Revenue also said that the same rules apply on cars that are imported into the Republic of Ireland from Britain, via Northern Ireland
Ireland’s Revenue has warned that anyone buying a used car from the UK needs to be aware of the significant additional costs that may apply, following the end of the Brexit transition period.
Since the UK became a “third country” on January 1, used cars imported from there that were originally manufactured in the EU or another country outside the EU, must have VAT of 21% paid on the invoice price.
A tariff of 10% has also to be paid on the cost of the vehicle within 30 days of importation and before it can be registered in Ireland.
As a result, the cost of buying a used car from the UK has risen substantially.
Anybody that is contemplating buying a car needs to bear the thought of additional cost in mind when they are doing it because they can be significant, said Dermot Donegan, Revenue’s Head of VAT Legislation and Policy.
Revenue has also said that the same rules apply on cars that are imported into the Republic of Ireland from Britain, via Northern Ireland.
Under the Northern Ireland Protocol, VAT should be paid on a used vehicle at the point of importation into the north if it is coming from Britain but was made in the EU.
However, the British government recently acted unilaterally to cut the tax on used car imports into Northern Ireland from Britain and backdated it to January 1.
What it effectively means it that VAT and import is not being collected on the cars coming into Northern Ireland. And they also extended the margin scheme, Mr Donegan said.
Now the margin scheme allows dealers to bring in cars but only pay VAT on the profit margin. But it can’t be done in respect of cars that come from third countries so it is contrary to EU law and it appears to be contrary to the protocol, he stated.
The issues create an additional headache for car dealers who have traditionally depended on UK imports to bolster their used stock.
Up until last year, around 100,000 used cars each year were imported into Ireland from Britain.