VRT question

byrneand

Hi all,

First of all thanks for yor help in advance!

I'm looking at getting a job in Ireland as my girlfriends Mum is not well and we'd been playing witht he idea of moving over at some point anyway. I am however a bit puzzled with the tax situation... especially on cars/

I currently live in London and so don't have a car but if I were to move back to Dublin its definitely something I'd be wanting to pick up. On looking into one or two things however, I've just found out about VRT... what a nightmare!!

The job offer I've received would be starting in the middle of September so 4.5 months away from now. I'm in a position to be able to go out this weekend and buy the car that I would want, but have found out that the VRT is quite substantial and looking at a few ads in ireland, it seems that there is no difference between irish price and UK price+VRT (of around €25k).

My question is can anyone suggest a way around having to pay the VRT? I have a flat in Manchester that I currently rent to my brother and could definitely get the bills set up in my name - the mortgage already is etc... and get it insured there and everything.

Is there anyway that I can move across in September and then bring the car over in November and avoid having to pay the VRT on it?

Alternatively, does the year i become a tax resident have an impact at all - e.g. I think I'll be spending >185 days in the UK this tax year.

Alternatively, I'm in the process of negotiating pay, benefits etc with the employer in ireland. Can i claim VRT as a relocation fee? in which case I could get the company to pay me that and so at least save 48% on the tax on that.

Any thoughts or advice would be most appreciated.

Thanks!!

Inquitus

you must have had possession of and have actually used the vehicle outside the State for at least 6 months before your transfer to Ireland. In the case of relief from import charges, you must have used the vehicle at your former normal place of residence. Any possession and use in the State, even during times when you were living abroad, does not count

You would not have to pay VRT having lived in the UK for the last year, if you had owned the car for 6mths or more before moving back.

As it is you can either delay your return for 1.5mths to avail of this, or else you are stuck having to pay the VRT. They are quite strict and will wish to see UK payslips and the like as well as the Vehicle Reg documents, so theres no leeway or way round this.

byrneand

Inquitus wrote: »

You would not have to pay VRT having lived in the UK for the last year, if you had owned the car for 6mths or more before moving back.

As it is you can either delay your return for 1.5mths to avail of this, or else you are stuck having to pay the VRT. They are quite strict and will wish to see UK payslips and the like as well as the Vehicle Reg documents, so theres no leeway or way round this.

Thanks mate,

Appreciate the quick response. 2 quick follow-on questions if I may:

1.) Can I claim VRT as a relocation cost?
2.) If I'm paid by an Irish company in Euros etc. but do actually live in London for the first two months does this count as being based in the UK?

Thanks again. As you can imagine it was a bit of a shock to find out that I was going to be hit with a €24k tax when I thought I was going to be able to get my dream car (I haven't bothered getting anything in London as there'd be no point)!

Cheers

Inquitus

byrneand wrote: »

1.) Can I claim VRT as a relocation cost?
2.) If I'm paid by an Irish company in Euros etc. but do actually live in London for the first two months does this count as being based in the UK?

1) That would be between you and your employer, and would have to be negotiatied as part of your contract imho.
2) I don't honestly know, but if you were to ring a VRO Office, they would be able to let you know the facts of the matter on a no name basis.

byrneand

Inquitus wrote: »

1) That would be between you and your employer, and would have to be negotiatied as part of your contract imho.
2) I don't honestly know, but if you were to ring a VRO Office, they would be able to let you know the facts of the matter on a no name basis.

Thanks again.

I was referring to the the VRT as a relocation expense more from an Irish tax perspective. i.e. If I were to receive €26k relocation money (€24k vrt and €2k furniture move etc.). "relocation" expenses are apparently tax free and so I could suggest to the employer doing a pay for relocation expenses swap and at least save paying 48% tax on the €26k of pay - effectively cutting the VRT charge in half.

- I actually phoned the VRO office today and the guy was an absolute muppet. I explained the situation and said he's not sure but there was a website or he could send me out a leaflet. Said I could import it and then appeal - but this struck me as being potentially a €24k+ mistake you could make!

Thanks thoguh mate - if anyone else has any other thoughts they would be most appreciated!

Mr. Incognito

Taxes cannot be claimed as legitimate relocation expenses.

If your employer was to pay this you would be taxed on it as a benefit in kind.

As for the thoughts to avoiding the tax illegally with false names, read the charter and take it elsewhere. Inducing or encouraging fraud is a bannable offense around here. Be warned.

byrneand

Mr. Incognito wrote: »

Taxes cannot be claimed as legitimate relocation expenses.

If your employer was to pay this you would be taxed on it as a benefit in kind.

As for the thoughts to avoiding the tax illegally with false names, read the charter and take it elsewhere. Inducing or encouraging fraud is a bannable offense around here. Be warned.

Incognito,

First of all thanks for clarifying the situation on VRT and relocation tax.

