vat on second hand cars?

jonnygee

If I buy a second hand car from an irish dealer and trade in a second hand car against it then does the government get any vat from this transaction.

robbie99

Yes, they do - on the profit the dealer makes on the car being sold less expenses. The trade-in is irrelevant for VAT.

darc

VAT on cars is different to other forms of vat trading.

Vat is not reclaimable on passenger cars for individuals or companies, so all transactions are in the gross price.

I don't know the ins & outs, but if there was a vat liability it would be on the profit he made on the transaction rather than the full value of the transaction itself.

rugbyman

`You seem quite sure Robbie,
But is this not the case,

Car on forecourt for 12,150 euro (10,000 plus 2150 i.e 21.5%)

Trade in accepted at an apparent price of 6075 (5,000 plus1075,i.e. 21.5%)

Buyer hands over 6075 euro plus trade in and drives away in new car.

Dealer forwards the Government 1075 ( 2150 minus 1075)

For clarity I have not mentioned that there may be VAT on the services of the valeter, service dept ,etc.

regards, Rugbyman


Question for someone else. If a trader exports a used car standing him 12,150 on his books, and sells it to a vat registered customer in the EC, can he reclaim the VAT element on this deal i.e. the 2150

jonnygee

Thanks for the replies, what i am really trying to figure out though is this.
Does the government actually get a bigger tax take from vrt if a secondhand car is imported than they would do from vat if a similar car is bought here from a dealer.

robbie99

@ rugbyman - the clue is in the name. Value Added Tax. It's a tax on the value added to the car. A dealer buys a car off joe public 1 (a trade-in) Dealer pays say 5k for the car. Dealer adds value to that car by valeting it and servcing it and sells it (to joe public 2) for 9,860. The value they added was 4,860 or 4k plus 860 VAT. If dealer has VAT receipts for the work done to the car then that VAT can be deducted from their VAT liability. The mark up by a dealer is liable for VAT (less expenses where VAT has been paid).

If joe public 2 has a trade-in then that trade-in starts off a separate transaction.

GiftGrub100

A thread from December 2008 !