I’d love to know the process for importing a car from Northern Ireland without having to pay VAT and import duties.
From David B, Co Dublin
As ever with Irish car taxes, this is both simple and complicated at the same time.
In theory, following the completion of Brexit negotiations, which saw the Britain formally withdraw from the EU at the end of 2020, Northern Ireland has been treated, for the purposes of importing and exporting, as still being part of the EU so that Ireland does not end up with an internal hard Border between the North and South.
Except that sometimes Northern Ireland is still treated as something outside the EU. Occasionally. When it suits.
The simplest way to avoid paying import duties and VAT on a car being brought from Northern Ireland to the Republic – you still have to pay the vehicle registration tax (VRT) either way – is to buy a car that was registered before January 1st, 2021.
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Before that date, Northern Ireland was still considered to be part of the EU, and so VAT and customs duty didn’t apply.
What about cars registered after that date? Well, this is where it gets complicated.
Because Northern Ireland has a slightly odd half-in, half-out arrangement with the EU, some cars will qualify for skipping VAT and customs payments, and some cars won’t.
If a car conforms to the Windsor Framework, then you can avoid paying VAT and customs duty. Essentially, this means that the car has been registered to someone living in Northern Ireland and taxed and MOT’d accordingly.
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The Revenue Commissioner’s official wording on this is: “A vehicle that has previously been in use in Northern Ireland can be registered for VRT in the State, without liability to additional customs duties and import VAT. Proof will be required that the vehicle has been in private ownership for a reasonable period of time – a copy of the V5C showing the last registered keeper in NI and the date of registration to that keeper.”
Note the phrase “a reasonable period of time”. That’s a bit of a catch-all, and it’s a way of Revenue making sure that a person who lives in Northern Ireland can’t register a car for a few weeks on someone else’s behalf, allowing them to skip the taxes.
Equally, it prevents a car dealer in Northern Ireland from specifically sourcing a car from England, Scotland, or Wales at your request. We’ve tried to get Revenue to be more precise about what exactly is meant by a “reasonable period of time” but they won’t lock it down any tighter than that.
So, how do you ensure that a car has been brought to Northern Ireland under the Windsor Framework? Basically, if you’re buying from a private seller, and they own the car and have had it for some time, you’re covered.
If it’s a car dealer, and they’ve brought the car over the sea as stock, then they’ll have had to make a specific customs declaration for that vehicle, and will have to provide you with copies of that paperwork so that you can show it all to Revenue at the time of the VRT inspection.
How much are you actually saving? Quite a lot, actually. Irish VAT, at the standard rate, is 23 per cent, which will be calculated on the purchase price of the car, plus the travel and shipping costs, and the customs duty. The customs duty is 10 per cent of the price paid for the car, plus the shipping costs.
However, there are some other trap doors here. One is that VAT will be payable – Windsor Framework or not – if the car is less than six months old, or has less than 6,000km on its clock.
Is it still worth doing? Absolutely. Ask most Irish car dealers, and they’ll tell you that there’s no comparison between a two- or three-year-old second-hand car that was originally registered in Ireland and one that comes from the UK, Europe, or Japan. We’re not good at looking after our cars, in general, and UK and European (and Japanese) cars tend to come with higher and better specifications, a lingering legacy of Ireland’s punitive VRT taxation.
As ever, it’s a case of buy with your eyes open, make sure you gather all of the necessary paperwork, and don’t sign on the dotted line until you’re certain of your standing when it comes to VAT and customs duty payments.
