Taxation of second-hand vehicles: EU Judgment in Case C-694/22 Commission v Malta

Thursday 22nd February 2024

Judgment in Case C-694/22 Commission v Malta (Taxation of second-hand vehicles)

(Taxation)

The European Commission asks the Court to declare that Malta has failed to fulfil its obligations under Article 110 TFEU. Malta was applying a higher annual circulation fee (the “ACT”) on motor vehicles registered in other Member States (second-hand vehicles) before January 1, 2009 and brought into Malta from that date, than the fee applicable to similar vehicles registered in Malta before said date, hence infringing EU law.

On June 7, 2019, the Commission sent a letter of formal notice to Malta.

Malta replied, explaining that the vehicle registration tax scheme and the TAC scheme were complementary: the TAC scheme could therefore not be examined in isolation as regards its compliance with Article 110 TFEU.

Secondly, Malta stated that the scheme in respect of the TAC applicable to vehicles registered in Malta from January 1, 2009 (the “new system”) was based on the “polluter pays” principle and favoured newer, smaller and cleaner vehicles.

Thirdly, it asserted that the application of the new system to vehicles registered in Malta before January 1, 2009 would penalise those who had purchased their vehicles before that date.

Malta was currently analysing the amendments to remedy the alleged discrimination, which would be introduced in respect of vehicles imported into Malta on or after 1 January 2009.

On June 9, 2021, the Commission issued a reasoned opinion, reiterating its view that the TAC scheme had infringed EU law.

Malta replied, providing further details of the legislative measures envisaged to remedy the alleged infringement and highlighting again the adverse consequences that the new system would have for the owners of the vehicles registered in Malta before January 1, 2009.

Not convinced by Malta’s reply, the Commission decided to bring the present action.

Background Documents C-694/22