VRT Calc - Double Taxation?

[darag]

No they wouldn't they would have a right VRT amount. That's the point. The OMSP is calculated incorrectly. 20-30% of the OMSP is VRT so therefore the VRT is 20-30% more than it should be.

You are right - the way they do the calculation doesn't make sense; they are comparing apples to oranges. A UK reg car is not worth the same as an equivalent Irish reg car because the former has a VRT liability. If you went to a forecourt and looked at two secondhand cars which were exactly equivalent in every respect except one had a UK reg, would you pay the same for UK one? No you wouldn't - you'd offer much less because you'd factor in the need to pay VRT. Therefore the OMSP for an Irish reg car is simply NOT an appropriate guide to the value of an non-Irish reged car.

Given that you'd never, for example, be able to sell a UK reg car with an OMSP of 12K for that amount on the open market in Ireland, then it is hardly an "Open Market Selling Price". If 12K was a fair price for the equivalent with an Irish reg, you'd only get 9230 for the non-Irish reged car (assuming 30% VRT applied).

 

[sonnyikea]

Which was exactly my assumption when I asked the VRO officer whether my car would now be worth the OMSP plus the VRT amount. When he said no I was taken aback. This has led me to question the whole thing hence my original question.

I don't think that VRT is fair but that isn't what I am questioning. I'm questioning the validity of the process and the individual elements of that process not the tax itself.

Coming from another angle. If the OMSP of my car is 12k and I bought the car for 12k in the UK without VRT and I then question the OMSP of the car stating that there is no way you could get the equilvilant car in Ireland for 12k it would more likely be 15k, and have evidence to prove this. If they then change the OMSP of the car based on my findings the only thing they are going to do is raise the value. This would then raise my VRT liability. Huh?

 

[Glenbhoy]

Are you insane? VRT is not one bit fair. It stops the free movement of goods around Europe. Very clearly anti EU.

If you lived in the UK you could easily go to say Belgium and buy a cheaper new car there than was available on the local forecourt. Many people do so.

VRT is a progressive registration tax, it hits those who buy larger cars with bigger engines more than someone less well off who can only afford a 1.0l uno, in that sense it is progressive, now you may argue that a progressive tax is not fair, and you would have a point, but imo, taxes that affect the better off to a greater degree than the less well off are fair. As it is in effect a consumption tax, people have the choice as to whether or not to incur it and at what level to incur it.
It does not stop anyone from buying a car in the UK or elsewhere in europe, although admittedly can influence people's decisions.
Do you think it would be fair for you to have a 100k car bought in the UK, used exclusively in ireland and yet you have not contributed to the upkeep of the road network (bar a few euro in car tax)?
What would you suggest should replace vrt? And we're presuming that public spending inefficiencies will remain, so i want a suggestion that will raise the same revenue that vrt currently does - probably circa 1bn.

 

[RonanC]

(bar a few euro in car tax)?

a few euro?? are you seriously having a laugh mate??

We have amongst the highest Road Tax charges in the EU and on top of that we have to pay road tolls too, with all new motorways being tolled !!!

I really think some people are living in Cookoo land.

In the UK you can buy a VW Toureg for example.. A 2.5L model and pay about €190 per year on Road Tax. The same vehicle here will cost about €850 per year to tax. Lets say that car lasts 10 years on the road, thats €8500 in Road Taxes, and add about €15000 to that figure in an initial VRT charge and €10000 in VAT on the purchase on that vehicle.

So over 10 years, €35000 has been paid in taxes on this vehicle ( not including fuel taxes, insurance taxes and road tolls)


The same vehicle in the UK would be €8500 in road taxes over 10 years and including the initial tax on purchase

 

[Glenbhoy]

Ronan, all I'm saying is that since we have the lowest tax burden in the eu, we have to collect the tax somewhere. IMO it's better to take it on vrt than by adding a cent to income tax or vat or other.

 

[xt40]

"IMO it's better to take it on vrt than by adding a cent to income tax or vat or other"
Rubbish. an extra fews % in income tax or preferably fuel duty would be much fairer all round as you wouldnt be paying a huge lump up front and in most cases, interest on it too. it would also level the playing field as far as the eu common market is concerned.

 

[Glenbhoy]

Rubbish. an extra fews % in income tax or preferably fuel duty would be much fairer all round as you wouldnt be paying a huge lump up front and in most cases, interest on it too. it would also level the playing field as far as the eu common market is concerned.

