EU Calls For Changes To Cypriot Vehicle Tax

By Editorial 01 June, 2012

The European Commission has formally requested that Cyprus change the way it levies registration tax on second-hand motor vehicles transferred from other member states.

Under Cypriot law, the full amount of registration tax on the transfer and registration of a second-hand motor vehicle from another member state is applied, regardless of the age or the mileage of the vehicle. It is levied on the basis of the category of the vehicle, engine capacity and carbon dioxide emissions. Cypriot rules do not, however, take into account the depreciation of the value of second-hand vehicles when they are registered in Cyprus, contrary to a ruling from the European Court of Justice (ECJ) on the matter.

The ECJ has ruled that the depreciated value of a motor vehicle must be taken into account when it is registered in a member state. This may be done for example by means of depreciation scales. These, the Commission said, should guarantee that the tax due does not exceed the tax value of similar vehicles already registered in the national territory.

In addition, the Commission considers that Cypriot rules do not allow taxpayers to challenge the specific assessment of the registration tax made by the tax authorities. The ECJ has ruled in previous cases that member states' judicial systems should offer taxpayers the opportunity to challenge the statutory scales in individual cases.

The Commission considers that both provisions are discriminatory and has requested that Cyprus undertake changes to its regime. In the absence of a satisfactory response within two months from the date of the request, the Commission may refer Cyprus to the Court of Justice.

Tags: Expatriates | Tax | European Commission | Vehicle Tax | Law | Travel And Tourism | Offshore | Cyprus | Europe |


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