Registration taxes represent an obstacle where the lessor is established in one Member State, being also the Member State of registration of the vehicle, and is leased to a lessee who is established in another Member State. In such a scenario the fleet of the leasing company would be registered and hence bear registration plates of Member State A. If the vehicle is leased to a lessee established in Member State B and Member State B levies a registration tax, the lessor (or the lessee) could be required to pay in full on the leased vehicle the registration tax in Member State B.
For such situations, the Court[38] has established the principle that where a vehicle is leased from a company established in one Member State and is actually used on the road network of another Member State, the latter may impose an obligation for that vehicle to be registered in its territory[39] and hence levy registration tax.
Having established that as such taxation of the Member State of the lessee is not prohibited by EU law, it remains to be determined to which extent and with which modalities that power of taxation can be exercised.
The Court[40] has found that the freedom to provide services does not preclude a Member State from imposing a car registration tax on leased motor vehicles. However, in order to respect the principle of proportionality, the amount of tax has to be proportionate to the duration of the registration of the vehicle in the Member State where it is used[41].
The Court has also found that the time period prescribed for completing the necessary formalities should not be so short as to constitute an unjustifiable obstacle to the freedom to provide services. In the material case the disproportionality of the time-limit, which was of three days, was quite evident. In some other circumstances, however, where the time limit is 10 or 15 days, such disproportion might be less evident[42].
The Court has confirmed this line of reasoning in subsequent cases[43].
