NEWS | Wednesday, 25 February 2009

PRINT THIS ARTICLE

Matthew Vella
The European Commission has said that motorists who bought a car from May 2004 onwards and want to seek reimbursement of their VAT paid on registration tax must seek redress in the law courts.
European Commissioner for Taxation Laszlo Kovacs was answering a question in the European Parliament tabled by Labour MEP Louis Grech.
Kovacs said the Commission is pursuing an infringement procedure against Malta over the inclusion of registration tax in the taxable amount of VAT, and that it had recently received the information about the amendment of the law which deals with this matter.
“Concerning the reimbursement claims, the Commission considers that taxpayers might indeed seek redress of taxes that have been collected in breach of EC law. They must, however, exercise that right in accordance with the procedures provided for similar refunds in national law,” Kovacs said.
The Commissioner said it will have to be the national courts to determine whether a refund applies or not in cases where taxes are levied in breach of Community law.
Finance Minister Tonio Fenech yesterday said that the Commissioner had only stated that taxpayers can seek redress, but that government was not obliged to automatically reimburse VAT paid on registration tax.
“It is not true Maltese law on VAT on registration tax breaches European law… there is no decision from the European Court of Justice against the government on this matter.”
Fenech said a statement by Louis Grech yesterday was contradictory since it was claiming that reimbursement must be awarded by right, but that taxpayers still had to file a claim against the government in court to be reimbursed. “This implies that claimants might not necessarily win their case in court,” Fenech said.
In October 2007 Joseph Muscat and Grech lodged a complaint with Commissioner Kovacs that the Maltese authorities were unjustifiably levying VAT on the vehicle registration tax element.
“We maintained that this illegality by the Maltese Government was not in conformity with the ruling given by the European Court of Justice in the De Danske Bilimporter case (C‑98/05) and insisted that consumers who had been made to pay this unjustified tax should be refunded the relevant amount immediately,” Grech said.
In the recent budget speech the government announced that with effect from 1 January 2009 the VAT on vehicle registration would be abolished.
“Having said that and following a number of meetings I held in the past three months with the Commissioner for Taxation, I was given to understand by the Commissioner’s office that the government has no other option but to effect the relevant tax refunds under conditions not worse than those normally applied by national tax authorities,” Grech said.
The Commission is still in the process of evaluating its infringement procedure against Malta on the issue of VAT on registration tax on cars. In 2007 it asked the government for a clarification of Maltese law on the matter and in 2008 it sent the government a reasoned opinion.
Fenech said that nowhere in Kovacs’ reply was it confirmed that the government was obliged to give refunds on VAT from May 2004.

PRINT THIS ARTICLE

Any comments?
If you wish your comments to be published in our Letters pages please click button below.
Please write a contact number and a postal address where you may be contacted.