Transport Malta has been ordered to refund over €30,000 in registration tax and VAT to a man who imported a second hand Ferrari from the United Kingdom.
Mr Justice Joseph Zammit McKeon in the First Hall of the Civil Court delivered this judgment following an action filed by Stephen Grech against the Prime Minister, the Minister for Communications and National Projects, the Finance Minister, the Transport Authority, the Director General for VAT and the Attorney General.
The court heard that in 2008 Mr Grech imported a second hand Ferrari. He had paid all taxes due on the car in the UK, including registration tax and VAT but was forced to pay the Authority €25,793.63 to register the car in Malta together with €4,642.85 in VAT. Mr Grech made the payment under protest.
Mr Grech claimed that the payment was unlawful and was based on an incorrect interpretation of EU law on freedom of movement of goods within the EU. The payment he had made was tantamount to double taxation and unjustified enrichment and he asked the court to order defendants to refund him €30,448.13.
In its judgment the court pointed out that the EU Treaty provided that no member state could impose, directly or indirectly, any internal taxation of any kind on the products of other member states in excess of that imposed directly or indirectly on similar domestic products.
Case law of the European Court had held that the aim of this provision was to ensure free movement of goods between EU member states in normal conditions of competition. The member states had to guarantee the complete neutrality of internal taxation as regards competition between domestic products and imported goods.
The court added that Mr Grech had also paid 18% in VAT on the registration tax of the car. This meant that he was paying tax on another tax when this was not due in terms of law. No VAT was due, said the court, on the importation of a second hand car from another EU state when the car was intended for one's personal use.
The court concluded by ordering the Transport Authority to refund Mr Grech €30,448.13.
Dr Simon Micallef Stafrace was defence counsel.