Court of Justice of the European Communities (including Court of First Instance Decisions)

Provisional text

JUDGMENT OF THE COURT (Eighth Chamber)

16 November 2023 (*)

(Reference for a preliminary ruling – Article 110 TFEU – Internal taxation – Prohibition of discriminatory taxation – Tax on vehicles – Second-hand vehicles imported from other Member States – Application of different tax rates depending on the date of registration of a vehicle in Portugal)

In Case C‑349/22,

REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa – CAAD) (Tax Arbitration Tribunal (Centre for Administrative Arbitration – CAAD), Portugal), made by decision of 23 May 2022, received at the Court on 31 May 2022, in the proceedings

NM

v

Autoridade Tributária e Aduaneira

THE COURT (Eighth Chamber),

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

Advocate General: N. Emiliou,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        NM, by P. Carido, advogado,

–        the Portuguese Government, by P. Barros da Costa, A. Pimenta, A. Rodrigues and N. Vitorino, acting as Agents,

–        the European Commission, by M. Björkland and I. Melo Sampaio, 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 Article 110 TFEU.

2        The request has been made in proceedings between NM and the Autoridade Tributária e Aduaneira (Tax and Customs Authority, Portugal) (‘the tax authority’) concerning the payment notice for the tax on vehicles (‘the tax’) provided for in the Código do Imposto sobre Veículos (Vehicle Tax Code) affecting a vehicle imported into Portugal by NM.

 Legal context

3        Article 2 of the Vehicle Tax Code, entitled ‘Objective scope’, provides in paragraph 1(a):

‘The following vehicles shall be subject to the tax:

(a)      light passenger motor vehicles, which shall mean vehicles with a gross weight of up to 3 500 [kilogrammes (kg)] and capacity of not more than nine seats, including the driver’s seat, intended to transport people.’

4        Article 3 of that code, entitled ‘Subjective scope’, provides in paragraph 1:

‘The tax shall be payable by registered operators, authorised operators and private individuals, as defined in this code, engaged in the release for consumption of vehicles liable to the tax, such persons being considered to be those persons in whose name the vehicle customs declaration is made.’

5        Article 5 of the code, entitled ‘Chargeable event’, is worded as follows:

‘1 – The chargeable event for the tax shall be the manufacture or assembly in, or admission or import into the national territory of taxable vehicles that are subject to a registration requirement in Portugal.

…

3 –      For the purposes of this code:

(a)      “admission” means the entry into the national territory of a vehicle which comes from another Member State of the European Union or is released for free circulation in that State’.

6        Article 6 of that code, entitled ‘Due payment of the tax’, states:

‘1 –      In the situations referred to in paragraph 1 of the previous article, the tax becomes chargeable at the time of release for consumption, which is deemed to occur:

…

(b)      when the vehicle customs declaration is submitted for private individuals;

…

3 –      The applicable rate shall be the rate in force when the tax becomes chargeable.’

7        Article 7 of the Vehicle Tax Code, entitled ‘Standard rates – motor cars’, provides in paragraph 1(a):

‘I – Table A, below, sets out the tax rates, which are based on the cubic capacity and the environmental component; it applies to the following vehicles:

(a)      passenger motor vehicles’.

8        In the version amended by Lei n.^o 82-D/2014 que procede à alteração das normas fiscais ambientais nos sectores da energia e emissões, transportes, água, resíduos, ordenamento do território, florestas e biodiversidade, introduzindo ainda um regime de tributação dos sacos de plástico e um regime de incentivo ao abate de veículos em fim de vida, no quadro de uma reforma da fiscalidade ambiental (Law No 82-D/2014 amending environmental tax rules in the energy and emissions, transport, water, waste, spatial planning, forests and biodiversity sectors, and introducing a taxation scheme for plastic bags and an incentive scheme for scrapping end-of-life vehicles, as part of a reform of environmental taxation), of 31 December 2014 (Diário da República, 1st series, No 252 of 31 December 2014), in force between 1 January 2015 and 31 December 2020 (‘Law No 82‑D/2014’), Article 8 of the Vehicle Tax Code, entitled ‘Intermediate rates – motor cars’, provided in paragraph 1(d):

‘An intermediate rate – calculated by applying the percentages stated below to the amount arrived at by applying Table A in paragraph 1 of the previous article – shall apply to the following vehicles:

(d)      25%, for light passenger motor vehicles equipped with plug-in hybrid engines where the battery can be charged from the electricity network and the vehicle has a minimum range of 25 km in electric mode.’

