Updated: Court orders €6,921 tax refund on second-hand car

(Adds PL statement)

Transport Malta has been ordered to refund €6,921 to a couple who bought a second-hand Landrover Freelander from the UK in 2007 for €3,693, on which they were charged €9,783 in registration tax and €1,761 in VAT on registration tax.

The refund was ordered by Mr Justice Anthony Ellul this morning in his decision on a civil case filed by William and Anna Grech against the Transport Authority, the Prime Minister and the Transport Minister.

The sum the court ordered the authority to refund the couple is the difference between the €9,783 they paid and the €4,622 they should have been charged as well as the VAT on registration tax.

The couple claimed that despite the fact that their car was registered in the UK, which is an EU country, they were asked to pay a registration tax of €9,783, as well as VAT on registration tax amounting to €1,761 on the car’s arrival in Malta.

They paid the money under protest and reserved the right to take legal action, which they did.

The couple claimed that, by demanding the payment of tax, Transport Malta was in breach of an article in the EU treaty that said that no EU member state should impose an internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products, on the products of other member states.

They also called on the court to find that it was illegal of TM to request VAT on registration tax.

TM and the Prime Minister denied that the EU treaty had been breached.

In his decision, Mr Justice Ellul noted that when the couple bought their car, the law established a 65 per cent tax on imported second hand vehicles or a minimum Lm4,200.

The authority valued this car at Lm3,053, that should have translated into a tax of Lm1,984 (€4,622).

For although the law then established a minimum of  Lm4,200 registration tax, this was in breach of EU regulations and was later changed. So the court ordered the authority to refund the couple the €5,160 - the difference between the €9,783 they paid and the €4,622 they were meant to have been charged.

The court also ordered the authority to refund the VAT on registration tax as the authorities’ failed to justify the imposition of VAT on registration tax when it came to importing second hand cars from EU member states.

PL STATEMENT

The Labour Party said the court’s decision confirmed the Labour Party’s argument that the VAT on registration tax GonziPN imposed was illegal and against EU regulations.

The PL had collected 17,000 such cases and presented a court case, which was in process.

The court’s decision, the party said, strengthened its argument while GonziPN insisted it would not give the money back.

A new Labour government would address this injustice which was now also acknowledged by the court, the PL said.