The European Union and Berlin have ended their standoff over the introduction of a road tax for passenger cars in Germany that was seen as discriminating against other EU drivers.

Both sides said the compromise deal would underscore that EU citizens cannot be discriminated against while it would allow Germany to fund road works in the future.

Initially the toll would have targeted non-German EU drivers, but the EU threatened to sue Germany, since it saw the practice as discriminatory. Under a complicated structure, the toll will now take into account how much any car pollutes the environment.

German Transport Minister Alexander Dobrindt said "the toll charge makes sense and is fair and just. It ensures that all drivers contribute adequately to the financing of our motorways."