarily apply here. One has to look at the nitty-gritty of it to see if it applies."

He said high tax regime in Malta acted as a limit on the number of cars on the roads and to reduce pollution. "Taxes can be part of a traffic management process. If the registration system were to change, it has to be a whole package, including more stringent controls on emissions and so forth. I am aware that the government is studying this issue," he said.

Questions sent by The Times to the Ministry of Finance on Wednesday and to the Office of the Prime Minister yesterday were not answered.

A spokesman for the Association of Car Importers said the real issue was not second-hand imports from the EU but imports from Japan.

"Malta has transposed various EU directives which strictly regulate the importation of cars. EU legislation requests a certificate of conformity when a vehicle enters the European market. However, the Maltese authorities were not insisting on such a certificate in the case of second-hand cars being imported. The result was that the importers of new cars were being discriminated against, consequently suffering substantial damages," the spokesman said.