Schoenherr advises on EU-Turkey Customs Union case

While some of these permits are issued at no charge, most have to be validated by paying a vehicle tax.

UND retained Schoenherr to challenge trade barriers such as road quotas and transit that Turkish freighters face when transporting goods into the EU under the EU-Turkey Customs Union ("CU"). The CU rests upon, as one of its central pillars, the principle of free movement of goods with the CU.

In a test case initiated before the Hungarian Administrative Authorities, Schoenherr challenged the Hungarian vehicle tax under the free movement of goods principles as a charge having the equivalent effect of a customs duty. The proceedings were escalated to the Hungarian courts, which referred the case to the European Court of Justice ("CJEU") for a preliminary ruling. In its judgement handed down on 19 October 2017, the CJEU held Schoenherr's view.

The CJEU confirmed that "a tax on motor vehicles such as that at issue in the main proceedings, which must be paid by persons operating heavy goods vehicles registered in Turkey and in transit through Hungarian territory, constitutes a charge having the equivalent effect of a customs duty within the meaning of that article."

The judgement is ground-breaking for the CU in many ways. It confirms that the free movement of goods principles laid out in the CU must be interpreted in accordance with the CJEU’s "free movement of goods" precedents rooted in the respective principles of the Treaty on the Functioning of the European Union. In addition, the judgment concludes that, even though the tax in question is not levied on products as such, it is imposed on the goods transported by vehicles registered in Turkey when they cross the Hungarian border, not on the transport service. As such, the vehicle tax violates the free movement of goods principle.

Schoenherr's team advising UND and IL in Luxembourg comprised Volker Weiss (partner, Brussels, eu & competition); Sándor Haboczky and András Nagy (associate, Budapest, eu & competition). Dispute resolution partner Christoph Lindinger alongside Istanbul-based partner Levent Çelepçi and attorney at law Bürke Serbetci are overall project leads. Additional teams across Schoenherr's international offices are also supporting the clients.