Fuel duty - possibly, income tax - certainly not. Why should a pensioner in Dublin using dublin bus help pay for the construction of the road network. If you can afford a big motor, you can afford the extra 30% and so on.
I have a few euro to pay myself on an import very shortly, so it's not as though i'm anti-car, but i do not have a problem with vrt 'unfairness'.
Enjoy the weekend all.

 

[sonnyikea]

of course they will calculate the VRT based on a OMSP for a car inclusive of VRT. Sure how else can they calculate this price?? If they were to calculate VRT based on the price of the car less VRT then they would have a wrong VRT amount.

I just wanted to bring this thread back and apologise to Ronan for disagreeing with him regarding the calc used for the VRT. I bow to his better understanding of the concepts. I was coming from completely the wrong angle.

 

[Frank]

Glenbhoy

Here is a notion.

If you buy a small 1 liter car that has ABS as an option the ABS is pirce plus vat plus VRT.

Punitive VRT forces people to drive older, smaller less safe cars.

Person buys a less safe car because cannot afford to pay the extra due to VRT.

The government is potentialy taxing he driver to death.

VRT is on engine size, no regard for safety, scant regard for emmision only hybrids count.

 

[briancbyrne]

if you have a house abroad in mainland europe can you register the car there and drive it here without having to pay vrt?

 

[Gone Fishin']

Fuel duty - possibly, income tax - certainly not. Why should a pensioner in Dublin using dublin bus help pay for the construction of the road network. ............

A pensioner using Dublin Bus contributes NOTHING to the roads.

w.r.t. VRT? It is a disgraceful tax, just another example of an anti-competitive measure used purely for the extraction of money from the motorist. It bears no relation to road expenditure and has been calculated by a cosy arrangement between the Govt and the car importers.

Some bureaucratic pen-pusher devised the VRT system. Some idiot with absolutely no comprehension as to the dynamics of cars, the engineering and safety, and settled for a cc-based system which is totally illogical.

Let's face it, a 1.6 litre Focus or Golf is a hell of a lot safer than a 1.4 litre version of the same car (just try a few overtaking manoeuvers in both and see how much safer the more powerful car is.) but our Govt sees this as an opportunity to extract/fleece the purchaser of another few euro. Why should an Airbag cost more in a 1.6l car over a 1.4 litre car? Because Mr Idiot_civil Servant decided it should.

As for imports of used cars? How does the Revenue calculate the OMSP? Nobody seems to know and they are not telling. They make it up as they go along.

We joined the EU with a promise of a free market. We have anything but, and our Govt are one of the most culpable in operating restrictive markets, and therefore higher prices for us all.

 

[Gone Fishin']

if you have a house abroad in mainland europe can you register the car there and drive it here without having to pay vrt?

No you cannot. If you are resident here you must register your car here. Resident means spending over 182 days in the country in the year.

 

[3-bed-semi]

I think the original OMSP issue the original poster refers to needs to be explained by example. The "double taxation" comment has confused some people into thinking it's something to do with paying VRT on top of VAT like the situation with new cars.
The original post is referring to the situation where you import a car, say from the UK 2nd hand. The revenue quote the OMSP as X. The original poster was querying whether the OMSP vlaue X was the value of a similar Irish car sold on the likes of etc.
If the OMSP is the guesstimated value (as nobody knows how it's worked out by the revenue) then this would take into account that VRT was paid on this car first day when new. If this is what the OMSP value corresponds to then the original poster has a very good point.

What's Currently Happening:
e.g.

OMSP €10,000, VRT 30% => VRT €3,000.

If Original Poster is Correct:

Taking OMSP as described above €10,000, if €3,000 of this is taken as the "VRT" part of the value, then the taxable amount should only be €7,000. i.e we should only pay 30% of €7,000 not 30% of €10,000
That would mean to VRT due should only be €2100.

The Revenue really need to clarify what the OMSP is, in the example above an overpayment of €900 would have been made.

Hope this helps make the point.

 

[sonnyikea]

I was coming from the wrong angle. The OMSP is indeed the price you would expect to find the car on an Irish forecourt. Therefore 30% of that is VRT. So therefore if I buy a car in the UK I would need to get one for 30% less than the OMSP here to make it worth my while. Ronan was right.

