[ad_1]
Revenue cautioned that anyone buying a used car in the UK should be aware of the significant additional costs that may apply after 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Since the UK became a “third country” on January 1, used cars imported from there that were originally made in the EU or in another country outside the EU, must have 21% VAT paid on the invoice price.
A 10% fee must also be paid on the cost of the vehicle within 30 days of importation and before it can be registered here.
As a result, the cost of buying a used car in the UK has risen substantially.
“Anyone contemplating buying a car needs to factor in the additional cost when doing so because it can be significant,” said Dermot Donegan, Head of Revenue VAT Policy and Legislation.
Revenues have also said that the same rules apply to cars that are imported into the Republic of Ireland from Great Britain, via Northern Ireland.
Under the Northern Ireland Protocol, VAT must be paid for a used vehicle at the point of import to the North if it comes from Great Britain but was manufactured in the EU.
However, the British government recently acted unilaterally to reduce the tax on used car imports into Northern Ireland from Great Britain and delayed it until January 1.
We need your consent to upload this rte-player contentWe use rte-player to manage additional content that can set cookies on your device and collect data about your activity. Review your data and accept it to load the content.Manage preferences
“What it effectively means is that VAT and import are not charged on cars coming into Northern Ireland. And they also extended the margin scheme,” Donegan said.
“Now the margin scheme allows dealers to bring cars but only pay VAT on the profit margin. But it cannot be done with cars that come from third countries, so it is against EU law and it seems be contrary to protocol, “he said.
Donegan added that Revenue will expect the correct taxes to be paid on UK imports entering the Republic through Northern Ireland.
“We will not allow cars to pass through the north from Great Britain to the north and here without paying VAT and customs duties, where a dealer bringing cars through Dublin Port would have to pay VAT and customs duties. customs, “said Donegan posted.
“So a warning shot to all people looking to buy a car, register a Northern Ireland car – be very careful, do your due diligence beforehand,” he warned.
The problems create an additional headache for car dealers who have traditionally relied on UK imports to bolster their used stocks.
Until last year, around 100,000 used cars were imported into Ireland from Great Britain each year.
“We envision used imports to continue, they will continue to be a market driver, they always will be,” said Emma Mitchell, COO of the Motor Industry Society of Ireland (SIMI).
“But we certainly do not expect used imports to continue as they have in previous years, particularly in 2018 and 2019.”
Ms Mitchell said that stock levels are currently quite strong as many dealers brought in a lot of used imports from the UK before 1 January.
“What we hope will happen is that used imports will probably find a more normal level. And used car stocks will feed off of new car sales, rather than importing used cars to close that gap.” said.
However, he added that consumers could see an increase in prices if companies do not absorb some of the additional costs.
The flip side, though, is that stock trading should go up, so the cost of trading a used car for a second-hand one should drop or stay the same, Mitchell said.
But SIMI is concerned about the British government’s unilateral action to reduce the tax on used car imports in the North because it will put dealers in the Republic at a significant competitive disadvantage.
“So until a deal is reached between the UK and the EU, we really have to make sure that some safeguards are put in place to protect the Irish market and really just to ensure that there is a level playing field between Northern Ireland and Ireland. “. , “she added.
For dealerships like Enda Conefrey, Principal Dealer at Bradys, a Mercedes-Benz and Seat dealership in Dublin, the additional Brexit paperwork, VAT and duties, as well as new VRT bands and Nitrogen Oxide taxes mean that It is no longer financially viable to import used goods from the UK. cars.
“All of those four elements have basically mitigated the possibility of carrying a used car from the UK at the moment, essentially pushing the price out of any reasonable sense of value for a customer or dealer buying it to sell a car,” Conefrey said .
“Any remaining margin was eliminated by any of those elements,” he said.
However, he argued that the situation should lead the auto industry here to return to where it was originally, with a franchise business model.
“If we can bring our new car market back to a reasonable operating level of 140.00-150,000 cars a year, that business alone will generate enough used car trades to supply the used car market,” he said. .
But the last four years have seen a decline in new car sales and that has had the effect of not providing enough new car sales to the market, leading to a demand for used car imports.
“If we can bring the new car market to the level it should be, we will generate enough used cars in the system,” Conefrey said.
New car sales drop 18% in January – CSO
New figures from the Central Bureau of Statistics show that a total of 16,948 new private cars were authorized in January this year, a drop of 18% compared to January last year.
Today’s CSO figures show that the number of private used (imported) cars licensed last month increased by 5.8% to 8,126 from a figure of 7,683 at the same time last year.
Despite the 18% drop in the total number of licensed new cars last month, the number of licensed new electric cars grew by 27.6% from 579 to 739, while plug-in hybrid electric cars (PHEVs) with license almost doubled, increasing by more than 93%.
The CSO said the number of new electric and hybrid cars licensed last month accounted for 32.9% of all new licensed cars. This compared to 20.8% in January 2020.
Toyota was the most popular brand of licensed new private cars, followed by Hyundai, Ford, Volkswagen and Skoda.
The CSO said these five brands accounted for 53.4% of all new licensed private cars in January.
Meanwhile, 34.2% of new private cars licensed last month were diesel, compared to 41% in the same period in 2020.
Of the new private vehicles licensed in the same period, 80.5% were in the A / B CO2 emission bands, the CSO said.
[ad_2]