The Supreme Court has determined that the transitional arrangement, which applies in the context of the reduction in the additional tax liability percentage for the private use of a company car from 25% to 22%, is not manifestly unreasonable. Any (pro forma) objections lodged in this context will be rejected by the Tax and Customs Administration.
What's going on?
The party to the proceedings was provided with an Opel Zafira by his employer, which was first registered on 21 August 2015. The additional tax liability percentage for that car, for the purposes of payroll tax, was at that time: 25%. If the same car had been registered on 1 January 2017 (or later), the additional tax liability would amount to: 22%. Under the transitional arrangements, 25% must still be added to the value of the interested party’s car.
Equality principle
Citing European law, the interested party argues that the principle of equality is being breached. For his car, which was first registered in 2015, a higher additional tax liability (25%) must be applied in 2017 than for exactly the same car first registered in 2017 (22%). He is demanding that the additional tax liability of 22% also be applied to his Opel.
The Supreme Court considers that, by its very nature, a legislative amendment entails that cases arising before that amendment are treated differently from those arising after it. In principle, that distinction is not regarded as discrimination. This remains the case even where the legislature provides for transitional provisions.
However, even if there were to be a case of inequality, the interested party would not yet have succeeded. This is because an appeal to the principle of equality is only successful if there is no reasonable and objective justification for the inequality. And in the case of the scheme in question, there are sufficient grounds to lead the Supreme Court to conclude that the inequality is not manifestly unreasonable.
Taxable income percentages
For the party concerned in this case, the ‘loss’ is not too severe. For drivers of cars that were subject to lower additional tax rates in the past, the difference may be much greater. This applies in particular to hybrid cars. In view of the judgment described above, we estimate that an appeal to the principle of equality will not be successful for them either.