Instructions and bulletins on value added tax payable on car tax

Judgement by Turku Court of Appeal 13 June 2017

On 13 June 2017, Turku Court of Appeal issued a judgement according to which the expiry of the State’s debt for damages has started to run from the judgement issued by the Court of Justice of the European Union on 19 March 2009 in the case C-10/08, which means that parties that have claimed damages from the State in similar cases after 19 March 2012 are not, according to the grounds for the judgement, entitled to damages for VAT levied on car tax upon import of a vehicle. Therefore, the Court of Appeal found that the State’s debt is expired and that on that ground, the proceedings must be dismissed and the State must be freed from all liability for damage in this matter regarding claim for damages which was instituted on 16 July 2013 in the court of jurisdiction.

The judgement issued on 13 June 2017 by Turku Court of Appeal reverses the interlocutory judgement issued by Finland Proper District Court on 6 February 2015 in the same matter.

Points to consider

According to the decision given by the Supreme Court on 3 May 2016, the expiry of claims for damages started at the earliest on 19 March 2009 when the Court of Justice of the European Union specifically ruled that the value added tax payable on car tax discriminates private importers of cars, and is thus not in line with Union law. When damages were claimed in the case related to the decision on 17 March 2011, the three-year time limit for claiming damages had not yet expired. General courts are currently processing about 60 similar cases involving claims for damages.

However, the Supreme Court ruling did not solve the expiry of more than 10 000 claims for damages presented directly to Customs later than within three years of the EU ruling of 19 March 2009 on VAT payable on car tax, that is, after 19 March 2012. Regarding these claims for damages, Turku Court of Appeal issued a judgement on 13 June 2017 specifying the details of the expiry, according to which the expiry of the State’s debt for damages has started to run from the judgement issued by the Court of Justice of the European Union on 19 March 2009 in the case C-10/08, which means that parties that have claimed damages from the State in similar cases after 19 March 2012 are not, according to the grounds for the judgement, entitled to damages for VAT levied on car tax upon import of a vehicle.


On 13 June 2017, Turku Court of Appeal issued a judgement according to which the expiry of the State’s debt for damages has started to run from judgement C-10/08 issued by the Court of Justice of the European Union on 19 March 2009, which means that parties that have claimed damages from the State in similar cases after 19 March 2012 are not, according to the grounds for the judgement, entitled to damages for VAT levied on car tax upon import of a vehicle.

If the Supreme Court of Finland grants permission to appeal in the matter, and if the matter regarding claim for damages with regard to value added tax payable on car tax is processed by the Supreme Court in the future, the judgement issued by Turku Court of Appeal on 13 June 2017 is not legally valid. In that case, there will be a resolution regarding the expiry according to the grounds for the judgement in the matter issued by the Supreme Court in the future. Finnish Customs will apply these grounds for the decision ex officio on all pending claims for damages.


Finland Proper District Court has on 6 March 2015 given an interlocutory judgment on the expiry of outstanding claims involving value added tax payable on car tax.

At that time, the Court dismissed arguments by the State concerning the expiry of claims for damages. The complainant’s decision on taxation was confirmed on 13 October 2003, and proceedings against the State were taken on 16 July 2013.

As for the matter of substance, the matter will be processed later as notified by the District Court. The interlocutory judgment can only be appealed when the final decision in the matter is appealed.

The judgement issued on 13 June 2017 by the Turku Court of Appeal reverses the interlocutory judgement issued by the Finland Proper District Court on 6 February 2015.


As concerns claims for damages submitted by e-mail, the Customs registry office replies with a confirmation message saying that it has received the claim. This is how you can be sure that your claim has reached Customs.

If you submit your claim to Customs by mail, you can call the Customs registry office or enquire about your claim by e-mail. A written confirmation of the e-mail reply will be stored.

If the registry office receives lots of messages, this may cause a backlog, so please observe that it may take a while for your claim to be processed.

The e-mail address of the Customs registry office is kirjaamo(at)tulli.fi, and the telephone number is 0295 527 000.


The party liable to pay tax must personally claim damages. Customs does not, ex officio, process matters as claims for damages, as there is no legislative basis for the ex officio processing of claims.

The Act on the Statute of Limitations on Debt lays down an unconditional limit for the expiry of claims for damages. This limit is ten years after the incident that lead to the damage, that is the date when the person has paid the car tax according to the decision on the levy of VAT payable on car tax in connection with the import of a vehicle. Therefore, Customs will no longer examine any new claims for damages based on VAT payable on car tax.


