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Polish import tax on used cars is illegal, EU's top court rules - extended

Poland's practice of charging higher registration taxes on used cars imported from other European Union countries is illegal, Europe's top court ruled in a case that could force the government to refund millions of zloty.

Polish citizen Maciej Brzezinski was seeking to recoup the registration tax he paid in 2004 on his 15-year-old imported Volkswagen Golf. Poland may not tax second-hand cars from other EU countries „more onerously” than those already registered in Poland, the Luxembourg-based European Court of Justice ruled today. Registration duties, which range from 3.1% to 65% of the value, have totaled more than 2 billion zloty ($667 million) since Poland joined the EU in 2004, according to finance ministry data. The Polish court that referred the case to Luxembourg had asked the judges to limit the effects of a negative ruling on government finances.

Deputy Finance Minister Jacek Dominik said the ruling won't have a large affect on the nation's budget. While reviewing the registration fees, the ministry will determine the market value of a vehicle rather than accept the value given by importers. „We expect then that many importers undervalued their cars in official invoices and our evaluation may actually prove that importers, instead of awaiting any return, should rather pay a higher tax,” Dominik said. „I won't be surprised when many importers simply refrain from seeking the return.”

An adviser to the Court of Justice last year said Poland's excise duty was „incompatible” with EU rules because it exceeded the amount due on a comparable used car registered in Poland. Poles have imported about 2.5 million used cars since 2004 at a cost of about 1,555 zloty per car plus an average 855 zloty in registration tax, according to Samar, a company that monitors the Polish car market. Today's case is the first time the EU court has ruled on a Polish tax since the country joined the bloc, Mariusz Aleksandrowicz, a lawyer in the Warsaw office of the Linklaters law firm said in an interview before the ruling. The government introduced a revised tax law on December 1, 2006, in line with the court's opinion, he said. (Bloomberg)