European Commission To Propose Harmonised Car Registration Tax

by Ulrika Lomas, Tax-News.com, Brussels

22 June 2005

European Commissioner for Taxation, Laszlo Kovacs is working on proposals that will introduce a uniform car registration tax throughout the European Union.

The idea behind the proposals, to be unveiled by Kovacs on Wednesday, is to eliminate instances of double taxation when motorists and car owners move between member states. Presently, car owners may be compelled to pay a tax to re-register their vehicles when moving to other member states, despite having already paid registration tax in their home state.

While some member states do not levy a car registration tax, rates across the EU can vary widely, and are as high as EUR16,000 ($20,000) in Denmark.

Under Kovacs' plans, registration taxes will be merged into member states' existing annual road tax charges or fuel tax levies. He expects the new system to be introduced within ten years after receiving approval from national legislatures and the European Parliament.

“It will benefit the single market, the competitiveness of the European car industry, the environment and the consumer,” he argued.

“It also removes the prospect of double taxation, which is against the spirit of the single market and provides consumers with higher legal certainty," the Taxation Commissioner added.

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