9        In the version amended by Lei n.^o 75-B/2020, Orçamento do Estado para 2021 (Law No 75-B/2020, State Budget Law for 2021) of 31 December 2020 (Diário da República, 1st series, No 253 of 31 December 2020), in force since 1 January 2021 (‘Law No 75-B/2020’), Article 8 of the Vehicle Tax Code, entitled ‘Intermediate rates – motor cars’, provides in paragraph 1(d):

‘An intermediate rate – calculated by applying the percentages stated below to the amount arrived at by applying Table A in paragraph 1 of the previous article – shall apply to the following vehicles:

…

(d)      25%, for light passenger motor vehicles equipped with plug-in hybrid engines where the battery can be charged from the electricity network and the vehicle has a minimum range of 25 km in electric mode and official emissions of 50g of CO2 per km.’

10      Article 11 of the Vehicle Tax Code, entitled ‘Rates – second-hand vehicles’, provides:

‘1 –      The tax on vehicles with a permanent EU registration certificate issued by another Member State of the European Union shall be calculated provisionally in accordance with the rules of this code; the percentage reductions listed in Table D shall be applied to the amount of tax calculated in accordance with the applicable table, which take into account the cubic capacity and environmental components, including the increment established in Article 7(3), with those percentages being linked to average depreciation in the value of vehicles in the national market and average remaining vehicle lifetime respectively:

Table D …’

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

11      On 14 September 2018, a light vehicle equipped with a plug-in hybrid engine was registered for the first time in Germany.

12      On 13 September 2021, NM lodged with the competent customs authority a customs declaration relating to that vehicle for release for consumption in Portugal.

13      The competent customs authority calculated the amount of the tax which NM was required to pay on the basis of the cubic capacity component and the environmental component (Table A) of that vehicle, and the duration of its use since its first registration (Table D). Following that calculation, the customs authority established that the tax should be applied at the full rate to that vehicle, amounting to EUR 2 928.28, and it issued a payment notice to that effect.

14      NM paid the amount of tax indicated in the payment notice sent to him by the competent customs authority. He then submitted to the President of the Centro de Arbitgem Administrativa (Centre for Administrative Arbitration, Portugal) a request for an arbitration tribunal to be set up in order to contest that payment notice.

15      NM’s application was forwarded to the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa – CAAD) (Tax Arbitration Tribunal (Centre for Administrative Arbitration – CAAD), Portugal), the referring court.

16      In essence, NM submits that, on the date of the first registration of the vehicle at issue in the main proceedings, on 14 September 2018, Article 8(1)(d) of the Vehicle Tax Code, in the version amended by Law No 82-D/2014, was in force and that, under that article, a reduced rate of 25% of the tax applied to light vehicles equipped with a plug-in hybrid engine which had a minimum range of 25 km in electric mode. By contrast, on the date on which he lodged a customs declaration in respect of that vehicle, it was Article 8(1)(d) of the Vehicle Tax Code, in the version amended by Law No 75-B/2020, which applied. However, unlike the version of that article in force in 2018, that provision no longer allows vehicles with characteristics similar to the one at issue in the main proceedings to benefit from the application of a reduced rate of 25% of that tax. He submits that, consequently, a vehicle with such characteristics and initially registered in another Member State of the European Union, which is then brought into Portugal, is treated less favourably than a vehicle with similar characteristics but initially acquired and registered in Portugal, since that first vehicle cannot benefit from the application of the reduced rate of 25% of that tax. Thus, a heavier financial burden is placed on vehicles initially registered in another Member State of the European Union than vehicles with similar characteristics that were initially registered in Portugal, which is not consistent with Article 110 TFEU.

17      By contrast, the tax authority submits that the chargeable event for the tax is the admission into Portuguese territory of a vehicle that is subject to a registration requirement there, and that that tax becomes chargeable when the vehicle is released for consumption in Portugal. Thus, it is only on that date that it is necessary to assess whether or not a given vehicle satisfies the criteria enabling it to benefit from the application of the reduced rate of 25% of the tax. In addition, the tax authority submits that there is no infringement of Article 110 TFEU where the amount of tax levied on the admission into Portuguese territory of a second-hand vehicle coming from another Member State does not exceed the residual amount of that tax included in the price of similar second-hand vehicles already registered in the national territory, which is the situation with the amount of tax charged in the case of the vehicle at issue in the main proceedings.

