Other Taxes (Diğer Vergiler)

- Passenger car taxation
- Possible contribution on airline tickets
- Canary Islands
- Dock dues in French overseas departments
   
- Passenger car taxation

At present there is little Community legislation, or harmonisation of national fiscal provisions, applied by the Member States in the area of passenger car taxation.

Therefore, it is for each Member State to lay down national provisions for the taxation of these cars. The few pieces of legislation currently in force mainly cover the cross-border aspects of car taxation.

European Commission Proposal

The European Commission on 5 July 2005 presented a proposal for a Directive (COM/2005/261/FINAL; press release IP/05/839; and frequently asked questions MEMO/05/236) that would require Member States to re-structure their passenger car taxation systems. The proposal aims to improve the functioning of the Internal Market by removing existing tax obstacles to the transfer of passenger cars from one Member State to another. It would also promote sustainability by restructuring the tax base of both registration taxes and annual circulation taxes so as to include elements directly related to carbon dioxide emissions of passenger cars. The proposal aims only to establish an EU structure for passenger car taxes. It would not harmonise tax rates or oblige Member States to introduce new taxes.

The Commission's passenger car tax proposal contains three elements:

·       Abolition of car registration taxes over a transitional period of five to ten years.
·       A system whereby a Member State would be required to refund a portion of registration tax, pending its abolition, where a passenger car that is registered in that Member State is subsequently exported or permanently transferred to another Member State.
·       The introduction of a CO2 element into the tax base of both annual circulation taxes and registration taxes.
Annexed to the proposal is a Commission staff working document that provides a detailed analysis of the proposal's economic, environmental and social impact (SEC/2005/809 ).

The ground for the proposal had been prepared by a 2002 Commission Communication proposing policies and options aimed at serving both Internal Market and environmental objectives (COM(2002) 431 - see also press release IP/02/1274).

Legal situation in the EU today

National provisions must be in line with the general principles of the EC Treaty. This means in particular that they should not give rise to border-crossing formalities in trade between Member States, and must respect the non discrimination principle.

As to Community Law, there are two Council Directives that restrict the rights of Member States to apply consumption taxes to vehicles:

·       Council Directive 83/183/EEC of 28 March 1983 on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals
·       Council Directive 83/182/EEC of 28 March 1983 on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another

The Commission has prepared a notice for citizens setting out the tax consequences of transferring cars across borders (TAXUD/255/02 - see below). It addresses only the cross-border aspects of car taxation.
Cars are an important means of getting around and are, therefore, instrumental to the right of freedom of movement by their users which is guaranteed under the EC Treaty. Many citizens take their car when they leave their Member State temporarily or settle permanently in another Member State . Others buy or hire a car in a Member State other than their own.

Background

·       Passenger car taxation: public consultation on proposals for passenger car taxation (Press release IP/04/970)
·       Communication from the Commission to the Council and the European Parliament - Taxation of passengers cars in the European Union - options for action at national and Community levels(COM(2002) 431 of 06/09/2002). See Press release IP/02/1274.
·       Information notice to citizens (TAXUD/255/02 of 09/09/2002 ): Taxation of cars transferred within the Community or used regularly on cross-border journeys. Information document from the Commission on the rights and duties of the European Citizen
·       Fiscal measures to reduce CO2 emissions from new passenger cars (January 2002). A study contract undertaken by COWI A/S: "Fiscal measures to reduce CO2 "
·       Study on vehicle taxation in the Member States of the European Union (January 2002): "Study on vehicle taxation 2002 "
·       Proposal for a Council Directive governing the tax treatment of private motor vehicles moved permanently to another Member State in connection with a transfer of residence or used temporarily in a Member State other than that in which they are registered (COM(98) 30 final of 10/02/1998)
·       Vehicle taxation in the European Union 1997. This document sets out the taxation measures in force in each of the Member States: "Vehicle taxation in the EU 1997 "

- Possible contribution on airline tickets

A European Commission staff working paper published on 1 September 2005 (SEC/2005/1067 ; and press release IP/05/1082) contains an analysis of how a solidarity contribution on airline tickets might be used by EU Member States as a source of development aid in order to help achieving the Millennium Development Goals.

Mandatory levy or voluntary contribution?

The paper must be seen in the context of the decisions to double development aid and to deliver better and faster, taken at the June 2005 European Council. Requested by the Council of Economic and Finance Ministers in July 2005, the staff working paper contains a technical analysis of the two options which Finance Ministers wish to consider further: mandatory or voluntary payment of a contribution by passengers under a common EU scheme in which Member States could voluntarily participate. A co-ordinated EU approach would deliver a political message of European solidarity towards developing countries, facilitate and clarify the operation of the measure for airline operators and passengers, as well as ensure that EC Treaty rules were respected.
The working paper does not represent a European Commission position on the mechanisms to be used; nor does it contain a Commission proposal for a specific mechanism. It is designed to assist Member States by providing a basis for them to consider further the instruments they could use to finance their Overseas Development Aid commitments. Member States have to make their decisions in this matter with a view to the UN General Assembly debate scheduled for the 2nd half of September, 2005. The paper analyses two main scenarios within which there could be a contribution on airline tickets:

·       Voluntary-Mandatory: a voluntary participation of Member States in an international scheme introducing a mandatory levy for passengers at national level;
·       Voluntary-Voluntary: a voluntary participation of Member States in an international scheme providing for a voluntary contribution by passengers at national level.

The levy/contribution rate envisaged in the paper ranges from € 1 to € 5 for intra EU and national flights, and from € 2 to € 10 for international flights.

