Brev til ESA vedr midlertidig bruk av kjøretøy

Re: Letter of formal notice – Failure to ensure compliance with Articles 28 and 30 of the EEA Agreement. Complaint concerning restrictions on the use of foreign registered car when providing services in Norway

Reference is made to the Authority’s letter of formal notice dated 14 July 2000, for failure to ensure compliance with Articles 28 and 36 of the EEA Agreement.

The letter of formal notice concerns the Norwegian restrictions on the use of foreign-registered motor vehicles in connection with providing services in Norway. ESA is of the opinion that by preventing the employees of companies and self-employed persons established in another EEA State from driving a foreign registered company car when providing services in Norway, Norwegian legislation is contrary to the obligations under Article 36 of the EEA Agreement. Furthermore, the Authority is of the opinion that the legislation hinders EEA nationals residing in Norway from accepting offers of employment that would require the use of a company car on both sides of the border. Therefore, Norway has not fulfilled its obligations under the Article 28 of the Agreement.

The Norwegian Ministry of Finance is of the opinion that the Norwegian legislation in this area is in accordance with the EEA Agreement.

1.

Regarding the Authority’s view on the Norwegian regulations on foreign-registered cars, the Ministry would like to emphasise that taxation is not covered by the EEA Agreement (according to Article 1, paragraph 2 of the EEA Agreement). However, the general principles of free trade are within the scope of the Agreement.

Norway is not part of the EC Customs Union. Norway and the EU are still two separate customs areas, and Norway can still levy duties at the time of importation as long as they are in accordance with Article 14. Thus, Norway can keep procedures to control the application of customs and excise duties levied on products imported into Norway from other EEA countries. The EEA Agreement implies some simplifications in the procedures.

It is proposed that the Norwegian excise duty on motor vehicles is levied at the time of registration of the car in the Norwegian vehicle register as from 1 April 2001. VAT will still be levied at the time of importation. In principle, Norway can also levy customs duty at the time of importation. However, Norway abolished the customs duty on vehicles as from 1 January 1996.

According to the legislation within the EU, temporary importation of cars and other means of transport from third countries its regulated in Articles 137-144 of Council Regulation No 2913/92/EEC and Articles 717-719 of Council Regulation No 2454/93/EEC. These provisions apply when a car is temporarily imported from Norway to the EU.

The question is whether the Norwegian provisions in this area are to be considered restrictive according to Articles 28 or 36 of the EEA Agreement. The ministry of Finance is of the opinion that it must be the Norwegian legislation itself that is in conflict with the EEA Agreement, and not the different provisions or different interpretations of the legislation in the various European countries. If the restriction is a consequence of different legislation or different interpretations, this can not be met by a unilateral adjustment of the Norwegian legislation. These kinds of obstacles can only be met by harmonisation of the EU/EEA legislation.

The secondary legislation within the EU in this area does not have to be implemented in the Norwegian legislation. However, in our opinion the Norwegian legislation is in accordance with the EU secondary legislation, and thus not in conflict with the EEA Agreement.

2.

The Ministry would like to draw the attention to some examples that indicate that it also seems to be the view within the Community that the obstacles are due to difference in national legislation.

Council Directive 83/182/EEC on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another, is based on Article 93 (ex. Article 99) of the Treaty of Rome.

The preamble to the Directive states that the freedom of movement of Community residents within the Community is hampered by the taxation arrangements applied to the temporary importation of certain means of transport of private or business use. Furthermore, the preamble declares that it seems desirable in a first stage to limit the scope of this Directive concerning certain means of transport to those acquired or imported in accordance with the general conditions of taxation in force in the domestic market of a Member State.

The Ministry is of the opinion, that this is an indication that the EU has detected problems related to the distinctions in the national legislation. Reference is also made to case C-389/95 and C-9/92 of the EC-Court.

