EU Warns Cyprus About Second Hand Car Tax

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Cyprus has been warned by the European Commission that it must modify the method of taxing second hand cars imported from other EU countries or face legal action.
 

Like several other member states Cyprus has broken EU rules prohibiting different tax treatment of similar products.
 

Article 25 of the Treaty establishing the European Community stipulates that "customs duties on imports and exports and charges having equivalent effect shall be prohibited between member states."
 

There is no exception to it. Therefore, it is legally impossible for a member state to levy a duty on cars imported from another member state. However Cyprus is currently calling the tax on second hand cars a "consumption" tax and not "import" tax. The EU allows consumption tax.
 

The Cypriot method of taxing second hand car imports is based on engine capacity then reduced by the age of the vehicle and CO2 emissions. The emissions certificates for second hand cars are not easily obtainable. The Commission is concerned about this as well as the fact that there is no appeals procedure for importers unhappy with the level of taxation.
 

There is now hope for anyone unhappy with the current system or who feels they were taxed excessively. The European Court of Justice has held that Article 90 of the EC Treaty that prohibits discriminatory taxes has direct effect. This means that it can be invoked before national courts. Therefore anyone can mount a legal challenge of their own in the Cypriot courts.