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Today’s Top Headlines




Bundesrat Approves German Road Charging Scheme

by Ulrika Lomas, Tax-News.com, Brussels

04 April 2017

A controversial road charging scheme that neighboring states says discriminates against foreign drivers has passed Germany's upper house of parliament, the Bundesrat.

Designed to raise EUR500m (USD533m) in additional revenue for the upkeep of Germany's road network, the new toll system comprises a number of different charges depending on a vehicle's environmental standards and the length of time it uses roads subject to the charging scheme.

The annual charge will start at EUR67, rising to EUR130, with users of vehicles with the lowest emissions paying less. Vehicles entering Germany from other countries will have the option of buying short-term passes, starting at EUR2.50 for 10 days and rising to EUR50 for two months.

However, the scheme, which is due to begin in 2019, is controversial because road users resident in Germany will see a corresponding reduction in their annual car tax and therefore it could potentially breach EU law by discriminating against foreign taxpayers.

The scheme has already been criticized by a number of countries bordering Germany, including the Netherlands, Belgium, Luxembourg, and Austria, with the latter having raised the possibility of challenging the road toll in the European courts.

Last month, the European Parliament said that any national road charging system that directly discriminates based on nationality or when combined with national tax measures to the benefit of only nationals from a given member state, constitutes "a violation of the non-discriminatory principle enshrined in Article 18 of the Treaty of the Functioning of the European Union."

Plans for a new road charging scheme were originally adopted in Germany in 2015. However, in June that year, the European Commission initiated formal infringement proceedings against Germany over the proposals.

In December 2016, the Commission reached an agreement with the German Government that was intended to allow for a better differentiation of the road charge on the basis of environmental criteria. The price of short-term vignettes – typically purchased by foreign drivers – was to decrease in relation to the annual rate and be set below a certain ratio. In addition, the most environmentally friendly vehicles were to be given favorable treatment in the annual vehicle tax.

The Commission then put infringement proceedings on hold. However, there is a strong possibility that the amended scheme will be subject to further scrutiny from the Commission and the European Court of Justice.

TAGS: court | environment | tax | investment | European Commission | Belgium | Netherlands | law | Luxembourg | travel and tourism | Austria | Germany | standards | Europe

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