Discrimination Suit Over German Highway Tax Circles Drain

(CN) – Recommending the dismissal of an unusual case between EU member states, a magistrate said Wednesday that Austria cannot support discrimination claims over a new highway tax in Germany.

Austria brought the case here in 2017 after the European Commission terminated its own challenge. Supported by the Netherlands, Austria claims that Germany discriminates on the grounds of nationality by forcing the owner or driver of vehicles registered abroad to pay an infrastructure tax when enter a federal road after crossing a national border.

Foreign drivers can elect to pay a charge that covers their cars for three time spans: a 10-day vignette, a two-month vignette or an annual vignette.

Depending on cylinder capacity, the type of engine and the class of emission, the cheapest 10-day vignette costs €2.50, while the most expensive annual vignette costs €130. 

German vehicle owners must pay a charge as well, but they are also entitled to a tax relief corresponding to the amount of the charge. Tuesday’s ruling emphasizes that owners of Euro 6 vehicles — cars that comply with the he latest engine-emission standards set by the European Union — see the highest relief.

Though Austria complained that the tax relief effectively makes the tax one paid exclusively by foreign vehicles, Advocate General Nils Wahl determined Wednesday that the member state does not have a case for discrimination.

The opinion begins with Wahl dissecting the comparator Austria has selected to show that Germany is playing favorites with two classes in a comparable situation.

“Owners of domestic vehicles and drivers of foreign vehicles are comparable with respect to the use of German motorways, but they are not comparable when examined in the light of both measures, which entails considering them as both users of German motorways and taxpayers,” Wahl wrote. “That is why there is a mismatch in the arguments of the Austrian government: on the one hand, it insists that the two measures are to be examined jointly but, on the other hand, when identifying the comparator, it merely looks at the comparability of the two groups in relation to their use of German motorways.”

Wahl also determined that “drivers of foreign vehicles are not, and can never be, in a situation that is less favorable than that in which owners of domestic vehicles find themselves.” (Emphasis in original.)

“In order to be allowed to drive on German motorways, the former are to pay only the infrastructure charge and are not obliged to pay for the yearly rate: they can opt for a vignette of shorter duration, depending on their actual need,” the ruling continues. “Conversely, in order to be allowed to drive on German motorways, owners of domestic vehicles are required by law to pay both an infrastructure charge and a motor vehicle tax. Moreover, irrespective of their actual use of local motorways, owners of vehicles registered in Germany are obliged to pay the infrastructure charge in the amount due for the annual vignette.”

Wahl conceded that tax relief means that the tax paid by domestic-vehicle owners will be lower than in the past. “However, even if the tax relief had the effect of ‘zeroing’ the motor vehicle tax (which is not the case) any foreign driver would be required to pay, for using German motorways, an amount that is, at maximum, that which would be payable by owners of domestic vehicle,” the ruling states.

Furthermore, emphasizing the various vignette options that Germany affords foreign drivers, Wahl said the scheme can be said to treat outsiders more favorably.

Wahl’s opinion is not binding on the Luxembourg-based Court of Justice, which will now begin its own deliberations on the case.

“I fail to see any valid legal argument justifying the view that the member states that have, up to now, decided to let all drivers use their motorways free of charge are forever ‘trapped’ by their initial choice, and are thus not allowed to introduce a system of fees similar to that which other member states have had for many years,” Wahl wrote. “That would be an unreasonable (and possibly even perverse) interpretation of Article 18 TFEU: rather than avoiding discrimination against non-nationals, it would de facto impose reverse discrimination against nationals. Indeed, in the present case, it would mean that German taxpayers would have to continue funding the motorway network alone.”

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