When cross border short term loan of a vehicle free of charge, registration tax must
be calculated according to use.
>> Mrs van
Putten and Mr Mook, two Dutch nationals, and Mrs Frank, a German national, were
all resident in the Netherlands when officers of the Dutch tax authority
established that they were using cars registered in other Member States on the
road network in the Netherlands without having paid vehicle tax. Accordingly,
they were advised that, on a subsequent check they might be issued with an
assessment notice for the payment of that tax.
On a
subsequent check they were stopped and found
to be in the same situation again. Assessment notices were therefore sent to
them, amounting to EUR 5955 for Mrs van Putten, EUR 1859 for Mr Mook and EUR
6709 for Mrs Frank.
As the
actions brought by each of the defendants in the main proceedings were held to
be unfounded, they appealed to the Court of appeal in ‘s-Hertogenbosch. That
court upheld their claims, on the ground that the notices constituted an
unjustified obstacle to the right to move and reside freely within the
territory of a Member State set out in Art. 18 EC.
The
Staatssecretaris (Secretary of State) brought an appeal before the referring
court against the decision of the Gerechtshof te ‘s-Hertogenbosch in each of
the cases. The court asked whether, in the light of Art. 18 EC, European Union
law covered a situation in which a Member State levied a tax on the first use on
the national road network of a motor vehicle by one of its residents, which had
been driven either only on national territory or on that territory and that of
another Member State, where that vehicle, which was registered in another
Member State, had been loaned by a resident of the latter State.
The Court
held that even though, formally, the national court had limited its questions to
the interpretation of Art. 18 EC, that did not prevent the Court from providing
the national court with all the elements of interpretation of Community law
which might be of assistance in adjudicating on the case before it, whether or
not that court had specifically referred to them in the questions (see, to that
effect, Case C‑251/06 ING. AUER [2007]).
The Court
pointed out that the charging of tax was the result, not of the fact that the
defendants in the main proceedings had exercised their right to freedom of movement,
but of the fact that, as residents, they had used a car registered in another
Member State and loaned to them on the road network in the Netherlands.
The Court
reiterated that with regard to the scope of Art. 56, in the absence of a
definition in the Treaty of “movement of capital” for the purposes of Art.
56(1) EC, the nomenclature annexed to Council Directive 88/361/EEC had
indicative value, even though that directive was adopted on the basis of Arts
69 and 70(1) of the EEC Treaty (Arts 67 to 73 of the EEC Treaty were replaced
by Arts 73B to 73G of the EC Treaty, now Arts 56 EC to 60 EC), subject to the
qualification, contained in the introduction to the nomenclature, that the list
set out there did not defined exhaustively the concept of movements of capital
(see, inter alia, Case C‑318/07 Persche [2009]; Case C‑182/08 Glaxo Wellcome [2009]; Case C‑35/08 Busley
and Cibrian Fernandez [2009 , and Case C‑25/10 Missionswerk Werner Heukelbach
[2011]).
The Court
held that the owner of the motor vehicle and the user of that vehicle were not confined
to a single Member State even though the national provision at issue was addressed
only to the residents of the Netherlands. Vehicle tax must be paid by the
residents of that Member State who used a motor vehicle on the national road
network, even though the use was of short duration and in the context of a
loan, free of charge, between those residents and residents of other Member
States of vehicles also registered in other Member States. The Court held that
the cross-border lending of a vehicle free of charge constituted a capital movement
within the meaning of Art. 56 EC.
The Court reiterated
with regard to the question whether there was any restriction on the free movement
of capital and the possible justification for such restriction, that apart from
certain exceptions not relevant to the main proceedings, taxation of motor
vehicles had not been harmonised at European Union level. The Member States
were thus free to exercise their powers of taxation in that area provided that
they did so in compliance with European Union law (see Case C-451/99 Cura
Anlagen [2002]; Case C‑464/02 Commission v Denmark [2005]; Joined Cases C-151/04 and C-152/04
Nadin and Nadin-Lux [2005]; order in Case C-242/05 van de Coevering [2006] and
order in Case C-364/08 Vandermeir [2008] ECR I-8087).
The
national legislation at issue in the main proceedings, by requiring residents
of the Netherlands to pay a tax on first used of a vehicle registered in
another Member State on the road network in the Netherlands, including where
that vehicle was loaned free of charge by a resident of another Member State,
resulted in the taxation of cross-border loans free of charge of motor
vehicles.
On the
other hand, loans of a motor vehicle for used free of charge were not subject
to that tax where the vehicle was registered in the Netherlands. Such a difference,
or at least apparent difference, in treatment according to the State in which
the loaned vehicle was registered was, therefore, according to the Court, liable
to make such cross border capital movements less attractive, by dissuading
residents of the Netherlands from accepting loans offered by residents of
another Member State of a vehicle registered in that State. Such national
legislation therefore constituted a restriction on the free movement of capital
for the purposes of Art. 56(1) EC. provision (see Case C-478/98 Commission v
Belgium [2000]).
The Court
had already held that a Member State might impose a registration tax on a motor
vehicle registered in another Member State where that vehicle was intended to
be used essentially in the first Member State on a permanent basis or where it
was, in fact, used in that manner (see Case C-451/99 Cura Anlagen [2002]; Case
C‑464/02 Commission v Denmark [2005]; Joined Cases C-151/04 and C-152/04
Nadin and Nadin-Lux [2005]; order in Case C-242/05 van de Coevering [2006] and
order in Case C-364/08 Vandermeir [2008] ECR I-8087).
The Court held that the charging of vehicle
tax on first used on the road network in the Netherlands of vehicles which were
not registered in the Netherlands, was justified in the same way as the tax due
on the registration of the vehicle in the Netherlands was, provided that the
tax took account, as appeared to be required by the 1992 Law, of the
depreciation of the vehicle at the time of that first used .
On the
other hand, if the vehicles at issue in the main proceedings were not intended
to be used essentially in the Netherlands on a permanent basis or were not, in
fact, used in that way, there would be a difference in treatment between the
two categories of persons and the charging of the tax concerned would not be
justified. In such circumstances, the connection of those vehicles with the
Netherlands would be insufficient to justify the charging of a tax normally due
on registration of a vehicle in the Netherlands.
therefore, Art.
56 EC must be interpreted as meaning that it precluded legislation of a Member
State which required residents who had borrowed a vehicle registered in another
Member State from a resident of that State to pay, on first use of that vehicle
on the national road network, the full amount of a tax normally due on
registration of a vehicle in the first Member State, without taking account of
the duration of the use of that vehicle on that road network and without that
person being able to invoked a right to exemption or reimbursement where that
vehicle was neither intended to be used essentially in the first Member State
on a permanent basis nor, in fact, used in that way.
The Court
held that since the cases fell within the scope of Art. 56 EC, it was not
necessary to rule on the interpretation of Art. 18 EC.
