Top EU court rules tax imposed on Turkish trucks illegal

Published 20.10.2017 20:02
Updated 20.10.2017 20:05

The European Union's highest court ruled Thursday that Turkish trucks transporting goods in EU member states do not have to pay tax.

Thursday's decision from the Court of Justice came after the Hungarian tax authorities ordered Istanbul Lojistik, a Turkish hauling company, to pay tax in March 2015.

The company rejected the demand, claiming EU member states were barred from imposing taxes on vehicles registered in Turkey as part of a Turkish-EU customs union deal.

However, Hungarian authorities filed for 60,000 forint ($230) in tax and also imposed penalties on the company amounting to 600,000 forint.

After the case was brought to Hungarian courts, local judges asked the EU for a legal interpretation.

International Transporters Association (UND) CEO Fatih Şener said the European Court of Justice ruled that the transit fee paid by the Turkish transporters to Hungary was "an effective measure against the customs duty and constitutes a contradiction to the customs union."

The EU court said in a statement that the tax imposed on Turkish motor vehicles was "incompatible with the EEC [European Economic Community]-Turkey Association Agreement."

"The tax constitutes a charge having [an] equivalent effect to a customs duty, the imposition of which is prohibited by that agreement," the court added.

This agreement, known as the Ankara Agreement, between the EU and Turkey, which was signed in 1963, allows Turkish companies and employees to operate in EU member states without fees.

The national carriers also expressed their satisfaction regarding the decision of the Court of Justice that Turkey was right in the case against Hungary.

Şener pointed out that, during the transfer of Turkish export products to western countries, transit fees were paid in Hungary, Bulgaria and Romania, which in turn increased the costs of cargo shipments.

He also argued that the practice continued for years, despite the fact it was contrary to the arrangement for the elimination of customs duties between Turkey and EU countries under the scope of the customs union.

He also mentioned that Hungary was receiving about 440 euros ($520), Bulgaria 86 euros and Romania 136 euros from Turkish transporters.

Şener said they asked for support from Economy Minister Nihat Zeybekci regarding the issue, indicating that, under the minister's leadership, they initiated a study via the Turkish Exporters Assembly (TİM).

"The penalty that was imposed by Hungary against Istanbul Lojistik, a member company of the UND, constituted a reason for bringing a lawsuit in the local Hungarian court. The local court referred the matter to the European Court of Justice," he said.

Indicating that the prosecutor's opinion about the case issued in April was in favor of Turkey and that the final decision was announced yesterday, Şener said the Court of Justice ruled that the transit fee paid by the Turkish transporters to Hungary was "an effective measure against the customs duty and constitutes a contradiction to the customs union."

"The court, with this decision, said, 'The application against the Turks is discriminatory and unfair and cannot be done,'" Şener said.

The decision will set a precedent for EU law, said Şener, indicating that it has been proved by law that some countries in Europe are unfair and ambivalent to Turkey and that with this decision, discrimination against Turkish carriers in Hungary, Bulgaria and Romania will end, and the transit fee would not be collected.

This decision will contribute to the strengthening of the transportation sector and increase the competitive chances of Turkish products in Europe, Şener said.

Turkish trucks are subject to a quota in many countries, Şener argued, adding that Turkey has a quota of 21,000 vehicles in Austria and 150,000 in Germany.

He also said they have filed a lawsuit against Austria with the support of the economy minister, underscoring that the Austrian Constitutional Court also referred this matter to the European Court of Justice.

"Any kind of quantity restriction has been lifted, the flow of goods is free of charge, but any quota means quantitative restrictions in terms of products being transported," he added.

Regarding the issue, TİM Chairman Mehmet Büyükekşi said they believe the exports to EU countries, where the country carries out half of its total exports, mainly to Germany, the leading country in terms of Turkish exports, will continue to increase with the removal of the mentioned obstacles, which have resulted in a loss of around 3.5 billion euros in Turkey-EU trade.

He also said they hope that the decision will be a precedent for the case against Austria, against which a suit has also commenced for similar reasons and that they expect it to come to a conclusion in the near future.

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