DONEGALDAILY.COM EXCLUSIVE: A human rights campaigner is just a few days away from winning a case in Europe that could see eventually see Vehicle Registration Tax on vehicles scrapped.

Ryan Stewart, from Inishowen, will fly to Brussels on November 21st to fight for the rights of motorists who have had cars seized by the Revenue.

Another huge step forward was taken this week when the European Commission (statement in full at the end of this article) warned Ireland that it cannot slap VRT at the full rate on leased, hired or Higher Purchase vehicles used by cross-Border workers.

It means anyone who is apprehended by Revenue and Gardai on this rule from now on would win any appeal in the court as European law overrides Irish laws. Europe has told the Government to change its rules immediately.

The ruling means drivers would pay a proportion of the tax based on how often it was used in the Republic – that could be as little as 10% of the current rate

Mr Stewart told donegaldaily.com the latest ruling was another step forward – and more will follow.

He told us: “I’m in Brussels on the 21st November to argue another few cases, but the Commission is listening so far, and the plan is working.

“This is the first major step towards getting rid of this grossly unfair tax, and my intention is to dismantle this tax piece-by -piece, so that ultimately the tax is unworkable, and will have to be abolished.

“There are more cases in the pipeline. It’s disappointing however, that we have to lead the government to the European Commission to make them listen to important issues, not just for Donegal, but people around the country as a whole.

“The arguments I have put forward are fair and reasonable, and this latest finding will show that the Commission does agree that the VRT regime operated in the state is not only flawed, but despite what successive governments have said, is actually in breach of treaties of the European Union.”

If Mr Stewart succeeds in his new cases, it will see VRT scrapped on all vehicles – giving a welcome boost to the motor trade.

BELOW IS THE EUROPEAN COMMISSION STATEMENT IN FULL:

The European Commission has formally requested Ireland and Spain to change the way in which they tax leased or rented vehicles from another Member State, as well as company cars in the case of Spain, so as to ensure their rules comply with EU legislation.

According to EU rules, a Member State can only levy a registration tax on a leased or rented vehicle from another Member State in proportion to the use in its own territory. This means that a Member State may only levy a full registration tax on a leased or rented vehicle from another Member State if it is used or intended to be used on a permanent basis.

Similarly, a vehicle that is registered by a company in one Member State and used by ąn employee resident in another Member State cannot be taxed unless the vehicle is used on a permanent basis in the resident’s country. A Member State can only require registration of the vehicle and levy a registration tax if it is proportionate to the duration of the vehicle’s use on its territory.

Under Irish law, an Irish resident who rents or leases a vehicle in another Member State is obliged to pay the full amount of the registration tax. An exemption or refund is therefore not possible if a car is used in Ireland only for a short period. This discriminatory tax treatment is contrary to EU rules. Leasing or rental companies in other Member States may face additional taxation when offering their services to Irish residents.

Spain also levies the full amount of registration tax on a leased or rented vehicle by a Spanish resident in another Member State (unless the leasing period is shorter than three months in any twelve months). This is in breach of EU rules which provide that the registration tax can only be levied in proportion to the duration of the use of the leased car.

Finally, under Spanish law, the registration tax on a car can be levied in full if an employee who works for a company established in another Member State uses a car in Spain and is resident in Spain.

These provisions are contrary to EU rules on free movement of workers and on freedom of establishment, fundamental principles of the EU’s Single Market.

In the absence of compliance with EU law within two months, the Commission may refer Ireland and/or Spain to the EU’s Court of Justice.

Background

A Member State may levy a registration tax on a leased or rented vehicle from another Member State when it is used or intended to be used on a permanent basis.

The Court of Justice has however concluded that such a tax is contrary to EU law if it is not proportionate to the duration of the registration of the means of transport in the State where it is used. Consequently, the Court has ruled that to oblige a natural person to pay the full amount of tax for a vehicle rented or leased in another Member State is contrary to EU rules (Articles 56 to 62 of the Treaty of the Functioning of the European Union) when the duration of the use in that territory is not taken into account.

Moreover, the Court has ruled that it is contrary to EU law to deprive the person in question of a right to an exemption or a refund, in case the vehicle is not intended to be used on a permanent basis.

The Court of Justices has also adopted a number of rulings establishing that registration tax should be proportionate the duration of use on a given territory for company cars.


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