THE GOVERNMENT has been ordered to modify how the Vehicle Registration Tax (VRT) is applied to some vehicles, as the existing levels do not comply with European Union law.
The European Commission yesterday said it was concerned that the current system was unfair. This was because those who imported vehicles under three months old, or with less than 3,000km on the clock, had to pay the tax at the same rate as those who bought a brand new vehicle in the State.
The commission said this was unfair as the EU Court of Justice had established that a vehicle started to lose its value as soon as it was bought or brought into use.
It said the Irish system breached regulations as the amount of tax levied on an imported second-hand vehicle was higher than the rate included in the value of a similar second-hand vehicle sold in Ireland.
Under EU law, member states are prohibited from levying lower rates of tax on domestic products than on those from another EU country. “This is a discrimination of these vehicles, which are proportionally more taxed than new vehicles purchased in the country,” the commission said.
If the rules are not brought into compliance within two months, the commission warned it would refer the matter to the European Union Court of Justice.
A spokesman for the Department of Justice said it accepted the findings of the commission. He said the matter would be considered as part of the 2012 Finance Bill, which is scheduled to be published on February 8th. The department said it did not expect any remedial action to have an impact on future tax revenue.
