MAJOR differences in tax levels between key EU countries mean that a 'true' single market is still a long way away.

The differences influence car taxes, on-the-road prices for cars, car policy and product preferences among buyers.

But the taxes also obstruct cross border sales of cars and their use, price harmonisation, cross border leasing and uniform car policies for fleets, Bart Vanham, director of PricewaterhouseCoopers tax consultants, said.

However, expected changes over the next few years may actually bring the holy grail of a single market much closer, he revealed.

Registration taxes that apply in up to 15 member states could gradually become the same, or even be scrapped in favour of a larger annual road tax fee.

The changes could also help cross border sales and leasing by avoiding double taxation, where two member states impose levies on a car sold from one country to another.

He added that road tax across Europe could be made into a uniform tax based on CO2 emissions, a policy which Britain has already introduced.

Also, fuel taxation could be changed to distinguish more clearly between commercial and private use, while diesel and petrol taxes could be given parity.

Vanham added: 'Company car tax in Europe is strongly diversified but, in five to 10 years' time, a standard system of CO2-based taxation could have been introduced, with a company car seen as part of a total mobility plan.'

Finally, he said there may be changes to VAT, but this was a particularly difficult area to harmonise. However, changes to legislation could make VAT arrangements on cross border deals much less complicated.

Vanham added: 'Whether these changes allow the facilitation of true international fleet management with a uniform car policy, only time will tell.'

For full copies of the Fleet News Europe Conference 2004 presentations in Powerpoint and pdf format click here.