(Bloomberg) --
Austria won a fight against Germany over a planned motorway toll on cars as the European Union's Court of Justice said the fee discriminates against foreign vehicle owners and violates EU rights guaranteeing free movement.
The ruling on Tuesday means Berlin will scrap the original plan, which was politically feasible only because German drivers were spared. The defeat marks a blow to the country, which sought to raise money from residents of neighboring countries.
“This was the penalty shootout, and it didn't end well,” Transport Minister Andreas Scheuer told reporters in Berlin. “The toll on cars as it was planned is off the table. The ruling will have to be implemented immediately.”
The court decision is remarkable as it's overturning a compromise the EU 's executive body reached with Germany. EU regulators took Germany to court a year before Austria, using similar arguments that the plans were discriminatory. When the EU struck a deal, Austria sued in 2017, partly over the discriminatory nature of the system by which German-registered car owners could claim a tax relief on the so-called infrastructure charge. The highway toll has so far not yet been applied.
The court sided with Austria's argument. “The charge is discriminatory since the economic burden of the charge falls, de facto, solely on the owners and drivers of vehicles registered in other member states,” the court ruled on Tuesday. The decision can't be appealed.
“This is the right signal for fairness in the EU,” Austrian Infrastructure Minister Andreas Reichhardt told reporters. “I wouldn't want to contemplate the implications if this precedent would have prevailed.”
The EU judges said Germany can't apply the charge as it stands now. The country failed to justify the legality of the system that charges German car owners the toll, but then allows them to benefit from a tax relief “in an amount that is at least equivalent to the amount paid with respect to that charge.”
Germany's decision to move to a financing system based on the “user pays” and “polluter pays” principles “in reality affects exclusively the owners and drivers of vehicles” registered in other EU nations, the court ruled.
It wasn't immediately clear what the decision means for the operators building the toll infrastructure, Germany's CTS Eventim AG & Co KGaA and Austria's Kapsch TrafficCom AG. The companies said they had contractual agreements in place that eliminate the legal risk for them. Kapsch was trading 3.4% lower in Vienna, while CTS was slightly higher in Frankfurt.
--With assistance from Richard Weiss and Birgit Jennen.
To contact the reporters on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net;Boris Groendahl in Vienna at bgroendahl@bloomberg.net
To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman, Chris Reiter
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