Provisional text

JUDGMENT OF THE COURT (Eighth Chamber)

2 February 2023 ( * )

(Reference for a preliminary ruling – Internal taxation – Article 110 TFEU – Motor vehicles – Tax on vehicles – Second-hand vehicles imported from other Member States – Second-hand vehicles exported to other Member States – Refund of that tax on export – Restriction on that refund to vehicles which were put into circulation less than ten years ago)

In Case C‑676/21,

REQUEST for a preliminary ruling under Article 267 TFEU from the Korkein hallinto-oikeus (Supreme Administrative Court, Finland), made by decision of 2 November 2021, received at the Court on 9 November 2021, in the proceedings brought by

A

intervening parties:

Veronsaajien oikeudenvalvontayksikkö,

THE COURT (Eighth Chamber),

composed of M. Safjan, President of the Chamber, N. Jääskinen and M. Gavalec (Rapporteur), Judges,

Advocate General: A. Rantos,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

– the Finnish Government, by A. Laine, acting as Agent,

– the European Commission, by A. Armenia, M. Björkland and T. Sevón, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of the provisions of Title II of Part Three of the TFEU relating to the free movement of goods and of Article 110 TFEU.

2 The request has been made in proceedings brought by A concerning the decision of the Verohallinto (tax administration, Finland), by which the latter refused the export refund of the vehicle tax applied for by A after the sale of his Finnish-registered motor vehicle in another Member State.

Legal context

3 Pursuant to Paragraph 1, first subparagraph, of the Autoverolaki (1482/1994) (Law No 1482/1994 on motor vehicle tax) of 29 December 1994, as amended by Laki (5/2009) (Law No 5/2009) of 9 January 2009 and Laki (561/2016) (Law No 561/2016) of 29 June 2016 (‘Law on motor vehicle tax’), passenger cars (category M1) are subject to motor vehicle tax payable to the State before their registration in the motor vehicle register or being put into circulation there.

4 According to Paragraph 2(1) of the Law on motor vehicle tax, for the purposes of that law, putting into circulation in Finland means the use of a motor vehicle intended to be put into circulation in Finland, even if it is not registered there.

5 According to Paragraph 4(1) of that law, the person liable for vehicle tax is the person registered in the motor vehicle register as the owner of the vehicle concerned. Paragraph 4(5) thereof provides that, where a vehicle is put into circulation without registration, the person liable to pay that tax is the person who put the vehicle into circulation, but that, if that person cannot be identified, or if the tax cannot be collected from that person, the owner of the vehicle used is the person liable.

6 Under Paragraph 8a of the Law on motor-vehicle tax, in respect of a motor vehicle taxed in Finland as a second-hand vehicle, the amount of motor vehicle tax is to be equivalent to the lowest amount of residual tax on a motor vehicle registered in Finland which is regarded as similar, having regard to the matters referred to in Paragraph 11c and 11d thereof.

7 According to Paragraph 11c(1) of the abovementioned law, in order to ascertain the general retail value of a vehicle in Finland, account is to be taken of the available evidence concerning the factors influencing the calculation of the retail value of the vehicle concerned on the market and those concerning the value of the vehicle, and the specific characteristics of that vehicle which affect its value, such as the make, model, type, drive system and equipment of the vehicle. The age, mileage and condition of the vehicle concerned, as well as its other characteristics, may also be taken into account.

8 According to Paragraph 11d of that law, vehicles may be considered similar if they are of similar makes and if their models and equipment are similar. If the motor vehicles to be compared are vehicles that have been type-approved in different countries, in addition to the information contained in their documents, they must actually be technically similar. However, minor differences do not preclude such motor vehicles from being considered similar if those differences may be considered immaterial in relation to the value of the motor vehicle concerned or the needs of the consumer in respect of that vehicle.

9 Paragraph 34d(1) of the Law on motor vehicle tax states that such tax is to be refunded on application if a motor vehicle taxed in Finland is permanently exported for use outside Finland.