Tax decisions dated prior to 2006 were issued using Customs’ car taxation system which has been removed from use. Customs has a database containing the information on tax decisions, but there is no interface through which officials could access that information. Also, it is not possible to retrieve individual tax decisions from paper archives without the transaction ID of the car tax decision.

This is why Customs wishes for taxpayers to refrain from enquiries concerning details of their car tax decisions. If claims for damages are to be paid in due course, Customs will find out the information on each individual tax decision and the levied amounts of VAT payable on car tax through IT solutions and based on taxpayers’ personal and business IDs.

On average, Customs has levied the amount of 800 euros as VAT payable on car tax per car tax decision for used vehicles.


Section 7 of the Finnish Interest Act (633/1982) provides that interest for late payment for compensation of damages or a corresponding debt, the grounds for and the amount of which require a specific investigation, must be paid when 30 days have passed from the date on which the creditor presented his or her claim and provided such information on the grounds for and the amount of the compensation that can reasonably be required of him or her, taking also the debtor’s possibilities to obtain such information into account.

The amount of interest will be the reference rate for each half-year period confirmed by the Bank of Finland based on section 12a of the Finnish Interest Act plus seven percentage points. In 2003–2017, the annual interest for late payment has ranged from 7.00 to 11.50 percentage points.


As the provisions on the expiry of debt are subject to interpretation in this case, Customs will not comment on the matter before legally valid rulings by general courts.

On 13 June 2017, Turku Court of Appeal issued a judgement according to which the expiry of the State’s debt for damages has started to run from judgement C-10/08 issued by the Court of Justice of the European Union on 19 March 2009, which means that parties that have claimed damages from the State in similar cases after 19 March 2012 are not, according to the grounds for the judgement, entitled to damages for VAT levied on car tax upon import of a vehicle.

If the Supreme Court of Finland grants permission to appeal in the matter, and if the matter regarding claim for damages with regard to value added tax payable on car tax is processed by the Supreme Court in the future, the judgement issued by Turku Court of Appeal on 13 June 2017 is not legally valid.


When collecting value added tax payable on car tax, Customs has acted according to the national legislation applied in each individual case and according to the legal practice applied by the Supreme Administrative Court. The Finnish legal act on refunds of tax amounting to value added tax payable on car tax in certain cases (822/2009) provided that refunds apply only to car tax decisions for which the three-year appeal period was still pending when the Court of Justice of the European Union issued judgment C-10/08 on 19 March 2009.


The appeal period for a car tax decision is three years starting from the beginning of the calendar year following the decision. The appeal and amendment period for car tax decisions issued in 2002–2005 has expired, and Customs can no longer examine any matters from that period as an administrative appeal. Therefore, the concerned party liable to pay tax had to lodge a claim for damages either on a customs form or with a free-form application instead of submitting claim for revision or an appeal regarding a car tax decision.

If the party liable to pay tax submits a claim for revision concerning VAT payable on car tax after the appeal period, Customs considers the claim for revision as being a claim for damages, unless the claim for revision indicates that the matter is to be processed exclusively under an administrative procedure. A decision on non-examination will be given for claims for revision processed under an administrative procedure. Such decisions can be appealed with an administrative court.


An appeal against the state of Finland can be lodged with Helsinki District Court. General provisions on places of jurisdiction rule that a claim made against the state is examined by the district court in whose jurisdiction the authority acting on behalf of the state is located. Furthermore, a claim made against the state can also be examined by that district court in whose judicial district the defendant’s domicile or permanent place of residence is located.


Only a person who, as the importer of the vehicle, is liable to pay value added tax payable on car tax based on a tax decision, and who has not been able to deduct value added tax in their own VAT taxation, can claim for damages. Therefore, it is not significant who owns the vehicle.


The taxation of cars was transferred from Customs to the Tax Administration on 1 January 2017. Thus car taxation, pending appeals and claims for correction regarding car tax decisions and all personnel handling car tax matters were transferred from Customs to the Tax Administration.

Customs is still responsible for control and criminal investigation regarding car and excise taxation.  Customs is also still the competent authority in certain car taxation situations, for example when importing a car from an area outside the EU. Customs is also responsible for handling the claims for damages and responding to actions for damages regarding VAT payable on car tax. 

More information can be found on the website of the Tax Administration.

 

 


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