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European Court of Justice declares céntimo sanitario illegal

13 Spanish Autonomous Communities charged up to 4.8 cents per litre additional fuel tax

European Court of Justice declares céntimo sanitario illegalThe fuel tax known as the “céntimo sanitario”, which has been in operation in thirteen of Spain’s seventeen Autonomous Communities, has today been declared illegal by the Court of Justice of the European Union in Luxembourg.

Despite its name, the amount being paid per litre of fuel was actually between zero and 4.8 cents, depending on the region of Spain: the maximum was in the regions of Murcia, Cantabria, Castilla y León, Extremadura, Andalucía, Castilla-La Mancha, Valencia, Catalunya and the Balearics, while in Navarra the tax stood at 2.4 cents and in Madrid it was 1.7 cents. In Asturias the amount of tax payable was 4.8 cents per litre for petrol and 4 cents for diesel, while in Galicia the equivalent amounts were 2.4 cents and 1.2 cents.

In the Basque Country, La Rioja and Aragón the tax was never levied, and as a result fuel has been cheaper in those regions since its introduction elsewhere in 2002. In the Canaries the tax was also ignored, but in the islands there is a different tax regime.

In effect, the EU has now decided that a tax which has been borne by all motorists in Spain for more than eleven years is now invalid. The supposed purpose of this tax was for the “centimo sanitario” to finance the health service or to protect the environment, although the reality of where the tax went is another matter altogether, but as of 1st January 2013 it was incorporated unto the Special Hydrocarbons Tax, which now makes it legal in the eyes of the EU Court of Justice.

This marks the end of a long and controversial life for the Céntimo Sanitario. Initially it was formally known as the IVDH tax, but was then renamed the “Tipo Autonómico”. This is now one of the three components of the Special Hydrocarbons Tax, along with the General State Tax and the Special State Tax.

The first of these is a uniform 40 cents per litre of petrol and 30 cents for diesel across the whole country, while the second equates to 2.4 cents for both types of fuel.

On top of all these taxes, car fuel is also subject to VAT of 21%, and since 1st January 2013 bio-fuel introduced into the final mix is taxed in the same way. This means that in most regions, if we pay 1.25€ for a litre of fuel, all but 56 cents of that amount is tax.

The reason for the EU’s Court of Justice ruling that the céntimo sanitario tax was illegal is that it didn’t meet EU criteria for special taxes, and it now says that the governments of Spain and Catalunya failed to act in good faith by maintaining the tax for over ten years. Spain could now have to repay more than 13,000 million euros of illegally collected tax which it received between 2002 and 2011, transport and vehicle companies being those who will have the easy means of claiming back the money they are owed due to their fuel consumption records.

The EU’s verdict comes as a triumph for the Catalan transport company which brought the case, claiming back the 45,000 euros it had paid on the grounds that the tax was not legal.
At the moment it’s not clear who will have responsibility for paying back the taxes. Several of the autonomous communities have today expressed their opinión that this tax should be repaid by central government, while others are allowing the dust to settle and waiting to see what happens now.
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