Tax rules must necessarily be based on objective criteria. Motor vehicles are registered in the owner’s country of residence. As mentioned above, there are differences of detail in the legislation regarding taxes imposed on motor vehicles in the different EEA States. The Ministry is of the opinion that this dispute is caused by these differences and not particularly by the Norwegian legislation. It is a fact that the Norwegian tax-level in this area is high and in some EEA States such taxation does not exist. As long as harmonisation of the legislation regarding registration of motor vehicles is not covered by the scope of the EEA Agreement, the EEA States must be permitted to some extent to undertake measures to prevent distortion of competition and undermining of the tax system.

In 1998 the Commission proposed a new Council Directive concerning tax exemptions for the temporary use of private motor vehicle. Several Member States have expressed dissatisfaction with this proposal, which has not been approved.

3.

Council Directive 83/182 /EEC was considered important when we developed the Norwegian legislation. The Directive must also be considered relevant in order to examine whether the Norwegian Regulation is in accordance with the general principles of the Agreement.

An excise duty is levied on motor vehicles imported to or manufactured in Norway. According to Regulations No. 381 of 20 June 1991 laid down by the Ministry of Finance, importation of foreign-registered motor vehicles for temporary use may under certain conditions be exempted from these excise duties and taxes.

Section 3 (1) 3 applies to persons who have occupational ties outside Norway and family ties in Norway. It follows from section 3 (2) that a person is regarded as having family ties with the country where he resides with his spouse or children under 18 years of age whom he visits regularly, normally at least once a month.

When deciding which country a motor vehicle should be registered in, the main factor is to determine the country where the owner is normally resident. This criterion is equivalent to the corresponding provision in Council Directive 83/182/EEC.

According to Article 7, paragraph 1 of the Directive, "normal residence" means the place where a person usually lives, that is for at least 185 days in each calendar year, because of personal and occupational ties, or, in the case of a person with no occupational ties because of personal ties which show close links between that person and the place where he is living. Furthermore, it follows from Article 7 that the normal residence of a person whose occupational ties are in a different place from his personal ties and who consequently lives in turn in different places situated in two or more Member States, shall be regarded as being the place of his personal ties, provided that such person returns there regularly.

According to Article 9 of the Council Directive, Denmark has special arrangements. Article 9 (3), second sentence, declares, in order to avoid double taxation, that where a person is considered to have two residences, the normal residence of that person is situated where his spouse and children live.

The Ministry is of the opinion that the main criterions are the same in the EC Directive and the Norwegian legislation – "normal residence". Thus, the Norwegian Regulation seems to be in compliance with the Council Directive.

We would also like to point out that according to the Norwegian Regulation section 5 (g), a person with residence in Norway may, on application, use a foreign-registered motor vehicle for short periods of use in particular cases. The reason for the need of an advance permission is the desire to monitor the use of foreign-registered motor vehicles in Norway.

4.

If the Authority is of the opinion that Norway should change the emphasis from family ties to occupation ties, this would have serious consequences for, for instant, the many Swedish and Danish citizens with occupational ties in Norway. They work here and rent/own a place to stay during the week and some weekends. According to the present legislation such a person can use a car registered in Sweden, if his spouse or children under the age of 18 years still reside in Sweden. If the Norwegian legislation in this area were to be amended in a way that makes the occupational the main criterion, such a person would have to use a car registered in Norway and pay Norwegian vehicle taxes. Such an amendment would probably cause a large number of objections.

It follows from the above, that the main problem seems to be the different tax level between Norway and for example Sweden and Germany. Persons with family ties in Norway, working in another country, would prefer to use a car registered in the country they are working, because of the high taxes in Norway. Persons working in Norway with family ties in another country, would prefer to drive a car registered in the country they have their family ties. If people were able to choose where to register their cars, this would undermine the Norwegian tax system for motor vehicles.

5.

The Ministry of Finance is of the opinion that the Norwegian provisions in this area are to be considered in compliance with the principle of the free movement of workers and the establishment of services in Articles 28 and 36 of the EEA Agreement. The Norwegian legislation in this area also seems to be in harmony with the secondary legislation in the EU.

The Ministry of Finance is of the opinion that the obstacles in this area are a consequence of different legislation or different interpretation of the legislation, in the various European countries.

Yours sincerely,

Tor Lande

Deputy Director General

Heidi Heggenes

Legal Adviser