Vehicle taxation is not harmonised at EU level[8]. This entails that Member States enjoy a wide level of freedom in determining whether to apply registration taxes on vehicles that are intended to be used on their territory and also in determining the level of taxation[9].
The Court has stated[10] that the Treaty does not offer any guarantee that a transfer of residence of a citizen or a worker would be tax neutral as regards taxation. The transfer would be to that person’s advantage or disadvantage in terms of taxation, depending on the circumstances. Therefore, any disadvantage suffered as compared to the pre-transfer situation would not be contrary to EU law, provided the individual is not treated less favourably than residents of the respective Member State subject to the same tax.
There are nevertheless some limits to the Member States’ freedom, which consist in the general principles enshrined in the Treaty on the Functioning of the European Union (hereinafter the "TFEU") as interpreted by the Court and limited secondary legislation, namely two Directives that will be analysed in paragraph 3.2[11].
