EU takes Austria to court on car registration VAT

The European Commission said today that 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.

"The Commission considers that VAT should not be applied on top of the car registration tax," the commission said in a statement.

It noted that in another court case (Case C-98/05) which referred to the registration car tax levied in Denmark, the European Court had ruled that, in the context of a sale contract providing that the dealer will supply a vehicle registered for a price which includes the registration tax he paid before supplying the vehicle, the amount of that duty must be excluded from VAT. It said that registration tax is due in relation with the registration of the vehicle and not triggered by the supply and, registration tax is paid by the supplier of the vehicle on behalf of the purchaser.

The Commission has already referred Poland to the European Court on a similar case.

In Malta, a number of cases have been filed before the local courts, demanding refunds of VAT paid on registration tax before the law on registration tax was amended.