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Danish government prepares to lower EU's highest car purchase taxes

The director of the Danish motor trade association Preben Kjaer told a meeting of CECRA, the European motor trades confederation, this week that Denmark's finance ministry is preparing proposals to reduce the country's car purchase taxes - which, ranging up to c.200% on luxury cars, are the EU's highest. Since cars are taxed in the country of the end-user within the EU, the differential between exceptionally low Danish pre-tax prices and those in other EU pre-tax prices has led to substantial Danish import-export trade, which a less punitive domestic regime would curtail, and which some manufacturers have tried to stem through reduced dealer margins.

The Danish motor trade federation is discussing with the government and the Danish motorists' association the means of achieving a gradual transition to lower post-tax prices. Proposals are expected next year for legislation likely to take effect from January 2005, and reduce taxes progressively over a period of up to ten years.

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