Although the paper recalls that Community law does not prevent a Member State from unilaterally introducing a levy on airline tickets, it stresses that there are advantages to implementing a levy and/or a voluntary contribution in a co-ordinated manner. In particular, co-ordination at EU level would reduce potential negative effects.

Background: Taxation, Air Transport and Development Aid

In the context of its drive to enhance development aid's effectiveness (see IP/05/423) the Commission services put forward, among other things, a working paper on "New Sources of Financing for Development: A Review of Options" (SEC(2005) 467 of 5 April 2005 ). This paper also deals with tax instruments such as kerosene and flight departure taxes and is expected to stimulate debate at European and national levels. On 15 June 2005, a staff working paper on 'An analysis of a possible contribution based on airline tickets as a new source of financing development', was transmitted to the Council of Ministers (SEC(2005) 733 ). It should be added that development aid funding has been discussed in connection with the issue of taxation of aircraft fuel.

Also in June 2005, the EU has decided to increase its budgetary commitment to development aid from € 46 billion in 2006 to around € 66 billion in 2010. The Union has more specifically agreed to further strengthen policy coherence and put a special emphasis on sub-Saharan Africa, the region with the most difficulties in achieving the Millennium Development Goals. The EU remains the worlds' biggest donor of developing aid and the developing world's largest trading partner. 

- Turnover taxes in the Canary Islands

The Canary Islands and Community VAT legislation

The Canary Islands are not part of Community territory for the purposes of VAT (Article 3 of 6th VAT Directive).
The harmonised rules on VAT do not apply to the Canary Islands and the application of turnover taxes is a matter for the national or local authorities subject to respect for the general principles of the treaty and, notably, the absence of discrimination in the taxation of products.

VAT does not exist in the Canary Islands but there is a local consumer tax known as the IGIC (Impuesto General Indirecto de Canarias - Canaries General Indirect Tax) applied at several different rates. There is also another consumer tax known as the AIEM, which is discussed below.

AIEM tax (Arbitrio sobre Importaciones y Entregas de Mercancías en las Islas Canarias - Tax on imports and deliveries to the Canary Islands)

In principle, the Treaty does not permit differences in taxation between local products and products imported from Spain or the other Member States. However, the specific nature of the outermost regions, one of which is the Canary Islands, is laid down in Article 299(§2) of the EC treaty, which permits specific measures to be taken, particularly in the tax field, so as to take account of the particular characteristics and constraints of these regions.

Local manufacturers have to contend with a number of handicaps, caused especially by their remoteness, the effect of which is to push up the cost prices of their products, thereby making them uncompetitive with products from elsewhere (especially mainland Spain and the other Community Member States). This has justified the implementation of a specific measure, which, by means of tax exemptions or reductions for local products, serves to

·       encourage productive industrial activity,
·       safeguard their competitiveness with outside products, and
·       thus increase the proportion of the Canaries' GDP accounted for by industrial activity.

This is why, on a proposal from the Commission, the Council adopted Decision 2002/546/EEC of 20 June 2002 (Official Journal L 179 of 9/7/2002, page 22), authorising the Spanish authorities to apply total exemptions or reductions of the local AIEM tax in respect of a limited list of locally manufactured products specified in the annex to that decision until 31 December 2011. These tax exemptions or reductions may not result in tax differentials of more than 5, 15 or 25% depending on the product and with the proviso that the 25% rate only applies to tobacco.

This decision therefore permits the application, subject to the authorised limits, of tax differentials between local products and products from outside the Canaries.

- Turnover taxes in the French Overseas Departments

The French Overseas Departments and Community VAT legislation
The French Overseas Departments (DOM) are not part of Community territory for the purposes of VAT (Article 3 of 6th VAT Directive).

The harmonised rules on VAT do not apply to the DOMs and the application of turnover taxes is a matter for the national or local authorities subject to respect for the general principles of the Treaty and, notably, the absence of discrimination in the taxation of products.

The DOMs (other than French Guiana) apply a local VAT system closely resembling the Community system but with certain adaptations (reduced rates).

Moreover, there is a further tax on consumption known as "dock dues", which applies mainly to products from outside the DOMs but which can also be applied to locally manufactured products.

- Dock dues

Dock dues are a very old form of tax, several centuries old, which was originally levied on all products arriving in the DOMs by sea.

In principle, the Treaty does not permit differences in taxation between local products and products imported from mainland France or the other Member States. However, the specific nature of the outermost regions, which includes the DOM, is laid down in Article 299(§2) of the EC treaty, which permits specific measures to be taken, particularly in the tax field, so as to take account of the particular characteristics and constraints of these regions.

Local manufacturers have to contend with a number of handicaps, caused especially by their remoteness, the effect of which is to push up the cost prices of their products, thereby making them uncompetitive with products from elsewhere (especially mainland France and the other Community Member States). This has justified the implementation of a specific measure, which, by means of tax exemptions or reductions for local products, serves to

·       encourage productive industrial activity,
·       safeguard their competitiveness with outside products, and
·       thus increase the proportion of the DOMs' GDP accounted for by industrial activity.

This is why, on a proposal from the Commission, the Council adopted its Decision of 10 February 2004 (Official Journal L 52 of 21/2/2004, page 64), authorising the French authorities to apply total exemptions or reductions of the local AIEM (dock dues) tax in respect of a limited list of locally manufactured products specified in the annex to that decision. These tax exemptions or reductions may not result in tax differentials of more than, 10, 20 or 30% depending on the products. The authorisation is valid until 1 July 2014.

This decision therefore permits the application, subject to the authorised limits, of tax differentials between local products and products from outside the DOM.