The final exit of the UK from the European Union means that there are some massive changes to the rules for importing a used (or new, for that matter) car from Great Britain or Northern Ireland.
Obviously, in 2020, we already had a big shakeup - the introduction of the new additional charge based on the NOx emissions of a car either being bought new or imported as a used car.
The charge works on a sliding scale and is calculated on the emissions of NOx (oxides of nitrogen, the gases that cause respiratory illnesses, and which have been at the heart of the 2015-on diesel emissions scandal) as measured in milligrams (mg) per kilometre (km). So, up to 60mg/km, you'll pay €5 per mg (that adds up to €300). From 61mg/km to 80mg/km you'll pay €15 per mg (which adds another €285). Above 85mg/km, you'll pay a whopping €25 per mg.
Now, for new cars and for most relatively recent imports, that's not going to be a major problem. For new cars, the average NOx emissions stand at around 43mg/km, so you'll only pay on average an extra €215 for your new car. Diesel cars are always worse off than petrol cars when it comes to NOx, and this tax is clearly aimed at discouraging people from bringing older, more polluting diesel models in from the UK. The effect is stark on older models, right enough, with many popular cars attracting NOx tax charges of more than €2,000. There is a maximum limit for NOx tax, but it's a huge €4,850 for diesel-engined cars (and just €600 for petrol or hybrid models). Don't forget - the NOx tax is on top of the normal VRT charge, not instead of it. It has made importing older diesel cars hugely expensive, but then that's kind of the point.
How VRT is calculated has also now changed. Instead of Bands A-to-G, there are now 20 bands, stretched across a broader spread of CO2 emissions. The lowest rate has come down to seven per cent, while the top rate was swelled to 37 per cent. This is based, as ever, on the OMSP - the Open Market Selling Price, or in other words, what the Revenue Commissioners judge the Irish market value of your car to be. So if you're importing a car, you're not paying the VRT on the price you paid, but on the price you would have paid had you bought the car in Ireland. Or rather, what Revenue reckons you would have paid. If you disagree, you can appeal, but only after you've actually paid the amount demanded.
A major change came into place from 1 January 2021. The NEDC CO2 rating of imported used cars is 'uplifted' to make them equivalent to the newer WLTP regime. That has a considerable effect on the VRT band the car sits in and therefore the rate of VRT to be paid. For a petrol car, the new CO2 rating = (old NEDC CO2 rating x 0.9227) + 34.554g/km. For a diesel car, the new CO2 rating = (old NEDC CO2 rating x 1.1405) + 12.858g/km.
Those VRT rates are:
Band 1: 0 - 50g/km - 7% of OMSP
Band 2: 51 - 80g/km - 9% of OMSP
Band 3: 81 - 85g/km - 9.75% of OMSP
Band 4: 86 - 90g/km - 10.5% of OMSP
Band 5: 91 - 95g/km - 11.25% of OMSP
Band 6: 96 - 100g/km - 12% of OMSP
Band 7: 101 - 105g/km - 12.75% of OMSP
Band 8: 106 - 110g/km - 13.5% of OMSP
Band 9: 111 - 115g/km - 14.25% of OMSP
Band 10: 116 - 120g/km - 15% of OMSP
Band 11: 121 - 125g/km - 15.75% of OMSP
Band 12: 126 - 130g/km - 16.5% of OMSP
Band 13: 131 - 135g/km - 17.25% of OMSP
Band 14: 136 - 140g/km - 18% of OMSP
Band 15: 141 - 145g/km - 19.5% of OMSP
Band 16: 146 - 150g/km - 21% of OMSP
Band 17: 151 - 155g/km - 23.5% of OMSP
Band 18: 156 - 170g/km - 26% of OMSP
Band 19: 171 - 190g/km - 31% of OMSP
Band 20: greater than 191g/km - 37% of OMSP
All of that was, of course, in place before the 1st of January, the date on which the UK actually, finally, came to the end of its transition period and, for good or ill, left the EU in full. With that being the case, the UK is now, for the first time since 1974, a 'Third Country' when it comes to dealing with imports, and that will change - in a fairly major way - how much it costs to import a car from the UK to Ireland.
There are now three new steps in the import process. Before you even bring your imported car into the State, you'll have to fill out a Customs Declaration Form (you can find it here). That done, you can then arrange for the carriage of your car from the UK to Ireland, and book your VRT inspection at your nearest NCT centre (as before, you have a week from the date of arrival to make that booking, and 30 days from the date of arrival to complete the process, although there may be some COVID-related leniency in that right now).
So, you get the inspection done, and then pay your VRT and NOx levy as before. There are, however, two new charges to pay, and they will likely upend the market for imported cars.
The first new charge is a ten per cent import duty (sometimes called customs duty). That's calculated on the price you paid for the car, plus the costs of bringing it into the country.
The second, much bigger charge, is VAT. Previously, you only paid VAT on new cars, or cars that were less than six months old, or had fewer than 6,000km on the clock. Now, if you're importing from Great Britain (and that's a distinction we'll come back to in a minute) you pay 21 per cent VAT (rising to 23 per cent when the current VAT reduction period runs out) on ALL imported cars, regardless of age or mileage.
There are some exceptions. That ten per cent import duty can be avoided if the car you're importing is substantially built in the UK, but the rules are incredibly complex. This is direct from the Revenue Commissioners: "The value of non-originating material used in the production of the car must not exceed 45 per cent of the ex-works price of the car in order for the car to qualify as originating in the UK for zero tariff on import to the EU under the agreement. However, for the period from the entry into force of the Agreement until 31 December 2026 alternative product-specific rules of origin apply for electrified and hybrid vehicles with both internal combustion engine and electric motor as motors for propulsion. For these cars, until 31 December 2023, the value of non-originating material used in the production of the car must not exceed 60 per cent of the ex-works price of the car, and from 1 January 2024 until 31 December 2026, the value of non-originating material used in the production of the car must not exceed 55 per cent of the ex-works price of the car." Incidentally, the onus for proving that a car does qualify for the zero-rate customs duty falls on you, the person doing the importing. This is going to make it exceptionally difficult and expensive to import a car from Britain.
Import duty will also apply to cars built in the EU, but sold in the first instance into the UK, unless that car has 55 per cent of its value originating in the UK (which is unlikely).
The major exception is if you're importing a car from Northern Ireland. Do that and you avoid the ten per cent import duty altogether, and the VAT payment reverts to the old system - you'll only pay it on new or nearly new cars. Mind you, Revenue is already warning that it will be carefully examining the paper trail for each car imported from Northern Ireland to make sure that it was actually originally sold there, rather than just sent there to avoid the taxes.