Greek Car Tax Infringes EU Law

by Ulrika Lomas, Tax-News.com, Brussels

06 May 2010

The European Commission has decided to continue the infringement procedure against Greece on its car registration system, which the Commission has said still discriminates against used cars bought in other member states, despite some modifications in the law. The Commission has therefore requested Greece, again, to modify the depreciation rules used in the determination of the taxable value of second-hand cars.

The request was made by means of an additional Letter of Formal Notice under Article 260 of the Treaty on the Functioning of the European Union (TFEU). Under a new provision in the TFEU, if Greece fails to comply with this additional letter, the Commission may immediately bring Greece to the European Court of Justice (ECJ) seeking the imposition of a penalty payment.

In its judgment in Case C-74/06, the ECJ held that Greece had infringed Article 90 EC by imposing a heavier tax on second-hand vehicles from other member states than on similar vehicles registered for the first time in Greece.

Greece has changed its legislation by introducing accelerated depreciation scales and another depreciation criterion based on mileage. Nevertheless, on the basis of its analysis of the Greek car market, the Commission maintains that the Greek depreciation rates still favour used vehicles on the national market. The result is an over-taxation of cars acquired in other member states, in violation of European Treaty.

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