10 Paragraph 34d(2) thereof provides that, in such a case, the amount of that tax to be refunded is the amount which would be levied on a similar vehicle if the latter were taxed as a second-hand motor vehicle at the time of the export of the vehicle concerned from Finnish territory. Therefore, the amount of the tax thus refunded cannot exceed the amount of tax which was paid on it. Motor vehicle tax is not refunded to the extent that the value of the motor vehicle or the tax on it has increased as a result of a modification or addition to the vehicle after taxation. That tax is not refunded in respect of a motor vehicle that has not been duly declared as taxable, or if the refundable amount is less than EUR 500. Neither is that tax refunded on vehicles that have been in circulation for at least ten years at the time of export. The refund is subject to the condition that the motor vehicle is roadworthy when it ceases to be used in Finland and that it has been withdrawn from use there.

11 Paragraph 34d(3) of the Law on motor vehicle tax provides that the export refund of motor vehicle tax may be claimed by any person who, as the owner of the vehicle concerned, exports the vehicle for use outside Finnish territory.

12 Paragraph 34d(4) of that law provides that the application for an export refund of that tax must be lodged with the tax authorities no later than 14 days before the vehicle concerned is exported, and that the person applying for the refund must give the tax authorities the opportunity to check the vehicle before export and provide the necessary documents to show that the conditions for the refund have been met.

The dispute in the main proceedings and the questions referred for a preliminary ruling

13 On 20 July 2015, A imported a second-hand motor vehicle into Finland from another Member State that was first put into circulation on 24 November 2004.

14 By a tax notice of 5 October 2015, the tax authorities levied motor vehicle tax on that vehicle in the amount of EUR 4 146.29, that was determined, on the basis of a taxable value of EUR 16 519.10, by applying a tax rate of 25.10%.

15 On 7 August 2017, having sold that motor vehicle in another Member State, A applied to the tax authorities for an export refund of motor vehicle tax, the amount of which corresponds, under Paragraph 34d(2) of the Law on motor vehicle tax, to that which would be charged on a similar vehicle if it were taxed as a second-hand vehicle at the time the motor vehicle concerned was exported.

16 By a decision of 21 August 2017, the tax authorities rejected that application for a refund on the ground that, according to that provision, motor vehicle tax is not refunded in respect of vehicles that have been in circulation for at least ten years at the time of export.

17 As both A’s complaint against that decision and his appeal before the Helsingin hallinto-oikeus (Administrative Court, Helsinki, Finland) were unsuccessful, he brought an appeal before the Korkein hallinto-oikeus (Supreme Administrative Court, Finland), requesting, inter alia, refund of the motor vehicle tax.

18 That court states that the second-hand motor vehicle, imported from another Member State, was registered by A in Finland and used by him for a period of less than three years before being resold in another Member State. It points out that A was liable to pay the full amount of the motor vehicle tax on that vehicle at the time of its registration, and that the amount of that tax was not proportionate to the actual period of use of that vehicle in Finland, since motor vehicle tax is not refundable on vehicles which are more than 10 years old at the time of export of the vehicle concerned.

19 According to the referring court, in order to resolve the dispute before it, it is necessary to examine whether the restriction on the age of the vehicle, that applies to the refund of motor vehicle tax on export, is contrary to primary EU law, so that, at the time of export of his motor vehicle, A should have been refunded the part of the residual tax included in its value.

20 In that connection, first, it is necessary to identify the provision of the TFEU in the light of which the possibility for a Member State to exercise its tax powers in respect of the import and export of wholly owned vehicles is to be assessed. The referring court refers, in that respect, to the provisions of Title II of Part Three of the TFEU relating to the free movement of goods and Article 110 TFEU. Furthermore, that court asks essentially, where a wholly owned imported motor vehicle is used in the territory of the Member State of registration for a period considerably shorter than the economic life of that vehicle, whether it may be concluded that that vehicle is not intended to be used primarily in the territory of that Member State on a permanent basis.

