In an unusual move, infringement proceedings were brought against Germany by Austria, marking only the seventh time in the history of the court that a member state has brought infringement proceedings against another member state.

Austria was supported by the Netherlands in the case, while Germany was supported by Denmark.

In 2015, Germany put in place the legal framework for a new “infrastructure use charge” for the use by passenger vehicles of federal roads, including motorways. The charge was intended to move Germany in part from a system of financing by means of taxation to a system of financing based on the “user pays” and “polluter pays” principles.

Revenue from the charge would have been entirely allocated to financing the road infrastructure, the amount of which will be calculated on the basis of cylinder capacity, the type of engine and the emission standard of the vehicle.

Every owner of a vehicle registered in Germany would have had to pay the charge, and owners or drivers or cars registered abroad would have had to pay for use of the German motorways.

In parallel, the legal framework provided that, from the revenue from the infrastructure use charge, the owners of vehicles registered in Germany would qualify for relief from the motor vehicle tax to an amount that is at least equivalent to the amount of the charge that they will have had to pay.

In yesterday’s judgment, the court found that the infrastructure use charge, in combination with the relief from motor vehicle tax enjoyed by the owners of vehicles registered in Germany, constitutes indirect discrimination on grounds of nationality and is in breach of the principles of the free movement of goods and of the freedom to provide services.

As regards the prohibition of discrimination on grounds of nationality, the court found that the effect of the relief from motor vehicle tax enjoyed by the owners of vehicles registered in Germany is to offset entirely the infrastructure use charge paid by those persons, with the result that the economic burden of that charge falls, de facto, solely on the owners and drivers of vehicles registered in other member states.

As regards the free movement of goods, the court found that the measures at issue are liable to restrict the access to the German market of goods from other member states. The infrastructure use charge to which, in reality, only vehicles that carry those goods are subject is liable to increase the costs of transport and, as a consequence, the price of those goods, thereby affecting their competitiveness.

As regards the freedom to provide services, the court found that the national measures at issue are liable to restrict the access to the German market of service providers and service recipients from another member state. The infrastructure use charge is liable, because of the relief from motor vehicle tax, either to increase the cost of services supplied in Germany by those service providers or to increase the cost for those service recipients inherent in travelling into Germany in order to be supplied with a service there.

However, contrary to what was claimed by Austria, the court found that the rules for the structuring and application of the infrastructure use charge are not discriminatory. This concerns the random inspections, any prohibition on continuing the journey using the vehicle concerned, the recovery a posteriori of the infrastructure use charge, the possible imposition of a fine and the payment of a security.