The European Commission is referring Ireland to the Court of Justice of the European Union because the car tax applied to rented and leased vehicles is not in line with EU rules. More specifically, Ireland is currently infringing EU law in the way it applies tax to vehicles that are either rented or leased. Under EU rules, car tax should be levied on Irish residents according to the precise duration that the vehicle is leased in another Member State, provided that the duration can be determined (e.g. on the basis of a leasing or rental contract).
Ireland is infringing the European Union law by levying the full amount of car tax, even though the amount levied in excess is refunded at a later stage, once the vehicle is registered in another country. The Irish legislation creates a disproportionate obstacle to the freedom to provide services for leasing and rental companies in other Member States that wish to offer their services to Irish residents.