The Commission recommends measures to strengthen the Single Market on car taxation

The European Commission presented a Communication with measures aimed to minimize the problems encountered by citizens and businesses moving cars between Member States and to remove obstacles for cross-border rentals, among other issues related to the car taxation.

The Communication presented by the European Commission intends to clarify EU rules on car taxation and recommends measures to strengthen the Single Market in this area. The measures proposed range from providing better information on the application of car taxes in cross-border situations; refunding part of the registration tax for cars which are permanently transferred to another Member State; to making provisions for the temporary use of vehicles, particularly rental cars, which are registered in another Member State. In April 2012, a Commission's report published that tax obstacles remained one of the key deterrents to citizens looking for work in another Member State.

The Commission receives numerous questions and complaints related to cross-border car taxation. The Commission has already put forward car taxation proposals to resolve problems encountered by EU citizens, but Member States have not been able to reach unanimous agreement on them. As a result, EU law related to car taxation is mainly derived from Court of Justice rulings. Despite jurisprudence of the Court and legal proceedings against Member States, the fragmentation of national tax schemes, discrimination and double taxation of cars transferred between Member States persist.

Car taxation accounted for around 1.9% of all tax revenue across Member States in 2010. Each year, more than 13 million new passenger cars are registered in the EU, while over 3 million cars are moved to another Member State.