The Luxembourg-based European Court of Justice ruled in favour of Austria, which opposed a “vignette” or payment sticker costing up to €130 a year for private vehicles on German motorways.
The fees were to be collected according to the time travelled on the Autobahn. But for cars registered in Germany, owners would be refunded the levy with a reduction in their annual motor vehicle tax, meaning the costs would be offset and Germans would hardly pay any toll.
But drivers with cars not registered in Germany would not have benefitted from this under the plans.
Neighbouring country Austria lodged a complaint against the scheme. It argued a levy is not in line with European agreements, as it discriminates against Austrians as well as all other EU citizens.
The court ruled in their favour.
“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 ECJ said in a statement.
The measures have been the subject of a furious row for years. Supporters of the toll say foreign and German vehicle owners cannot be compared with each other because non-German registered drivers do not have to pay the German motor vehicle tax.
With the decision, the toll and refund scheme as it was proposed must be scrapped, Transport Minister Andreas Scheuer admitted, without saying what would replace it.
It was due to launch in October 2020. But the judgement must be “respected and accepted”, Scheuer told reporters in Berlin.
The plans, a pet project of Chancellor Angela Merkel's political allies, the Christian Social Union (CSU) in Bavaria, had also angered other neighbours including Belgium and the Netherlands.
Charges to use motorways, based either on the amount of time spent or distance travelled, are already in place in many European countries.
Anyone driving on Austrian motorways, including Austrians, has to buy a vignette toll sticker valid for a certain time period.