18      In those circumstances, the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa – CAAD) (Tax Arbitration Tribunal (Centre for Administrative Arbitration – CAAD)) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Does Article 110 TFEU preclude a situation in which a rule of national law, such as Article 8(1)(d) of the [Vehicle Tax Code], which provides that private vehicles that satisfy certain environmental criteria are to be subject to tax on the release for consumption of motor vehicles … at a reduced rate of 25% [of the tax], remains in force and, under the version of the legislation in force from 1 January 2021 – which is more restrictive than the version previously in force – applies both to new Portuguese vehicles and to second-hand vehicles from other Member States of the European Union which are registered for the first time in Portugal from that date onwards, thereby providing the same tax treatment for those vehicles but giving rise to what could be considered unequal treatment between second-hand vehicles which have been in use for the same length of time and which satisfy the less demanding environmental criteria that previously applied but which do not satisfy the requirements in the new law, under which treatment is dependent on whether (a) they were originally sold and registered in Portugal before the date on which the new version of the law came into force, in which case they will have benefited from the reduced tax rate of 25%, which is likely to be reflected in the purchase price of second-hand vehicles; or (b) they were registered in another Member State while the previous version of the law was in force and were released for consumption in Portugal after that date, in which case they are subject to tax at the rate of 100%?’

 Consideration of the question referred

19      By its question, the referring court asks, in essence, whether Article 110 TFEU must be interpreted as precluding, on the date of release for consumption in a Member State of a vehicle that was registered for the first time in another Member State, a vehicle tax from being calculated in accordance with the rules applicable on that date, when an earlier version of the legislation relating to that tax, which would lead to the application of a lower tax and from which similar vehicles with the same relevant characteristics as that vehicle, but which were registered for the first time in the first Member State, were able to benefit, was in force when the vehicle was first registered.

20      It must be recalled at the outset 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).

21      Furthermore, according to the Court’s settled case-law, a motor vehicle tax levied by a Member State on the registration of such 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, which prohibits 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 of 17 December 2015, Viamar, C‑402/14, EU:C:2015:830, paragraph 33 and the case-law cited).

22      The aim of Article 110 TFEU is to ensure free movement of goods between the Member States in normal conditions of competition. That provision 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). That article is infringed where the tax charged on the imported product and the one charged on the similar domestic product are calculated in a different manner on the basis of different criteria which lead, if only in certain cases, to higher taxation being imposed on the imported product (judgment of 2 September 2021, Commission v Portugal (Vehicle tax), C‑169/20, EU:C:2021:679, paragraph 34 and the case-law cited).

23      More specifically, 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, judgment of 7 April 2011, Tatu, C‑402/09, EU:C:2011:219, paragraph 56, and order of 17 April 2018, dos Santos, C‑640/17, EU:C:2018:275, paragraph 17).

24      Motor vehicles present on the market in a Member State are domestic products of that State within the meaning of Article 110 TFEU. Where those products are placed on the market for second-hand vehicles in that Member State, they must be regarded as similar to imported second-hand vehicles of the same type, and with the same characteristics and wear. Second-hand vehicles purchased on the market of that Member State and those purchased in other Member States in order to be imported and placed in circulation in the former State are competing products (judgment of 7 April 2011, Tatu, C‑402/09, EU:C:2011:219, paragraph 55, and order of 17 April 2018, dos Santos, C‑640/17, EU:C:2011:275, paragraph 16).

25      Thus, there is a breach of Article 110 TFEU where the amount of tax levied on a second-hand vehicle coming from another Member State exceeds the residual amount of that tax incorporated in the value of similar second-hand vehicles already registered in the national territory. Such a situation is liable to favour the sale of domestic second-hand vehicles, thereby discouraging the importation of similar second-hand vehicles (judgment of 19 December 2013, X, C‑437/12, EU:C:2013:857, paragraphs 31 and 32 and the case-law cited).

26      In the present case, it is apparent from the information before the Court that, first, the tax is a consumption tax levied, inter alia, on any vehicle that is subject to a registration requirement in Portugal and that it is chargeable at the time when such a vehicle is released for consumption there. That tax thus applies to new vehicles and to imported second-hand vehicles, since it is levied only once, when a given vehicle is released for consumption on Portuguese territory.

27      Second, the referring court explains that Article 8 of the Vehicle Tax Code was amended after the date of the first registration of the vehicle at issue in the main proceedings in Germany but before it was released for consumption in Portugal. That amendment was intended to make the conditions that had to be satisfied in order for a vehicle to benefit from the application of the reduced rate of 25% of the tax more stringent.

