The European Commission said on Thursday it will take Malta to court over its discriminatory rules on registering cars and other motor vehicles imported from the EU.
Malta’s reply to the Commission's reasoned opinion on the matter was not deemed to be satisfactory so the country will be referred to the European Union's Court of Justice for taxing used cars imported from other member states more heavily than used cars purchased on the Maltese market.
The step follows the time given to Malta to rectify the situation after the Commission said that Malta was discriminating in its car registration tax.
According to Maltese tax rules, cars registered after 2009 and imported from other EU states are taxed more heavily than similar cars registered in Malta before that date.
The rules were put in place by the government in 2008 in a bid to protect local car import companies from far cheaper second-hand imports from the EU.
Brussels had opened infringement proceedings against Malta over the rules which it says are incompatible with the Treaty on the Functioning of the European Union (TFEU), prohibiting discrimination against imported products.
The Maltese car taxation system does not take into account the date of first registration of the vehicle, where registration took place in another member state, it said.
It holds that the Maltese car taxation system has a discriminatory effect with respect to motor vehicles coming from other EU states.
The bulk of second-hand vehicles imported into Malta used to come from the United Kingdom although this has somewhat changed since Brexit.
The Commission said on Thursday that, in the absence of harmonisation of car taxes, each member state can arrange its tax measures in accordance with its own assessments.
However, the TFEU requires each member state to select and arrange car taxes in such a way that they do not have the effect of promoting sales of domestic second-hand cars and so discourage the transfer of similar second-hand cars from other member states.
This discriminatory effect is not compatible with Article 110 TFEU, which prohibits discrimination against imported products, the statement read.