Case C-402/09

Ioan Tatu

v

Statul român prin Ministerul Finanţelor şi Economiei and Others

(Reference for a preliminary ruling from the Tribunalul Sibiu)

(Internal taxation – Article 110 TFEU – Pollution tax charged on first registration of motor vehicles – Neutrality of tax between imported second-hand motor vehicles and similar vehicles already on the domestic market)

Summary of the Judgment

1.        Tax provisions – Internal taxation – Pollution tax charged on motor vehicles on their first registration on national territory

(Art. 110 TFEU)

2.        Tax provisions – Internal taxation – Prohibition of discrimination between imported products and similar domestic products – Similar products – Definition

(Art. 110 TFEU)

3.        Tax provisions – Internal taxation – Pollution tax charged on motor vehicles on their first registration on national territory

(Art. 110 TFEU)

1.        Article 110 TFEU prohibits all Member States from imposing on products of the other Member States internal taxation in excess of that imposed on similar domestic products. That provision of the Treaty seeks to guarantee the complete neutrality of internal taxation as regards competition between products already on the domestic market and imported products. As regards in particular the taxation of second-hand motor vehicles, there is a breach of Article 110 TFEU where the amount of tax levied on an imported second-hand vehicle exceeds the residual tax incorporated in the value of similar second-hand vehicles already registered on national territory.

A system establishing a pollution tax charged on motor vehicles on their first registration on national territory which takes account, in calculating that tax, of the depreciation of the motor vehicle by using fixed, detailed and statistically based scales relating to the age and actual annual average kilometrage of the vehicle, which may, at the request and at the expense of the taxpayer, be supplemented by an inspection of the general condition of the vehicle and its equipment, ensures that when that tax is charged on imported second-hand vehicles it does not exceed the residual tax incorporated in the value of similar second-hand vehicles which were previously registered on national territory and were subjected on that registration to the same tax, and does not therefore create indirect discrimination between imported second-hand motor vehicles and those vehicles.

(see paras 35, 38-39, 47)

2.        Motor vehicles present on the market in a Member State are ‘domestic products’ of that State within the meaning of Article 110 TFEU. Where those products are placed on the market for second-hand vehicles in that Member State, they must be regarded as ‘similar’ to imported second-hand vehicles of the same type, characteristics and wear. Second-hand vehicles purchased on the market of that Member State and those purchased in other Member States in order to be imported and placed in circulation in the former State are competing products.

(see para. 55)

3.        Article 110 TFEU must be interpreted as precluding a Member State from introducing a pollution tax levied on motor vehicles on their first registration in that Member State if that tax is arranged in such a way that it discourages the placing in circulation in that Member State of second-hand vehicles purchased in other Member States without discouraging the purchase of second-hand vehicles of the same age and condition on the domestic market.

Article 110 TFEU would be deprived of meaning and purpose if it were open to the Member States to introduce new taxes which had the purpose or effect of discouraging the sale of imported products in favour of the sale of similar products available on the domestic market which had been placed on that market before those taxes entered into force. Such a situation would allow the Member States, by introducing internal taxes designed in such a way as to have the above effect, to circumvent the prohibitions in Articles 28 TFEU, 30 TFEU and 34 TFEU.

National legislation which has the effect that imported second-hand vehicles of considerable age and wear are, despite the application of a large reduction in tax to take account of depreciation, subject to a tax which may approach 30% of their market value, while similar vehicles offered for sale on the domestic second-hand vehicle market are not burdened by such a tax charge, has the effect of discouraging the import and placing in circulation on national territory of second-hand vehicles purchased in other Member States.

(see paras 53, 58, 61, operative part)