Court: Finland must repay tax to tens of thousands of Finns who imported cars

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Tens of thousands of Finns who have brought a car to Finland from another European Union member state are entitled to a tax refund.
      The European Court of Justice ruled on Thursday that the imposition of a tax similar to value added tax on personal imports is not in line with EU legislation.
      The court found it particularly unfair that the additional “non-VAT” is tax-deductible for companies but not for private citizens.
     
The change mainly affects those who have imported a car in recent years; Finnish car taxation will change in April, and the contradiction with EU legislation will go away.
      For example, an individual importing a Mercedes-Benz 420, imported in March last year with a taxation value of EUR 14,461 was required to pay a EUR 4,743 in vehicle tax, and EUR 1,044 in VAT (or “non-VAT”).
      Under Thursday’s decision, the importer will be entitled to a refund of the “non-VAT”, plus 2.25 per cent interest.
     
The Ministry of Finance estimates that the amount of money to be returned is about EUR 40-50 million. Finland told the EU court that the sum to be returned would be as high as EUR 80 million, and some experts have put forward even higher figures.
      Finnish Customs, which took the payments in the first place, plans to refund the excess money at its own initiative.
      However, not all of those entitled to a refund are expected to get it this year.
     
Refunds are in store for all those who imported a car in 2006 or later.
      Those who brought in a car before 2006 might be entitled to a refund, if they have an appeal pending on the matter, says Merja Sandell of the Ministry of Finance. “Refunds will be paid in an estimated 70,000 cases.”
      Lawyer Petteri Snell, who specialises in car taxation, predicts that the number of Finns getting refunds will end up being much greater than the ministry calculates.
     
Snell and car tax veteran Antti Siilin decided after learning of the decision, that they will seek a refund for taxes paid by Siilin on his personal import of a Mercedes-Benz in 2002.
      It was that case that led to a previous decision by the European Court of Justice that forced Finland to change its taxation of personal car imports, which led to the continuing surge in imports, mainly from Germany.
      “Why should I have to pay VAT, when the EU court says that it should not have been levied? I brought the car from Germany in 1998, and I have not yet received compensation for VAT. From the point of view of individual rights, this is ridiculous”, Siilin says.
      Snell feels that those who imported cars between 2002 and 2005 are also entitled to a refund.
      “Officials have told people erroneously that VAT has been levied lawfully, and that there is no point in appealing. Therefore, many failed to submit an appeal.
      Snell feels that the present formula used by customs authorities to determine taxation values for cars is not in line with decisions of the court. The decision notes that the taxation system is in line with EU legislation only if it is shown that the imported cars are not taxed any higher than domestic products would be.


Previously in HS International Edition:
  EU Commission takes Finland to court over car taxes (15.1.2008)

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