The European Commission has formally requested Cyprus to change its tax laws on second-hand motor vehicles transferred from other Member States. According to the Commission, Cyprus’ laws on taxing second-hand vehicles are contrary to the principle of non-discrimination as interpreted by the European Court of Justice.

Under Cypriot law, the full amount of registration tax on the transfer and registration of a second-hand motor vehicle from another Member State is applied, regardless of the age or the mileage of the vehicle. Cypriot rules do not, however, take into account the depreciation of the value of second-hand vehicles when they are registered in Cyprus. The Court of Justice ruled that the tax on a second-hand car from another Member State cannot be higher than the tax value of similar vehicles registered nationally (Article 110 of the Treaty on the Functioning of the European Union).

In addition, Cypriot rules do not allow taxpayers to challenge the specific assessment of the registration tax made by the tax authorities. The Court of Justice has ruled in previous cases that Member States’ judicial systems should provide a means of redress if the taxpayer wishes to challenge the specific assessment of the registration tax.

The Commission's request takes the form of a reasoned opinion (second step of EU infringement proceedings). In the absence of a satisfactory response within two months, the Commission may refer Cyprus to the Court of Justice of the European Union.