On 16 November 2023, the Court of Justice handed down its judgment in Case C‑349/22, NM v Autoridade Tributária e Aduaneira, on the interpretation of Article 110 of the Treaty on the Functioning of the European Union (TFEU). The request has been made in proceedings between NM and the Autoridade Tributária e Aduaneira (Portuguese Tax and Customs Authority) concerning the payment notice for the tax on vehicles provided for in the Código do Imposto sobre Veículos (Vehicle Tax Code) affecting a vehicle imported into Portugal by NM.

On 14 September 2018, a light vehicle equipped with a plug-in hybrid engine was registered for the first time in Germany. At a later time, on 13 September 2021 NM lodged with the competent customs authority a declaration relating to that vehicle for release for consumption in Portugal. The latter, therefore, calculated the amount of the tax which NM was required to pay on the basis of the cubic capacity and the environmental component of that vehicle, and the duration of its use since its first registration, establishing a tax amounting to almost EUR 2 900.

Despite having paid that amount, NM submitted a request for an arbitration tribunal to be set up in order to contest the version of the Vehicle Tax Code applied by the customs authority. NM’s application was therefore forwarded to the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa – CAAD) [Tax Arbitration Tribunal (Centre for Administrative Arbitration – CAAD); the “referring court”] which, in light of the need to interpret the relevant European legislation, decided to stay the proceedings and to ask to the Court of Justice 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 the one concerned, 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.

According to the Court, motor vehicles present on the market in a Member State are domestic products of that State within the meaning of Article 110 TFEU, so that, where they are placed on its market for second-hand vehicles, those products must be regarded as similar to imported second-hand vehicles of the same type, and with the same characteristics and wear. Therefore, 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 one 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.

Marco Stillo