It is important for any purchaser of a second-hand vehicle to be aware of the latest rules regarding customs declarations, VRT and VAT.

The importation of a motor vehicle from the UK excluding Northern Ireland is treated as an import from a third country i.e., a non-EU Member State. The customs treatment of such imports depends on factors such as the origin of the vehicle and whether it qualifies for customs relief (e.g. Returned Goods Relief).

The standard treatment for vehicles imported into Ireland from GB may be summarised as follows:

• VAT and Customs Duty are payable at the point of import:
• Customs Import Declaration is required in Ireland and include the Vehicle Identification Number (VIN). The declaration is usually completed by a customs agent on behalf of the importer, or an individual can also complete the declaration using the declaration portal on the Irish Revenue’s Automated Import System (AIS). In order to be able to complete the declaration the person completing it must:
  • Be registered for Revenue Online Service (ROS)
  • Be registered for Customs & Excise (C&E)
  • Have an EORI number.

This treatment applies to all vehicles imported from GB unless it is proved that the vehicle qualifies for preferential origin or Returned Goods Relief.

Since 1 January 2021, the EU-UK Trade and Cooperation Agreement (TCA) has eliminated tariff duties for trade between the EU and GB, where the relevant rules on origin are met. If the goods are of UK origin, then a 0% tariff rate applies.

Where the vehicle was manufactured in the UK and complies with the origin terms as set out in the EU-UK TCA, a preferential tariff rate of 0% may be claimed.

Importantly however, where goods are of EU origin and are in use in the UK and then subsequently imported into Ireland from GB will not qualify for the 0% rate.

Returned Goods Relief (RGR) may be available, subject to conditions, for vehicles that have been exported from the Customs territory of the Union. RGR allows for the re-importation of goods into the EU without triggering Customs Duty and VAT in certain cases.

Vehicles imported into Ireland from NI have different customs requirements. Generally, vehicles imported from Northern Ireland generally do not require customs declarations due to the Protocol on Ireland and Northern Ireland, which allows Northern Ireland to continue adhering to EU rules in relation to trade in goods. As a result of the unique trading arrangements for NI following Brexit, there are no customs formalities including customs declarations or payment of tariffs on trade between Ireland and Northern Ireland.

However, if there is no proof of declaration to customs in Northern Ireland, then the importer is required to complete a Customs Import Declaration, pay Customs Duty, if applicable and VAT on import.

It should be noted that vehicles purchased from NI, that were in NI prior to 1 January 2021, are treated as EU goods and no customs formalities are required, VAT on import and customs duty are not applicable.

A vehicle bought in NI can be registered for VRT in Ireland. As certain additional requirements may apply, proof of the vehicle’s status in NI prior to purchase will be required, e.g., a ferry ticket showing date of arrival in NI.

Motor vehicles in Ireland must be registered within 30 days of their date of entry into the State.

In January 2021, the UK introduced changes to the UK VAT margin scheme for used vehicles imported into NI. This margin scheme remained in place until 1 May 2024.

There is a replacement scheme, the Second-Hand Motor Vehicle Payment Scheme (SHMVPS). This new scheme allows car dealers who are VAT registered in NI and in EU Member States to reclaim the VAT element of the vehicle cost:

• if the vehicle is purchased in GB

and

• removed or exported from there for resale in NI or an EU Member State.

The new rules apply from 01 May 2023 and claims can be made from August 2023 onwards.

Vehicles bought by NI dealers before 1 May 2023 and sold before 1 May 2024 are subject to additional requirements if imported into Ireland.

Vehicles bought by NI dealers before 1 May 2023 and sold after 1 May 2024 can be registered in Ireland without customs obligations.

There are no customs obligations for vehicles brought into NI after 1 May 2023, where the vehicle has been in private ownership in NI for a reasonable period of time.

Where a vehicle availing of the UK VAT Margin Scheme (as introduced in January 2021) has been declared to customs on import into NI, including payment of any customs duties, there will remain a liability to VAT on import into Ireland. VAT will apply at the standard rate currently 23% and must be discharged before the vehicle can be registered. In such cases, a Supplementary Import Declaration Form – VAT on Import on Used Vehicles must be completed, and the associated import VAT must be paid. Proof of the customs declaration on import into NI must also be provided.

Before buying a vehicle from NI with either a GB registration or a vehicle that was previously registered in GB, the purchaser should ensure that they have documentation to prove that the vehicle was declared to NI customs.

If the purchaser does not have proof of declaration to Customs in NI, then the purchaser:

• must complete a customs declaration in Ireland;

and

• pay customs duty in Ireland (if applicable), and VAT on the import value of the vehicle.

This must be done before presenting the vehicle for registration.

In general, customs duty at the rate of 10% applies to most vehicles imported from the UK. This duty is calculated on the customs value of the vehicle. This customs value is made up of:

• the purchase price of the vehicle, plus
• transport and insurance costs, plus
• handling charges

VAT at the standard rate (currently 23%) applies on the importation of vehicles from GB. Generally, VAT is not applied to used vehicles purchased in NI. However, VAT may apply if the vehicle is regarded as a “new means of transport” or was previously registered in GB and move to NI after 31 December 2020. VAT is levied on the value of the vehicle that equals the customs value (as detailed above) plus customs duty.

Postponed VAT accounting is a cashflow relieving measure for importers. It operates by permitting import VAT to be reclaimed at the same time as it is declared. Of course, this right of VAT reclaim is subject to VAT deductibility rules which are discussed further below.

The scheme is available to all VAT registered traders who are registered for VAT and Customs and Excise. However, Revenue may exclude importers who do not fulfil certain conditions. Such conditions include compliance with tax and customs law, the viability of their business operations and their capacity to pay their VAT liabilities.

Where postponed VAT accounting is being applied, it is essential that the importer correctly reflects the import in its VAT return. The VAT3 return now includes new fields for the taxpayer to input the customs value of goods (including motor vehicles) imported plus Customs Duty.

The Irish Revenue have issued detailed guidance on the operation of postponed VAT accounting, which may be accessed below:

Under general VAT deduction rules, there are limits on the entitlement to reclaim VAT incurred on the acquisition of vehicles. Traders generally may not reclaim VAT incurred on the hire, leasing or purchase of passenger motor vehicles for use in their business where the vehicles are classed as Category A for VRT purposes. VRT Category A include saloons, for example, estates, hatchbacks, jeeps, SUV’s, motorcycles, motor scooters, minibuses with no more than 8 seating positions (in addition to the driver). However, certain traders are entitled to recover VAT on these vehicles for use as stock-in-trade, or in a driving school or car-hire business.

Vehicles that are within Categories B and C may have different VAT deductibility rules. Where the imported vehicle is used for commercial purposes and falls under the appropriate VRT categories (likely B or C), the VAT incurred can be reclaimed, aligning with the general rules of VAT recovery for business purposes. This means that if such a vehicle is used exclusively for business purposes, the VAT is deductible in the normal way. Vehicles within VRT Categories B and C, such as vans, lorries, pick-ups and crew-cabs are generally deductible for VAT. Buses or minibuses with more than 8 seating positions (in addition to the driver’s seating position) are not generally deductible for VAT, although they come within Category C, as they are normally used for the exempt activity of transporting passengers.

It is imperative that Irish businesses are aware of the correct VAT and customs treatment to apply when trading with NI and GB. Businesses need to stay informed about latest developments in terms of the rules and practices of trading with the UK and consult with their accountant and / or tax adviser to ensure ongoing compliance.