Action brought on 9 January 2008 — Commission of the European Communities v Republic of Finland

(Case C-10/08)

(2008/C 79/29)

Language of the case: Finnish

Parties

Applicant: Commission of the European Communities (represented by: I. Koskinen and D. Triantafyllou, acting as Agents)

Defendant: Republic of Finland

Form of order sought

Pleas in law and main arguments

A person liable for value added tax who imports a vehicle into Finland has to pay value added tax on car tax to the customs authorities in accordance with Paragraph 5 of the Autoverolaki, but since, according to Paragraph 102(1)(4) of the Arvonlisäverolaki, he can deduct the corresponding amount of VAT payable on the sale, there is no VAT on car tax left in the value of the vehicle. The VAT on car tax which has been deducted is not transferred to the amount the consumer has to pay. If a private individual registers a vehicle for the first time in Finland he also has to pay VAT on car tax to the customs authorities but he cannot deduct it. That system, which distinguishes between sales by persons liable to VAT related to commercial activities at different stages of trade and acquisitions by final consumers from other Member States means that the VAT on car tax that a private individual has to pay for a used vehicle obtained in another Member State and registered for the first time in Finland is probably higher than the residual VAT on car tax in the value of a similar used car which has already been registered in Finland when the person liable to car tax was also liable to VAT and the vehicle has been sold in connection with taxable commercial activities, in which latter case the value of the vehicle does not include VAT on car tax because it has been deducted in its entirety, infringes Article 90 of the EC Treaty.

In Case C-101/00 Siilin the Court held that VAT on car tax was not VAT within the meaning of the Sixth Directive. The right under the Finnish Arvonlisäverolaki to deduct VAT on car tax related to commercial activities subject to tax was contrary to the Sixth VAT Directive 77/388/EEC, according to which VAT may be deducted only from VAT.

According to the Finnish Autoverolaki, the value of cars under three months old which are in use is not reduced and they are taxed as new vehicles. The value of a vehicle begins to go down from the moment the vehicle is purchased or brought into use. The taxation of used cars under three months old at the same level as new cars is contrary to Article 90 of the EC Treaty. The provisions of the Autoverolaki also infringe Article 90 of the EC Treaty because they apply a scale to cars between 3 and 6 months of age according to which the value of a car decreases by 0,8 % per month in circumstances where it has not been established that there are any similar vehicles on the Finnish market, because using that scale for a linear reduction in value of 0,8 % there is no guarantee that the amount of tax chargeable does not exceed in any circumstances the amount of residual tax included in the value of similar vehicles already registered in Finland.

(1)  Sixth Council Directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1).

(2)  OJ 2006 L 347, p. 1.