EU clears Malta on car registration tax VAT

The European Commission has closed the infringement procedure that had been brought against Malta over VAT charged on vehicle registration tax under the old car registration tax system.

The Commission said it considered that the issue on which it had opened the infringement proceedings was no longer part of Malta's legislation.

"The current car registration tax which came into effect on 1 January 2009 introduced environmental considerations into the tax system to encourage the use of smaller and environmentally cleaner cars," the Ministry of Finance said in a statement.

"The Maltese Government is pleased to note the positive effects which the current car registration tax has already had since its coming into force namely the reduction of prices for smaller and cleaner cars and the reduction in the average age of second hand cars being imported into Malta."

Earlier today, the European Commission said it has taken Austria to the European Court of Justice for the inclusion of car registration tax in the taxable base on which VAT is calculated (see separate story).