C-101/00: Preliminary ruling on taxation of imported cars32E29000 European and International Tax LawFilip Djupsjöbacka

Precipitating events• On 2.3.1998 Antti Siilin purchases a 1986 Mercedez Benz in

Germany for about €3700 and imports it to Finland on 20.4.1998.

• The Helsinki customs offices assesses a car tax in the amount of €7700 on the vehicle, and a VAT of €1700 on the car tax. The taxes are calculated according to Autoverolaki using a new reference car valued at €23000 and adjusted for depreciation

• Mr. Siilin pays the tax and bring proceedings against the assessment in the Uudenmaan lääninoikeus.

Original case• Mr. Siilin submits to Uudenmaan lääninoikeus that:

1. The tax levied on his imported vehicle was higher than the residual tax incorporated in to the value of a similar vehicle registered new in Finland, and therefore discriminatory and in conflict with Article 95 (currently Article 90) of the EC Treaty

2. Levying a VAT on car tax does not conform to the Sixth VAT Directive

• Lääninoikeus decided that:1. The customs office had not examined the actual depreciation

of Mr. Siilin’s car or checked whether the levied tax exceeded the tax on a similar car registered new and remitted the case to the customs office for reassessment

2. VAT payable on car tax was not a “value added tax” within the meaning of the Sixth Directive, and hence not contrary to it

Appeal to KHO• Both parties appealed the decision by Uudenmaan

lääninoikeus in the Korkein hallinto-oikeus• KHO referred six questions to the European Court of Justice for

a preliminary ruling:Questions 1-3: Is the procedure for taxing imported cars laid out in Autoverolaki discriminatory as meant by Article 95 (currently 90) of the EC Treaty

Questions 4-6: Can the value added tax payable on car tax according to Finnish law be considered a value added tax according to the Sixth VAT Directive, can it be levied, and is it discriminatory

Relevant EU law• Article 95, currently Article 90, of the Treaty estabilishing the

European Community:“No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.”

• Sixth VAT DirectiveHarmonizes national value added taxes to provide a uniform basis of assessment. Central directive in the EU VAT system.

Preliminary ruling in C-101/00• While a taxation system where the taxable value of a vehicle is

determined by customs value is permissible, it must be organized in such a way that the tax on imported used cars does not exceed the residual tax incorporated into the value of a similar used car already registered domestically

• The Finnish Autoverolaki causes the above to occur in at least some cases, and is discriminatory and in conflict with Article 95 (currently 90)

• The Finnish “arvonlisävero” payable on car tax does not have the essential features of a value added tax and cannot be considered such in the context of the Sixth VAT Directive. Since it is based on the discriminatory car tax, it is also discriminatory

Effects and further developments• KHO refunded the car tax, but not the VAT paid by Mr. Siilin• Consequently, the car tax on imported cars was lowered and

tens of millions in improperly levied car taxes were refunded• Finland lost another case, C-10/08 on car taxation in 2009,

resulting in excess VATs levied on car taxes being refunded as well

• The Finnish law on car taxation was changed in 2008 (to consider CO2 emissions) and again this year