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EFTA Warns Norway On Car Taxes

By Ulrika Lomas, Tax-News.com, Brussels

27 November 2012


The European Free Trade Association (EFTA) Surveillance Authority is claiming that Norwegian rules concerning tax on leased or borrowed motor vehicles registered in another European Economic Area (EEA) state are in breach of EEA rules. The EEA covers the countries of the European Union plus Iceland, Liechtenstein and Norway.

The EFTA Surveillance Authority has announced that it has sent two letters to Norway. The first letter, a reasoned opinion, concerns the full registration tax imposed on foreign-registered leased motor vehicles which are used by Norwegian residents in Norway. According to EEA law, Norway may impose a registration tax on a motor vehicle registered in another EEA State if that vehicle is intended to be used mainly on its territory on a permanent basis. However, the amount of tax has to be proportionate to the use in Norway. The Authority takes the view that the obligation to pay a full registration tax without taking account of the duration of the use of that vehicle in Norway is disproportionate. Such an obligation is therefore in breach of the freedom to provide and receive cross-border services in the EEA.

The second letter, a letter of formal notice, concerns the taxation of private motor vehicles registered in another EEA State and borrowed for use in Norway by persons residing in Norway. According to EEA law, Norway cannot impose a full registration tax without justification and without taking account of the duration of the use of such vehicles in Norway.

A letter of formal notice is the first step in an infringement procedure against an EEA State. The Norwegian government has two months to express its views on the content of the letter.

A reasoned opinion is the second step in the infringement procedure. The Authority may bring the matter before the EFTA Court if Norway fails to take the measures necessary to comply with the reasoned opinion within two months.

TAGS: tax | vehicle tax | law | Norway | European Union (EU) | services | Europe

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