20 September 2002: The European Court’s decision that elements of VRT taxation imposed on cars in Europe are ‘illegal’ is not likely to have any immediate effects in Ireland, according to Cyril McHugh of the Society of the Irish Motor Industry. But he said it does flag that the system may eventually be on the way out.

The Court ruled that Finland must not levy taxes on imported used cars exceeding the tax on similar vehicles already in the country. The ruling is expected to boost used car imports to Finland, especially from Germany.

The case had been taken by a Finnish citizen who had imported a used Mercedes-Benz from Germany and challenged the customs authorities over the car tax in the national courts, which then asked the European Court of Justice for an interpretation.

The decision is expected to lower taxes on imported used cars in Finland by about a third. The decision was welcomed by the European Commission, which two weeks ago called on countries in the EU to phase out vehicle registration taxes because they militated against the single market concept that underpins the EU.

Finland has the highest VRT in Europe.