Unlike the current tax, the fee will be the same regardless of the value of the car.
The Ministry of Finance has submitted to the public consultation process amendments to the Law on Motor Vehicle Taxes, which introduce changes in the taxation of sales of used vehicles. Instead of paying a tax that was calculated on the basis of the value of the vehicle, buyers would pay an administrative fee according to the age of the vehicle and its engine power, reports tportal.hr on May 26, 2017.
According to current regulations, buyers of second-hand vehicles pay a special 5% tax on the estimated value of the vehicle, The proof that the tax had been paid is a condition for registering and transfer of ownership. The tax base or the value of the vehicle is determined based on the Used Vehicle Catalogue issued by the Croatian Vehicle Centre, which shows prices of used vehicles per year of production.
This model of taxation is almost unknown in the European Union. According to available data, in addition to Croatia, only Spain and Greece have it. In most European countries, the used cars sales vehicle tax does not exist, and the transfer of ownership of second-hand vehicles is covered by an administrative costs. For example, in Germany a fee of 50 euros is payable regardless of the value of the vehicle.
According to the proposal prepared by the Ministry of Finance, Croatia will abolish the tax and introduce a fee. Also, in the future, the administrative procedure would be simplified so that all activities related to the transfer of ownership of the vehicle would be carried out in one place. Thus, the payment of the fee would be done to the Ministry of Interior, and not to the Tax Administration.
However, the major news is that the fee will be calculated based on the age of the vehicle and the engine power. The fee level will be set by the Administrative Fees Tariff, which prescribes the prices of various administrative services charged by state institutions. It is interesting that the current proposal does not mention the amount of the new fee, so we still do not know whether buyers of used cars will pay more or less than the existing tax.
The only thing that can be deduced from the current proposal is that new criteria for calculating the fee will be to the advantage of people buying more expensive vehicles, since the fee will no longer be paid according to the vehicle’s value, but according to its age and power. This means that the same fee will be paid by buyers of an expensive Mercedes and a cheap Kia, provided that the year of production and engine power are the same. So, those who buy more expensive cars will be in a better position, while buyers with less purchasing power will pay a relatively higher administrative fee.
Last year, 209,905 used cars were bought and sold in Croatia, and the state received 193.8 million kuna in taxes, which was considerably more than in 2015, when 165 million kuna was paid.
