Romania, EC Agree On Car Tax Issue

According to Korodi, the Commission asked Romania to set a very high level for cars with weak Euro catalysts, to lower the tax with respect for age in the same Euro group and to make the tax challenge procedure wider reaching and clearer.

 

Korodi stated that Romania will not send to Brussels a new document with the modified tax values, and it would directly inject into legislation the set values, depending on the new demands.

 

The Romanian officials on Wednesday met with the representatives of the Directorate-General for Taxation and Customs Union within the European Commission for talks on the car tax.

 

"The EC experts said that Romania’s proposals observe the European legislation in the field. Thus, the last details on the matter will be dealt with next week so that the ordinance amending the legislation in the field can be issued by January 31, 2008," Romanian Department for European Affairs chief Adrian Ciocanea said.

 

Ciocanea stressed that the infringement procedure would likely be suspended once the legislation is adopted under the format agreed by the European Commission.

 

Late November 2007, the European Commission took the second step in the infringement procedure against Romania regarding its car tax, giving the country a two-month deadline to amend its legislation. If Romania fails to comply, the Commission may refer it to the European Court of Justice.

 

The reason behind the Commission’s decision was that the tax applied by Romania discriminates against used cars brought into the Romanian territory from other member states.

 

Early December 2007, Romania’s economy and finance minister of Varujan Vosganian said Romania will amend its car tax legislation by correlating the first registration tax to the car’s market value and allowing population to appeal the taxes.

 

Government sources told MEDIAFAX that the car tax will nearly triple for new cars and will be lowered in direct ratio with the car’s age for vehicles with the same cylinder capacity and emission standards.

 

Thus, if the tax for a new Euro 4 car with an engine capacity of 1,400-1,600 cubic centimeters is currently a little above EUR100, under the new calculation method, the tax increases to over EUR400. The tax is lowered in direct ratio with the car age, so that the same vehicle, but two years old, would be taxed 15% less.

 
The tax was introduced early last year, when the elimination of excises for imported vehicles thinned the state budget. The tax was immediately frowned upon by the EU, which considered it discriminating against second-hand EU imported cars. The first registration tax, as it was called, was calculated depending on engine capacity, car age and level of emissions.