21 Second, the referring court points out that, unlike rental or leasing vehicles, there is no means of verifying objectively and in advance the intended purpose or use of wholly owned vehicles. The period of use of a wholly owned vehicle in the territory of the Member State of registration can only be assessed ex post.

22 Third, although the provisions of the TFEU on the free movement of goods preclude, in principle, a national rule, according to which motor vehicle tax included in the value of the second-hand vehicle concerned is not refunded when the latter is exported for permanent use in another Member State, the referring court asks whether that restriction may be justified on the ground that it is intended to curb the export of ‘old motor vehicles’. The referring court adds that the Finnish legislature invoked the aim of environmental protection when adopting Law (5/2009) and Law (561/2016), and that that tax is levied on second-hand vehicles imported into Finland, regardless of the date of their first registration in another Member State.

23 In those circumstances the Korkein hallinto-oikeus (Supreme Administrative Court) decided to stay the proceedings before it and to refer the following questions to the Court for a preliminary ruling:

1. May the provisions on the free movement of goods in Title II of Part Three of the [TFEU] or Article 110 TFEU preclude legislation of a Member State under which, in circumstances such as those at issue in the main proceedings, the motor vehicle tax included in the value of a vehicle, within the meaning of the [Law on motor vehicle tax], is not refunded to the owner of the vehicle where he or she exports it for use on a permanent basis in another Member State, and is it relevant, in that connection, whether the vehicle was intended to be used on a permanent basis primarily in the territory of the Member State which levied the motor vehicle tax and whether it was actually used on a permanent basis primarily in that territory?

2. If the intended purpose of the vehicle and its actual use are relevant to the answer to the first question, how is such non-permanent intended purpose and actual use to be established, in so far as the length of time for which a private vehicle is to be used in the Member State cannot be determined in advance?

3. If the refusal to grant an export refund, within the meaning of the Law on motor vehicle tax, constitutes a restriction on the free movement of goods, in circumstances, such as those at issue in the main proceedings, can that restriction be justified by the aim of limiting the export of old vehicles which are often in poor condition and pollute the environment? Is the restriction of the export refund to vehicles less than ten years old to be regarded as being incompatible with EU law on the ground that motor vehicle tax is nevertheless levied on imported used vehicles irrespective of the duration for which they have been used? ‘

Consideration of the questions referred

The first question

24 By its first question, the referring court asks essentially whether primary Union law, specifically Article 110 TFEU, is to be interpreted as precluding national legislation according to which motor vehicle tax included in the value of each vehicle is not refunded to the owner of a motor vehicle where the latter is exported for permanent use in another Member State, where that vehicle was first put into circulation at least ten years before the time of export, and, whether it is relevant in that respect that such a vehicle was not only intended to be used on a permanent basis primarily in the territory of the Member State which levied the motor vehicle tax but was also actually used in that manner.

25 It must be recalled that, apart from certain exceptions that are not relevant to the present case, taxation of motor vehicles has not been harmonised at EU level. The Member States are thus free to exercise their powers of taxation in that area provided that they do so in compliance with EU law (judgment of 19 September 2017, Commission v Ireland (Registration tax) , C‑552/15, EU:C:2017:698, paragraph 71 and the case-law cited).

26 It must be recalled in that regard that, according to the Court’s settled case-law, a tax levied by a Member State on the registration of motor vehicles for the purpose of being put into circulation in its territory is neither a customs duty nor a charge having equivalent effect to a customs duty within the meaning of Article 28 TFEU and Article 30 TFEU. Nor can such a tax be assessed in the light of Article 34 TFEU prohibiting quantitative restrictions on imports and measures having equivalent effect to such restrictions. A tax such as that at issue in the main proceedings constitutes an internal charge and must therefore be examined in the light of Article 110 TFEU (judgments of 7 April 2011, Tatu , C‑402/09, EU:C:2011:219, paragraphs 32 and 33, and the case-law cited therein, and of 17 December 2015, Viamar , C‑402/14, EU:C:2015:830, paragraph 33). In that regard, it must be recalled that, in the judgment of 19 September 2002, Tulliasiamies and Siilin (C‑101/00, EU:C:2002:505), the Court examined the conformity with primary law of the motor vehicle tax provided for in Law (1482/1994) on motor vehicle tax, as it was applicable at the time, in the light of Article 95 EC, which corresponds to Article 110 TFEU.

