Tuesday, 15 January 2008

EU Against Finnish State Car Tax Scheme

"The European commission has taken legal action at the European Court of Justice against Finland's car taxation scheme, saying parts of the Finnish Car Tax Act and the Value Added Tax Act clash with EU legislation, the Finnish government said in a statement Tuesday."

"The action is about the Finnish practice of levying VAT on car tax-inclusive prices of vehicles and the right to write off said tax against business expenses subject to VAT."

"Further, the commission takes issue with Finnish regulations on establishing the taxable value of cars that are less than six months old, though this part of the Car Tax Act has already been amended."
"The basic flaw in the Finnish system from the Commission's point of view is that companies are allowed to deduct the non-VAT from their corporate taxes, but private individuals are not allowed a corresponding deduction in their income tax."
"Under present Finnish legislation, the non-VAT applies to new cars as well, and car dealers can make a corresponding deduction from their corporate taxes. The Commission feels that the non-VAT should not be deductible as if it were VAT. "
"Such a decision would also make it cheaper for Finns to import used cars in the future. "
"Losing the case would force Finland to thoroughly overhaul its car tax system. "

"Finland is expected to submit its response by 25 February."

So since the government prefers to be behing car dealers instead of the citizen as well as being in the incapacity to fully reform the Car taxation scheme and is keeping tax burdens on the shoulder of the Finnish citizens, the matter is now to be handled by a third party namely the European Commision.

I hope that they will bring the car tax inline with other european country or remove VAT tricks and are willing to save the Finnish citizens thousands of euros. And not try to help the retailers by giving 10% tax present indiretly to them when the citizen has seen the credit cost rise by over 10% in the past one year, taking the consumer for fools... at least for the one who are not aware or can't afford to pay cash...
Source: STT, HS

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