Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee – Strengthening the single market by removing cross-border tax obstacles for passenger cars

More than 230 million passenger cars circulate on European roads. Each year, more than 13 million new passenger cars are registered in the European Union, and about 3 million used cars are transferred between Member States, of which up to 1 million are linked to people migrating from one Member State to another. Car taxation is an important revenue source for all Member States. On average, registration and circulation taxes accounted for 1.9% of all tax revenues in 20102. The actual level and design of such national tax regimes is therefore of specific interest for national tax authorities as well as for car producers and citizens and enterprises owning and using a car.

The issues of double or multiple taxation and of potential tax discrimination in case of cross-border transfers of passenger cars are of concern to EU citizens and service providers. In its 2010 EU Citizenship Report the Commission announced that it would work on solutions to double registration taxes on cars as this can be an obstacle to EU citizens' right to move freely in the EU, and in its Communication 'Removing cross-border tax obstacles for EU citizens' the Commission pointed out that, when buying a car in a Member State other than that of their normal residence or when transferring a car to a Member State other than that in which it is registered, EU citizens frequently face excessively complex re-registration procedures and may have to pay registration and/or circulation taxes twice.

The present Communication focuses on the tax aspects in cross-border situations. High registration taxes on cars transferred between Member States in the context of the transfer of permanent residence may work as an obstacle for potential migrants. Also, the multitude of different and un-coordinated thresholds and technical triggers for different levels of taxation such as engine size, fuel used or CO2 emissions (be it for registration or circulation taxes) further complicates the already diverse market conditions for car producers triggering a tax-induced fragmentation of the Single Market, which results in tax-induced cross-border trade as well.

EUR-Lex: COM(2012)756: Follow the progress of this document through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2012:756:FIN

European Commission: SWD(2012)429: Principles of taxation of motor vehicles according to EU law as interpreted by the Court of Justice http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SWD:2012:0429:FIN:EN:PDF

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