Brussels, 27/10/2011 (Agence Europe) - On Thursday 27 October, the European Commission referred Ireland, Spain and Cyprus to the Court of Justice for breach of European rules on excise duties. Furthermore, it urged Italy and Bulgaria to come into line with EU rules on VAT, while Ireland and Spain are to amend their taxation rules for vehicles on hire or on cars from other member states.
The Court has thus had the following cases referred to it for: - Ireland which continues to apply exemption from excise duties on fuel used by persons with disabilities on their motor vehicles, an exemption that was to have ended at the end of 2006. Exemption constitutes distortion on the internal market and the Commission had urged Ireland to put an end to it in 2008 and then in 2010. The procedure underway does not prevent Ireland from adopting other measures likely to favour disabled mobility, while being in line with EU legislation; - Spain, due to the discriminatory fiscal facilities granted by the Spanish autonomous communities in favour of residents, allowing the latter to pay succession and donation duties that are clearly lower than those that non-residents have to pay, a practice that runs counter to the free movement of capital and people. The Commission had called on Spain to amend its legislation in May 2010 and then in February 2011, but to no avail; - Cyprus, due to its rules on the taxation of private cars, considered discriminatory towards non-Cypriot EU citizens that settle permanently on Cypriot territory. These nationals cannot enjoy excise exemptions when they import a new car to the island unless they carry out a professional activity in the country, a condition that does not apply to Cypriot citizens or to their descendants who return to live there permanently. A reasoned opinion calling on Cyprus to amend its legislation that is against freedom of movement and establishment had been sent in January 2011 but no follow-up was given.
The Commission also sent reasoned opinions calling on - Italy to fully transpose into national legislation amended EU rules on the common VAT system (Directive 2009/162/EU), and amended rules relating to VAT linked to tax evasion on imports (Directive 2009/69/EC); - Bulgaria to amend its discriminatory rules on the conditions for refunding VAT to taxable persons subject to a tax audit. The audit delays for taxable persons involved in intra-Community operations are twice as long as those applied to taxable persons that only operate within the country. - Ireland and Spain, to amend their taxation systems for vehicles leased or hired from another member state. According to EU rules, a member state can only levy a registration tax on a leased or hired vehicle from another member state in proportion to the use in its own territory. This means that full registration tax can only be levied if the vehicles are used or intended to be used in the member state on a permanent basis. However, an Irish resident who rents or leases a vehicle in another member state is obliged to pay the full registration tax, even though the vehicles is only used for brief periods of time in Ireland. This is discriminatory tax treatment as leasing or hire companies in other member states may face additional taxation when offering their services to Irish residents. Similarly, Spain also levies the full amount of registration tax if the foreign vehicle is used there for more than three months in any 12-month period. Under Spanish law, too, the full registration tax on a car can be levied if an employee who works for a company established in another member state uses a car in Spain and is resident in Spain. These provisions are contrary to free movement and freedom of establishment. In all cases, the member states have two months to comply with EU law or face possible referral to the Court of Justice. (FG/transl.jl/rt)