If you have imported a used car from the UK or a European Union member state in recent years, you may have been overcharged for VRT.
VRT – vehicle registration tax – is the charge incurred by all vehicles brought into Ireland and must be paid when it is first given an Irish number plate.
It’s a controversial tax, not least because it is often seen as being contrary to EU regulations when it comes to the imposition of import tariffs on goods sold between member states.
Such concerns have been raised anew by Gareth Hickey, the chief executive and co-founder of NOA, an Irish company that provides audio versions of news articles. Hickey spoke to The Irish Times about a potential misapplication of VRT over the costs imposed on his importing of a BMW 5 Series.
“I ended up buying a 2013 BMW M550d. Prices had fallen to around €10,000-€12,000, so with us having family in Frankfurt, it seemed like a good idea.”
Before buying the car and bringing it back to Ireland, he contacted Revenue to get a rough idea of the valuation it would place on such a car. However, Revenue said it would only value the car once inspected.
This lack of upfront transparency, or fixed VRT costs for vehicles being established in advance of purchase, is a significant issue for many consumers and has been flagged previously by the EU as a concern.
Undeterred, Hickey decided to import his left-hand drive BMW 5 Series. The M550d model had never been officially sold in Ireland. The only difference to an Irish-market 530d is the addition of an extra turbocharger and consequently, some more engine power.
The problems started when Hickey presented the car for inspection at his local NCT centre, which defines the car’s OMSP, or open market selling price. That is the value Revenue places on the car to reflect what it would have cost had it been sold in Ireland originally.
After being told he would have a valuation within three days, Hickey was left waiting. The deadline to pay the VRT and avoid penalty charges is within 30 days of the car physically arriving in the State.
And then the hammer dropped – a €9,000 bill for VRT. That included a conversion of the car’s original CO2 emissions from the older NEDC testing system to the newer, more stringent WLTP system. The BMW was also charged the NOx levy, an extra bill introduced in 2020 which would not have been charged if the car was originally sold in Ireland.
It is on this last point Revenue appears to be most out on a limb when it comes to charges. Article 110 of the Treaty on the Functioning of the European Union states you are not allowed to charge more internal tax than is already incorporated in a similar or competing product on the domestic market. How many other vehicles might have been overcharged in this way?
Hickey turned to the Your Europe advice service. While not able to make legally-binding findings, this is nonetheless an official arm of the EU, offering “free, personalised advice on your EU rights in a real (not theoretical) situation” to all EU citizens.
Your Europe is sceptical of Revenue’s application of VRT. Looking at the way VRT and the NOx charge was applied in this case, Your Europe noted legal precedent: “In the case of Denkavit v France, C-132/78, the CJEU considered the distinction between a CEE and a measure of internal taxation.”
(A CEE is a charge of equivalent effect, which is considered as an import duty.)
It continued: “The court noted that the charge could escape classification as a CEE only if it related to a general system of internal dues applied systematically and in accordance with the same criteria for domestic products and imported products alike.
“The charge to which the imported product is subject must be imposed at the same rate on the same product; the charge to which the imported product is subject must be imposed at the same marketing stage; and the chargeable event giving rise to the duty must be the same for both products.”
Further, Your Europe noted: “We are also concerned about the use of 2025 VRT rates instead of 2013 residual rate of tax contained in existing cars already registered in Ireland. The practice appears contrary to the ruling of the CJEU in Gomes Valente, C-393/98 and Commission v Finland, C-10/08.”
There is a broader question, though. VRT, as it is imposed, is payable within 30 days of the moment a vehicle, new or old, arrives in the State, raising significant questions as to whether it actually is an import tax wearing a light disguise.
Your Europe seems to think so, saying: “We are concerned here that the imposition of VRT constitutes a CEE due to the rule that you must pay the VRT within 30 days of crossing the border. Even if the VRT is treated as internal taxation, the treatment of your imported car raises concerns under the provision.”
The Irish Times put these concerns to Revenue. In response, a spokesperson said: “Vehicle Registration Tax is not an import tax and does not constitute a Charge of Equivalent Effect. VRT is a duty of excise and is imposed equally on domestic and imported vehicles at the point of registration… and it has been found to be fully compatible with EU law. The Nitrous Oxide (NOx) charge is an environmental levy and is also not an import tax.”
Revenue also said the imported BMW 5 Series, with left-hand drive, would have been effectively discounted for VRT. This, they say, is because “strict comparison between a used vehicle first registered in Ireland and a used vehicle acquired from a member state built for right-hand traffic is not entirely possible, as all vehicles sold as new in Ireland must be built or modified for left-hand traffic”.
Hickey disagrees with that last point, telling The Irish Times: “Revenue valued my car at €20,000 but I’ve discussed the matter with some BMW dealerships and the valuation they’ve given me for the car, with left-hand drive, is €6,000, because they say there’s simply no market here for it.”
In the view of Your Europe, Revenue may have incorrectly applied NOx charges and uplifted WLTP emissions values to cars previously approved under the older regulations. With all of this taken into account, and the potential for overcharging running into many millions of euro, The Irish Times asked Revenue if it would commit to refunding overcharges if the case could be sufficiently made?
Revenue says “if a taxpayer believes that the rate of VRT levied on their vehicle is incorrect, they may appeal that decision”.