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Vehicle Registration Tax

Dáil Éireann Debate, Thursday - 24 June 2021

Thursday, 24 June 2021

Questions (196, 197)

Claire Kerrane


196. Deputy Claire Kerrane asked the Minister for Finance the details of the charges including VRT and VAT placed on a bus hire company purchasing buses from England post-Brexit. [34070/21]

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Claire Kerrane


197. Deputy Claire Kerrane asked the Minister for Finance if, given the huge losses experienced by bus operators due to Covid-19, consideration will be given to an exemption on VAT charged to those purchasing buses from England especially for bus drivers who are sole traders and are not registered for VAT and therefore cannot claim VAT back. [34071/21]

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Written answers (Question to Finance)

I propose to take Questions Nos. 196 and 197 together.

Following the withdrawal of the UK from the European Union, an import of a vehicle from Great Britain is treated as an import from a third country, i.e. a non-EU country.  I am advised by Revenue that, if a vehicle is imported from Great Britain into Ireland, the importer is required to complete a customs declaration and pay customs duty, if applicable, and VAT at 23% prior to presenting the vehicle for registration. Under customs law, VAT at import is chargeable on the customs value of the goods.  Usually this will be the purchase price, plus the cost of transport and insurance, plus any customs duties payable.

The EU-UK Trade and Cooperation Agreement (TCA), has eliminated tariff duties for trade between the EU and Great Britain where the relevant rules of origin are met. This means that, if an imported vehicle is of UK origin, then there is no customs duty payable as a 0% tariff rate applies. The following vehicles would not qualify as UK origin under the rules of origin, so a 10% tariff would apply if they were imported:

- vehicles of EU origin used in the UK; and

- vehicles of other third country origin used in the UK. This applies even if the EU has a Free Trade Agreement with the relevant third country.

In cases where it is applicable, the preferential tariff treatment must be claimed on import on the Customs declaration.                  

Vehicles originally exported from the EU to the UK which meet certain criteria may be eligible for Returned Goods Relief under the EU customs rules (the Union Customs Code).  Under Union Customs Code, goods can be exported from the EU to a third country and re-imported into the EU without payment of Customs Duty provided all the required conditions for Returned Goods Relief are met. The goods must have been originally exported from the EU, must not have been altered and must be re-imported within three years of export from the EU. In very specific circumstances, relief from VAT may also apply where the goods are re-imported into the EU by the same economic entity that originally exported the goods out of the EU.

Further information on Returned Goods Relief and Movement of Motor Vehicles including proofs required for claiming the relief is available on Revenue’s website.

On the matter of Vehicle Registration Tax, the UK exit from the EU has no impact on VRT liability. Buses generally fall within EU Categories M2 or M3 and, when registered in the State, these vehicles are liable to a VRT flat rate of €200.

The Deputy is asking also about the potential for VAT recovery by businesses whose activities are exempt from VAT. The VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate, currently 23% in Ireland, unless they fall within categories of goods and services specified in the Directive, in respect of which Member States may apply a lower rate or exemption from VAT. In addition, the Directive allows for historic VAT treatment to be maintained under certain conditions and Ireland has retained the application of VAT exemption to the transport of passengers and their accompanying baggage. This means that under Ireland’s VAT rules, the supplier of passenger transport services does not register for VAT, does not charge VAT on the supply of their services and, consequently, has no VAT recovery entitlement on their input costs.

In accordance with the EU rules, Ireland may continue to apply this existing, historic VAT exemption on the supply of domestic passenger transport but, for as long as the exemption remains, the conditions under which the exemption was granted cannot be changed;  for example, Ireland could not adopt the Deputy’s suggestion to introduce a new entitlement to VAT recovery on purchases of buses from Great Britain. In fact, the introduction of a new entitlement to VAT recovery for the passenger transport sector could only be done if Ireland were to decide to end its historic exemption for the sector, and bring passenger transport services into the VAT net;  this would then require suppliers to register for VAT and require them to charge VAT on their passenger fares.

Finally, the Deputy may be interested to know that under the existing arrangements, certain reliefs from VAT are already available to passenger transport operators, whose businesses are established in this State, as follows:

- the Value Added Tax (Refund of Tax) (Touring Coaches) Order of 2012 provides for a refund of VAT on the cost of acquiring “qualifying vehicles” used for the carriage of tourists under contracts for group transport; and

- provisions within Section 59 of the VAT Consolidation Act 2010, which allow a person established in this State to claim deductibility in respect of input costs incurred in relation to the transport of passengers outside this State.

Question No. 197 answered with Question No. 196.