VAT AND CUSTOMS IMPLICATION FOR IMPORTING UK VEHICLES IN IRELAND

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After Brexit, since January 1st the UK is now considered to be a ‘third country’ by the EU. Hence there are implications for any transactions of trade with the UK

Brexit has caused additional costs for businesses and private individuals to import second hand cars into the Republic of Ireland.  New changes have triggered a Custom Duty of 10% (Subject to Whether Vehicles is UK origin or Not) and Irish VAT on Sales for 21% (Jan /Feb 2021) and its rise to 23% subsequently. The burden for VAT and Customs Duties is hard to pass on to the customers who will refuse to pay the additional costs hence Dealers or sellers have to factor in this additional cost when submitting their return with Revenue.

As per Revenue Guidance.

From 1 January 2021 vehicle imported from Great Britain are liable to:

Customs duty, if applicable

Vehicle Registration Tax (VRT)

VAT at the current standard rate.

VAT

If a person imports a car from the UK to Ireland, VAT on purchase becomes payable at 23%.

Customs Duty

Any vehicle imported from the UK into Republic is required to complete a customs declaration.

Custom Duty is 0% if the vehicle is originated in the UK.
Duty is 10% if the vehicle originated outside the UK.

Given below example helps you to understand the procedure

For example, if a car dealer sells a car in Ireland that was imported from the UK (Assuming vehicles qualifies Zero Custom Duty) Still a cost of VAT applies at the rate of 23%. Say the Car sale price is 20,000 Euros. This means there is a VAT element in it worth 3,739 Euros making it Dear for the dealer to pay this VAT means eating the viability of importing. Previously Car dealers had to pay on the second-hand UK imported cars VAT on Profit margin which is changed since the Brexit hence full VAT of 23% on the price of the car is required to be charged.

 

 

If you are a motor dealer and need help in compliance with Taxes for second-hand car transactions, contact us or fill the form below.

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