Malta hauled to EU court over unfair car taxation

The European Commission has referred Malta to the EU’s Court of Justice for taxing used cars imported from other EU states more heavily than used cars purchased on the Maltese market.

Each EU state can arrange its tax measures, but member states can use tax to discourage sales of domestic second-hand cars, as well as from other member states.

In Malta, cars registered since January 2009 have a higher licence fee – annual circulation tax – than those registered before, due to a difference in the way the tax is calculated.

But the ACT does not take into account the date of the first registration of the vehicle, where registration took place in another member state, but rather the date of registration in Malta. As a result, vehicles registered in other member states before 2009 and brought to Malta after that date are subject to a higher ACT.

“This discriminatory effect is not compatible with Article 110 TFEU, which prohibits discrimination against imported products,” the European Commission said.

The response given by Malta to a reasoned opinion from Brussels in June 2021 was not considered satisfactory. Malta will now have to defend its position in the ECJ.