26.1.2011

The Ministry of Finance and the Customs did not act blameworthily when they limited non-VAT vehicle tax rebates on imported cars to apply to decisions made after 2006 and pending matters, even though the taxes had been levied contrary to EU law.

Deputy-Ombudsman Maija Sakslin issued decisions on several complaints concerning the deadlines for non-VAT vehicle tax rebates.

Non-VAT vehicle tax was levied on the basis of the Vehicle Tax Act until March 2009, when the Court of Justice found that it contravened EU law.

Limitation of rebates in accordance with law

The view taken in the complaints that the Ombudsman received was that levying non-VAT vehicle tax had been contrary to EU law already in 2002. That was when the Court of Justice ruled in the so-called Siilin case, which related to Finnish vehicle tax.

In the view of the Deputy-Ombudsman, a conclusion to the effect that non-VAT tax  should be rebated more broadly than is provided for in the legislation on mass rebates can not be inferred from EU law.

In her decision, Deputy-Ombudsman Sakslin evaluated the obligation on the national authorities to act in the light of the Court of Justice ruling as well as the retroactive effect of the judgement. 

She took the view that the Customs had acted in the rebate matter in accordance with the appeal provisions of the Vehicle Tax Act. In those cases in which taxation had not been resolved with the force of law, the Customs dealt with the rebates as correction matters.

The Ministry of Finance was not found to have acted unlawfully, either.

Court of Justice: non-VAT tax contrary to EU law

The non-VAT tax was a levy, in the same amount as value-added tax, charged on vehicle tax. It was charged under the provisions of the Vehicle Tax Act before the Court of Justice ruling in March 2009. That was when the Court of Justice found that the Finnish non-VAT tax was contrary to Community law.

Under the legal praxis followed in the EU, a Member State is obliged to return to a taxpayer any tax that has been found contrary to Community law. After the judgement, a so-called Rebate Act, under which rebates were restricted to post-2006 and pending tax decisions, was enacted in Finland.

It was estimated that the number of tax decisions with respect to which rebates would have to be made was about 53,000, and the taxes to be repaid a total of around €40 - 50 million. The average rebate would be about €900 per taxed vehicle.

Deadlines in accordance with national regulations

In evaluating the deadline for rebating taxes, Deputy-Ombudsman Sakslin noted that an EU Member State can apply national procedural rules on deadlines, provided they accord with the commensurability and efficiency principles in EU law. Procedural rules and deadlines of this kind are determined in accordance with the Member State's internal legal order.

The rules applicable to rebates of taxes that have been levied in contravention of EU law must not, however, be more disadvantageous than the rules that are applied to rebates of equivalent national payments. Nationally-set deadlines must also be reasonable. What is deemed reasonable has been three, four years.

It has also been possible in national law to set an appeal deadline that limits the chronological dimension of rebates. Because the deadline is founded on an Act, people liable to pay tax have not been, in Deputy-Ombudsman Sakslin's view, groundlessly placed in an unequal position.

The possibility of obtaining compensation under Union law was not addressed in the decision.

Deputy-Ombudsman evaluated statements by civil servant

A complaint had also been made to the Ombudsman about opinions concerning the development of vehicle tax and car prices in the near future that a Senior Officer at the Ministry of Finance had expressed in public. The complainant took the view that the civil servant had given incorrect information about, e.g., preparatory work on changes to vehicle tax as well as the effects that the changes would have on car prices and the car trade.

The Senior Office had stated, inter alia, in an article in the magazine AKE in 2001 that "according to present estimates, it is not the intention to consider changing vehicle tax" and that consumers had been mistaken in believing that the prices of new cars would fall due to changes in the taxes levied on imported used cars.

According to a report received by the Ombudsman, a political decision to reduce vehicle tax was not made until November 2002.

The Deputy-Ombudsman pointed out that the level of vehicle tax is a question to be resolved within political decision making and that forecasting it has a significant effect on business activities in the sector.  She took the view that a civil servant must exercise caution in his statements when assessing the development of vehicle taxation, but without forgetting the state administration's goal of mediating information that supports decision making by individuals.

The Deputy-Ombudsman takes the view that the Senior Office did not state anything in the matter than was not correct at that point in the preparatory process. Thus she does not find that the Senior Office acted incorrectly.

The Ministry of Finance did not in its statement adopt a position on the Senior Officer's action.

A few complainants also criticised statements made by the Director of the Customs and a judge of an administrative court concerning the compliance with EU law of non-VAT tax rebates.

In this respect, the Deputy-Ombudsman found that what was involved was the expression of opinion by a civil servant in his official capacity on interpretation of legislation, legal praxis and authorities' work situation. She took the view that she had no reason to intervene in a civil servant's individual choices of words and that, in the light of the report received, the civil servant's action had not been unlawful.

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