27 Therefore, as the European Commission maintains, the conformity of both the motor vehicle tax and the export refund of that tax on the export of a motor vehicle registered in Finland with the primary law of the Union must be assessed solely on the basis of Article 110 TFEU.

28 The aim of Article 110 TFEU is to ensure free movement of goods between the Member States in normal conditions of competition. It is intended to eliminate all forms of protection which may result from the application of internal taxation, in particular those which discriminate against products from other Member States (judgment of 14 April 2015, Manea , C‑76/14, EU:C:2015:216, paragraph 28 and the case-law cited).

29 To that end, the first paragraph of Article 110 TFEU prohibits all Member States from imposing on products of the other Member States internal taxation in excess of that imposed on similar domestic products. That provision seeks to guarantee the complete neutrality of internal taxation as regards competition between products already on the domestic market and imported products (judgment of 14 April 2015, Manea , C‑76/14, EU:C:2015:216, paragraph 29 and case-law cited).

30 The motor vehicle tax, provided for in the Law on motor vehicle tax, is levied only once, on any motor vehicle intended to be registered or put into circulation in Finland, whether it is a new or second-hand vehicle. It seems clear from the evidence before the Court, as set out in the reference for a preliminary ruling, that the Law on motor vehicle tax ensures, in principle, that the amount of vehicle tax imposed on imported second-hand motor vehicles corresponds to the amount of the residual tax included in the value of similar domestic second-hand vehicles, taking account of the rate and basis of assessment of that tax.

31 With regard to the taxation of imported second-hand motor vehicles, Article 110 TFEU aims to ensure that internal taxation is completely neutral with regard to competition between products already on the domestic market and imported products, and therefore obliges each Member State to select and adjust taxes on motor vehicles in such a way that they do not have the effect of favouring the sale of domestic second-hand vehicles and thereby discouraging the importation of similar second-hand vehicles (see, to that effect, order of 7 March 2019, Elliniko Dimosio , C‑689/18, not published, EU:C:2019:185, paragraphs 20 to 22).

32 In that regard, it must be observed that, in the context of Article 110 TFEU, a special arrangement, such as that provided for in Paragraph 34d(2) of the Law on motor vehicle tax, under which motor vehicle tax is not refunded in respect of the permanent export of a second-hand motor vehicle, where the latter was first put into circulation, in Finland or in another Member State, at least 10 years before the time of the export concerned, cannot be regarded as discriminatory.

33 As the Commission points out, that arrangement applies to all vehicles which were first put into circulation more than ten years ago, in that it lays down an objective criterion, namely the year in which the vehicle concerned was first put into circulation, on the basis of which a distinction is made between cases in which a refund of vehicle tax is granted and those in which such a refund is refused.

34 Therefore, that arrangement does not entail any difference in treatment between imported and domestic second-hand motor vehicles, as regards the possibility of being sold on the second-hand car market in Finland, where the vehicles concerned are more than 10 years old, since it does not alter the amount of the corresponding tax included in the market value of those two types of vehicle.

35 Furthermore, for the purposes of Article 110 TFEU, it is irrelevant that motor vehicles first registered in another Member State and then in Finland, in respect of which the export refund of that tax is refused when they are permanently exported from Finland to another Member State by virtue of the restriction on the export refund of that tax to motor vehicles less than 10 years old, have, from a statistical point of view, been registered in Finland for a shorter period than motor vehicles first registered in Finland, the final export of which to another Member State does not give entitlement to an export refund of that tax, pursuant to that restriction.

