LUXEMBOURG (Reuters) - A planned German highway toll for cars discriminates against foreign drivers and breaches European Union law, the EU’s highest court ruled on Tuesday, forcing Berlin to rethink how to charge road users.

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The European Court of Justice (ECJ) backed a challenge from Austria, which argued that the burden of the toll fell solely on drivers from countries other than Germany, its northern neighbor.

The ruling means Berlin cannot introduce the autobahn (motorway) toll for passenger cars in its current form. It was due to start in October 2020.

German Transport Minister Andreas Scheuer, a member of the Bavarian Christian Social Union party that fervently backed the scheme, said charging motorists was still possible, even if the present toll system was not.

He said he had set up a panel of experts to look into the matter and that politicians would debate the issue as part of broad discussions on mobility and climate change.

Under the planned toll, those with cars registered in Germany would have been charged an annual fee of up to 130 euros ($146.09), but they would have been given a corresponding reduction in motor vehicle tax.

Drivers elsewhere would also have needed passes to drive on German highways, again up to a maximum of 130 euros a year.

Austrian drivers in particular would have felt the pinch because the fastest east-west route across their mountainous country involves a shortcut through the “German corner”.

Austria has a similar highway toll - but without the tax break - which can irritate Germans who flock to Austria on holiday or cross its narrow western section en route to Italy.

Austria, backed by the Netherlands, complained that the tax relief for German residents effectively meant only foreign drivers were paying the charge.

The court agreed on Tuesday, saying the planned system constituted indirect discrimination.

“I believe this ruling of the ECJ really is a good day for the European Union ... and that it is also a sign, a clear signal, in favor of fairness,” Austrian Transport Minister Andreas Reichhardt told a news conference.

Germany, supported by Denmark, had argued the charge was in line with EU transport policy and the principle that users and polluters should pay the cost of the highway network.

The court said the toll scheme did not meet this goal. For example, drivers in Germany did not have the opportunity to pay for less than the full year even if they rarely drove on highways.

German ticket operator CTS Eventim and Austrian road systems specialist Kapsch TrafficCom were awarded a 2-billion-euro ($2.24 billion) contract in December to operate the toll.

German already has a road toll for trucks.