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TAXATION : POLAND WILL HAVE TO PAY BACK ILLEGAL EXCISE DUTIES.

The Luxembourg-based EU Court of Justice ruled, on 18 January, in Case C-313/05, that the heavier excise duty levied on certain second-hand cars imported into Poland is an infringement of Article 90 of the EC Treaty, which imposes neutrality in internal taxation from the standpoint of competition between products on the national market and imported products.

The case originated with a complaint lodged by a Polish national who had bought in Germany a Volkswagen Golf manufactured in 1989, for which he had to pay an excise duty of PLN855 (220.69) to import the vehicle into Poland. Demanding the reimbursement of the tax, to no avail, the plaintiff took the matter before the Polish courts, which referred preliminary questions to the EU Court of Justice.

Under a 2004 Polish law, excise duties are indeed levied on the purchase of second-hand cars originating in other member states, but not on the acquisition of a second-hand car already registered in Poland. After reviewing the compatibility of the Polish law with Treaty Article 90, the Court noted that the excise duty in question is charged only once (for all vehicles intended for registration in Poland). However, it increases in terms of the age of the vehicle for second-hand cars sold more than two years after their date of manufacture. The Court consequently asks the national courts to determine whether the higher excise duty applies only to second-hand cars originating in other member states. If a discriminatory effect is indeed confirmed, the tax authorities will be obliged to reimburse vehicle owners the amount of the tax collected unduly. An important detail in the case is that the Court holds that there is no reason to limit the temporal effect of the judgement.

Five other procedures underway

Commenting on the Court ruling, the European Commission pointed out that Poland had recently modified its legislation on excise duties. That said, however, five other member states are in the Commission's sights for similar practices. Alongside Cyprus, Malta and Hungary, Denmark and Finland are also concerned, but the discriminatory rates are apparently not as high as in the first three cases. Romania will also have to amend its legislation on pain of being notified soon of a litigation procedure. Taxation Commissioner Laszlo Kovacs has said that the Commission's proposal on vehicle tax schemes will be on the agenda of the economic and finance ministers' (EcoFin) lunchtime meeting in May.

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Publication:European Report
Geographic Code:4EXPO
Date:Jan 19, 2007
Words:402
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