The real crux of the matter is the OMSP and it's accuracy. As more and more people are taking the Revenue calc as the value a car is worth on the secondhand market the more this figure actually means something as it dictates secondhand prices. It's becoming the equivalent to the Parkers Guide in the UK. I've seen the OMSP to be inaccurate for a number of vehicles.

 

[Gone Fishin']

The OMSP is woefully inaccurate for a huge number of cars. There are numerous opportunities to import a decent car for substantial savings, just remember to do it before some jacked-up Civil Servant spots it and raises the tax.

VRT is just another revenue generating scheme. It is disengenuous and outrageous, but no politicial has the balls to see it reduced.

 

[darag]

I was coming from the wrong angle. The OMSP is indeed the price you would expect to find the car on an Irish forecourt. Therefore 30% of that is VRT. So therefore if I buy a car in the UK I would need to get one for 30% less than the OMSP here to make it worth my while. Ronan was right.

No. I think you were right initially, unless I'm misunderstanding what you're saying here. 3-bed-semi has it right.

The way VRT is being applied is simply wrong. For the sake of simplicity, ignore currency and the fact that manufacturers price cars differently in different countries. Consider the case of a brand new car with a price of, let's say, 20k (excluding VRT) and say it's in the 30% VRT bracket here. If you went into an Irish forecourt, you'd pay 26k (20K + the VRT at 30%). If you bought it abroad, you'd pay 20K for it. Now to get it registered here, they'd claim the OMSP is 26K (which is correct for this brand new car) BUT WOULD CHARGE YOU 30% of 26K or 7,800 so you'd end up paying 27,800 in total. This is simply wrong - they should be charging 30% of 20K NOT 30% of 26K.

This is quite a subtle point ignoring whether VRT is justified.

A similar situation occurs, lets say if you were due to get the VAT back on a purchase worth lets say 1000 euro. Even if the VAT rate is 21% - it does not mean you should be getting 210 back! You should only get 173.55 back because if the item cost you 1000 including VAT, it means it was 826.45 ex VAT.

 

[Guest127]

after reading all the posts here I think sonny, 3 bed and darag have very valid points. looks like vrt on vrt to me.

 

[xt40]

darag, in fair world you would be 100% correct but unfortunately, according to the revenue.ie faq question "how is it calculated"

In the case of cars and small vans, the tax is a percentage of the expected retail price, including all taxes in the State. This price is known as the Open Market Selling Price or OMSP. The VRO will calculate this tax for you or you may obtain the details online at Vehicle Registration on-line Enquiry System.

is there a 2 tier system in operation whereby importers of new cars get a favourable method of calculation. if not, how do they work out the vrt on a new car

 

[sonnyikea]

I asked for clarification from the revenue if their description of the OMSP included VRT and I received a reply yesterday confirming that it is the case.

The VAT example from darag is initially the way I was thinking. I understand the way VRT is calculated but I'm lost as to whether it is a correct calculation.

I also asked the revenue to clarify if VRT was designed to make purchasing a car outside the state more, less or equally as attractive as purchasing inside the state. I haven't got the response with me but I will post it word for word tomorrow. More for information purposes for future readers than anything else.

Is there an ombudsman I can go to who will look at this? If something is mathematically incorrect then surely it can be questioned?

 

[darag]

xt40, you may be right. However, I suspect the rules and the calculation are actually a mistake as I think it's fair to say that there's no way this can be legal under EU law. Remember VRT was introduced as a replacement for an illegal import duty and so should not discriminate against retailers in other european countries. The example I gave shows how you are penalised by this tax for buying from a non-Irish retailer.

Sonnyikea, good luck persuing this. The issue doesn't affect me but I think you have a strong case. Here's some advice. The Ombudsman is not the person to go to but you've started on the right path. Get Revenue to acknowledge that the calculation penalises thoses purchasing from retailers outside the state. If they dispute this then present them with my example which I think is conclusive proof that the existing method of calculation is unfair. Once they acknowledge this, I think you're half way there. If they refuse to correct the calculation, take your case to SOLVIT. This is an EU body specifically set up to help citizens and businesses have misapplications of EU law corrected. A person on this messageboard has already managed to force the French finance dept. to change their tax treatment of interest on mortgages raised outside of France so this crowd aren't just wafflers. If you want help with persuing this send me a private message.