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Consultation on proposals for passenger car taxation

The consultation on proposals for passenger car taxation launched by the European Commission in July 2004 (IP/04/970) was closed on 11 September 2004 . A summary report on its outcome is available here PDF document Deutsch - 44 KBEnglish - 37 KBfrançais - 44 KB.


The intention to come forward with proposals had been announced in the Commission Communication on taxation of passenger cars in the European Union (COM (2002) 431 final of 06.09.2002)

The Communication has focussed on two main areas.

  • First, in relation to the Internal Market, it noted that considerable tax obstacles and distortions to free movement of passenger cars exist as a result of current passenger car taxation systems and identified registration taxes as the biggest problem in the EU-15 Member States. It, therefore, recommended their gradual reduction and preferably abolition, to be replaced by annual road taxes and fuel taxes (so that the global tax burden would remain the same but related to the use of a car rather than its acquisition). It also recommended a certain degree of approximation of annual road taxes to prevent car market fragmentation.
  • Second, in relation to Community policy environmental objectives and sustainability, it recommended that the taxation of new passenger cars be more directly related to their CO 2 emissions.

Examination of the various options available to meet the objectives stated in the Communication had been the subject of considerable work and a limited consultation of certain bodies. Briefly, these options have been short-listed to four:

  1. the "do-nothing" option;
  2. retaining existing taxation systems but introducing a refund system to avoid double taxation problems when cars transfer to another Member State ;
  3. the gradual phasing out of registration tax, with a refund system to apply in the meantime, and the introduction of a new tax structure linked to CO 2 emissions; and
  4. similar to option (3) but rather than a phasing out of registration tax, merely reducing it to a level that does not exceed 10% of the pre-tax price of the car.

Initial views from the industry and consumer associations supported Option (3) and on this basis a partial Extended Impact Assessment PDF document English - 265 KB had been completed.

In order to obtain the views of all stakeholders, including private individuals, the Commission launched in July 2004 a wide consultation to collect feedback from interested parties, with a view to making a legislative proposal in the autumn.