38 As it stands at present, EU law does not contain any provision designed to prohibit the effects of double taxation occurring in the case of such taxes, such as that in issue in the main proceedings, which are governed by independent national legislation, and, while the elimination of such effects is desirable in the interests of the free movement of goods, it may nonetheless result only from the harmonisation of national systems (see, by analogy, judgment of 23 April 2002, Nygård , C‑234/99, EU:2002:244, paragraph 38 and the case-law cited).

39 Each Member State may levy a motor vehicle tax in accordance with its own assessments, provided that such assessments, and the measures adopted for their implementation, do not discourage the sale of imported products to the benefit of the sale of similar products available on the domestic market (see, to that effect, judgment of 7 April 2011, Tatu , C‑402/09, EU:C:2011:219, paragraphs 53 and 54).

40 It must be added that natural persons who wish to import new or used motor vehicles into Finland have alternatives to importing such wholly owned vehicles. In addition to cases falling within the scope of Council Directive 83/182/EEC of 28 March 1983 on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another (OJ 1983 L 105, p. 59), as the Finnish Government points out, they may import a motor vehicle for temporary use under a leasing or rental contract, which involves the levying of a tax on the vehicle calculated in proportion to the period of use provided for in the contract (see to that effect, order of 29 September 2010, VAV-Autovermietung , C‑91/10, not published, EU:C:2010:558, paragraph 26 and the case-law cited).

41 Therefore, those persons may decide, in full knowledge of the facts, to import wholly owned motor vehicles into Finland, entailing full liability of those vehicles to motor vehicle tax, or to import a motor vehicle for the purpose of using it temporarily, entailing payment of such tax in an amount proportionate to the length of time the vehicle is used in that Member State.

42 Therefore, it is the choice of those persons that determines the tax scheme applicable to the imported motor vehicle and, as the Commission points out, in the case of an import of a wholly owned motor vehicle, any intentions of those persons concerning the subsequent use of the vehicle concerned, for which the export refund of vehicle tax is provided for by the Law on motor vehicle tax, are irrelevant for the purposes of the assessment under Article 110 TFEU of that export refund.

43 Finally, the fact relied on by the Finnish Government, that, where a motor vehicle taxed in Finland is exported for permanent use outside that Member State, the amount of tax refunded corresponds, in accordance with Paragraph 34d(2) of the Law on motor vehicle tax, to the amount of tax which would be levied on a similar vehicle if it were taxed as a second-hand vehicle at the time of that export, is also irrelevant for the purposes of that assessment.

44 Such a tax refund does not affect the second-hand car market in Finland, but is likely to have an effect on the second-hand car market in the Member State of export, notwithstanding the fact that the amount of tax refunded does not exceed the residual value of the tax paid on registration in Finland, in that it reduces the value of the second-hand car imported from Finland.

45 Having regard to all the foregoing considerations, the answer to the first question is that primary Union law, specifically Article 110 TFEU, must be interpreted as not precluding national legislation under which a motor vehicle tax included in the value of each vehicle is not refunded to the owner of a motor vehicle in the event of its export for permanent use in another Member State, where that vehicle was first put into circulation at least ten years before the time of its export. It is irrelevant in that regard that such a vehicle was intended to be used primarily in the territory of the Member State which levied the vehicle tax on a permanent basis and that it was in fact also used in that way.

The second and third questions

46 In view of the answer to the first question, there is no need to answer the second or third question.

Costs

47 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Eighth Chamber) hereby rules:

Primary Union law, specifically Article 110 TFEU, must be interpreted as not precluding national legislation under which a motor vehicle tax included in the value of each vehicle is not refunded to the owner of a motor vehicle in the event of its export for permanent use in another Member State, where that vehicle was first put into circulation at least ten years before the time of its export. It is irrelevant in that regard that such a vehicle was intended to be used primarily in the territory of the Member State which levied the vehicle tax on a permanent basis and that it was in fact also used in that way.

[Signatures]

* Language of the case: Finnish.