Second-hand imported cars: “High taxes”; EU insists that Malta should amend the rules

Minister for Transport, Infrastructure and Capital Projects Ian Borg visits the Marsa Junction Project as Phase 2 nears finalisation and Phase 3 is due to commence - DOI - Clifton Fenech

Malta infringed EU law taxing imported cars higher than local cars; importers welcome harmonisation

Malta infringed European Union law by imposing higher road tax on imported cars from the EU member states than on cars already in Malta, the European Commission has said.

In a formal notice issued to Malta, the Commission calls on Malta to amend its car taxation rules. The European body states that in light of its case law Article 110 of the Treaty of the Founding of the European Union (TFEU), Malta’s law ‘is not compatible with EU law,’ in this regard.

The Commission states that currently Malta’s legislation for cars registered in Malta after the specified period of 1st January 2009 which are imported from fellow EU member states were, ‘taxed more heavily than similar cars registered in Malta before that date, even when the imported car has already been registered in another Member State.’ The EC has given Malta  two months to provide a reply about this situation or it will send a ‘reasoned opinion.’ reached out to a number of auto dealers in Malta to get their reactions to this news.

“Taxation level is high, equalling that of Ireland”

One importer told that Malta’s current import taxation level was high, equalling that of the Republic of Ireland.  They also explained that in most cases the process for calculating this taxation came from a range of values like the age of the vehicle, its registration value and level of CO2 emissions. The older and more polluting the vehicle, the more likely it would be that it would cost more for the customer. Conversely, a vehicle registered under the European Emissions scheme (Euro – 4,5,6 for example) would be cleaner and therefore cost less in tax.

“The vehicle could easily hit €3,000 in taxes”

A fellow importer of UK imports told that they welcomed the idea of a more stable and uniform process for taxing imports. Going further, they provided an example of an UK Imported car, a KIA Sportage. They explained that once all of the factors are accumulated, the vehicle could easily hit €3,000 in taxes.  Like the first respondent, they agreed that it would actually help their business but it would also make their sales of imported vehicles more transparent for the customer and therefore in line with the EU standards.

“More money in the consumers’ pockets”

Another importer agreed with the EU’s estimations saying that Malta should be part of the harmonisation. They explained that prior to 2009, cars with annual circulation tax (a licence) was capped to €550 maximum for an engine 2000cc or more. However, after 2009, these same engines with emissions that were higher than 200grammes of CO2 or more, were charged double. They added that this created ‘an anomalous field where there was no fixed value for the same car.’ The result, they say, meant that similar cars with a cheaper licence ‘would command a higher value than the same car registered after 2008.’

‘If the EU harmonises this system, every car would have the same book value. Currently it  doesn’t.’ Like the previous two respondents, they believed that harmonisation would mean more money in the pockets of consumers, as they would be paying less every year. ‘The playing field would be level,’ they added.

The Commission has given Malta  two months to provide a reply about this situation or it will send a ‘reasoned opinion.’