28      As is apparent from the request for a preliminary ruling, under the scheme that was applicable in Portugal by virtue of Article 8(1)(d) of the Vehicle Tax Code, in the version resulting from Law No 82-D/2014, on the date of the first registration of the vehicle at issue in the main proceedings in Germany, such a vehicle was entitled to benefit from the application of the reduced rate of 25% of the tax. On the other hand, on the date on which it was released for consumption in Portugal, that vehicle did not fulfil the conditions laid down for entitlement to such a reduced rate under the scheme provided for in Article 8(1)(d) of the Vehicle Tax Code, in the version resulting from Law No 75-B/2020.

29      It follows that second-hand vehicles of the same type, and with the same characteristics and wear, which are thus similar goods for the purposes of the case-law referred to in paragraph 24 above, may be subject to the tax at a different rate depending on whether they were released for consumption in Portugal before or after the legislative amendment described in paragraphs 27 and 28 above.

30      In that context, it is for the referring court to ascertain that, at the time of release for consumption in Portugal of a second-hand vehicle from another Member State, the implementation of the tax legislation does not mean that the tax imposed on that second-hand vehicle exceeds the residual amount of that tax incorporated in the value of similar second-hand vehicles already registered in the national territory and is thus not liable to favour the sale of domestic second-hand vehicles and discourage the importation of similar second-hand vehicles, for the purposes of the case-law referred to in paragraph 25 above.

31      In the first place, that court will have to take account of the fact that the tax is levied at the full rate on the importation and release for consumption of such a vehicle coming from another Member State, even where that vehicle satisfied the conditions for the application of the reduced rate of 25% of that tax when it was registered for the first time in that other Member State. In addition, it will have to take account of the fact that the purchaser of a similar second-hand vehicle, already present on the Portuguese market, must only bear the amount of the residual tax incorporated in the market value of the vehicle he or she purchases, the value of that tax being linked, moreover, to such a reduced rate paid at the time of the initial release for consumption of that vehicle.

32      In that regard, it should be recalled that the Court has stipulated that Member States may not introduce new taxes or make changes to existing taxes which have the purpose or effect of discouraging the sale of imported products in favour of the sale of similar products available on the domestic market which had been placed on that market before those taxes or changes entered into force (judgment of 19 December 2013, X, C‑437/12, EU:C:2013:857, paragraph 35).

33      In the second place, it is apparent from the explanations given by the referring court that the detailed rules for calculating the tax have been gradually amended by means of several legislative reforms, so that the environmental component of that tax now takes into account the depreciation resulting from the period of use of second-hand vehicles imported into Portugal.

34      Nevertheless, subject to the checks to be carried out by the referring court, such legislative reforms do not appear to be capable of ensuring, on their own, an application of the tax that is compatible with Article 110 TFEU. As is apparent, in essence, from paragraph 31 above, the market value of vehicles similar to a vehicle such as the one at issue in the main proceedings, which are also sold on the Portuguese market for second-hand vehicles and which benefited from the application of the reduced rate of 25% of the tax at the time of their release for consumption, includes the residual amount of that tax. It is by reference to the rate at which that tax was paid that such a residual amount must be assessed.

35      In the light of all the foregoing, the answer to the question referred is that Article 110 TFEU must be interpreted as precluding, on the date of release for consumption in a Member State of a vehicle that was registered for the first time in another Member State, a vehicle tax from being calculated in accordance with the rules applicable on that date, when an earlier version of the legislation relating to that tax, which would lead to the application of a lower tax and from which similar vehicles with the same relevant characteristics as that vehicle, but which were registered for the first time in the first Member State, were able to benefit, was in force when the vehicle was first registered, if and to the extent that the amount of tax levied on that imported vehicle exceeds the amount of the residual value of the tax incorporated in the value of similar domestic vehicles on the domestic market for second-hand vehicles.

 Costs

36      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:

Article 110 TFEU must be interpreted as precluding, on the date of release for consumption in a Member State of a vehicle that was registered for the first time in another Member State, a vehicle tax from being calculated in accordance with the rules applicable on that date, when an earlier version of the legislation relating to that tax, which would lead to the application of a lower tax and from which similar vehicles with the same relevant characteristics as that vehicle, but which were registered for the first time in the first Member State, were able to benefit, was in force when the vehicle was first registered, if and to the extent that the amount of tax levied on that imported vehicle exceeds the amount of the residual value of the tax incorporated in the value of similar domestic vehicles on the domestic market for second-hand vehicles.

[Signatures]

*      Language of the case: Portuguese.

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