I do however take a bit of offense at your suggestion that I would be trying to commit fraud through false names etc.. I don't think I mentioned anything of the sort.

I think the questions I outlined were:

1.) Is the 6 months calaculated from when i move to Ireland or from when I move the car to Ireland.

2.) What constitutes "living" in the UK for the 1.5 month overlap - e.g. if i spent 2-3 days a week in the UK, 2-3 days a week in ireland and 2-3 days in Europe, whilst maintaining a flat in London, but getting paid in Euros would this constitute living in Ireland, the UK or abroad?

I'm only asking here as when I phoned the VRO they didn't have a clue and the best the guy/muppet could do was say that I should read the internet and then import the car and then look to appeal. I don't fancy making a€24-30k mistake!

I am looking at ways to avoid paying the €24k tax (which I find quite extraordinary that the Irish accept) even if that means maintaining a flat in London for an additional 2 months. I've got no problem with paying income tax, levies, VAT and everything like that. I'd rather not pay something that I don't have too and spend the money on my family.

Mr. Incognito

My question is can anyone suggest a way around having to pay the VRT? I have a flat in Manchester that I currently rent to my brother and could definitely get the bills set up in my name - the mortgage already is etc... and get it insured there and everything

I think the questions I outlined were:

1.) Is the 6 months calaculated from when i move to Ireland or from when I move the car to Ireland.

2.) What constitutes "living" in the UK for the 1.5 month overlap - e.g. if i spent 2-3 days a week in the UK, 2-3 days a week in ireland and 2-3 days in Europe, whilst maintaining a flat in London, but getting paid in Euros would this constitute living in Ireland, the UK or abroad?

You insinuated that you could get the bills in a flat you don't live in set up in your name to imply to Revenue you were UK resident when you were not. This is fraud. Don't play the innocent now.

There is a holiday from VRT for one year when you move here from abroad. After that there is no way around it.

The reason the Irish accept it is the same reason we accepted the Bank bail out. The Irish public imo is ignorant and stupid.

byrneand

Mr. Incognito wrote: »

You insinuated that you could get the bills in a flat you don't live in set up in your name to imply to Revenue you were UK resident when you were not. This is fraud. Don't play the innocent now.

There is a holiday from VRT for one year when you move here from abroad. After that there is no way around it.

The reason the Irish accept it is the same reason we accepted the Bank bail out. The Irish public imo is ignorant and stupid.

But I could move to the flat tomorrow - and live there for 4.5 or 6 months. (depending on what the definition of being a resident there is - e.g. is it 3 days a week, 5 days a week, what if you go on holiday for 3 weeks etc..)

When you say "There is a holiday from VRT for one year when you move here from abroad. After that there is no way around it." what does that mean in practice?

Mr. Incognito

http://www.revenue.ie/en/tax/vrt/leaflets/index.html

Third one down

byrneand

Mr. Incognito wrote: »

http://www.revenue.ie/en/tax/vrt/leaflets/index.html

Third one down

This is where I'm trying to get clarrification (hence my call to VRO).

From what I gather say I were to move to Ireland on Sept 15th, I would not be a "Normal Resident" in 2010. In which case does my Normal Residency come into effect on Jan 1, 2011. In which case if I bought the car on May 1, "lived" (and by this I mean spent how ever many days they class as "living") in England and using the car until November 2 and brought the car over would I have to pay tax.

So I suppose the basis of avoiding this tax is what is the revenue definition of "living" in Ireland. In order to avoid paying €24k+ in tax (basically the equivalent of a €50k salary), I'd be more than happy to appropriately split my time for the sake of 1.5 months - its just trying to get clarification on what constitutes "living".

e.g If you take just a one week period for instance - is it a case of proving that you live in England or proving that your not "living" in Ireland. Say your pay the rent in England, all your bills are in England in a one week period you spend 3 days in Ireland with work, 2 days in England and go to Paris for 2 days - what would this be classed as?

Any ideas?

Mr. Incognito

Residence means that you spend 183 days in Ireland in a calendar year. It used to be midnights but now it's any part of the day. To be sure it is 185 for the VRT exemption.

That would be known as tax residence but it actuality as regards you bringing a car here for VRT.

Now as to what happens if you are island hopping after it will not affect the exemption as the tax legislation always points to "intention to be resident" in Ireland to avail of reliefs like split year relief etc.

byrneand

Mr. Incognito wrote: »

Residence means that you spend 183 days in Ireland in a calendar year. It used to be midnights but now it's any part of the day. To be sure it is 185 for the VRT exemption.

That would be known as tax residence but it actuality as regards you bringing a car here for VRT.

Now as to what happens if you are island hopping after it will not affect the exemption as the tax legislation always points to "intention to be resident" in Ireland to avail of reliefs like split year relief etc.

So bottom line what your saying is that as soon as i start getting paid by an irish company (e.g September 15th) that's classed as intent and so therefore be liable for VRT.

I'd have to defer taking up the employment until November 1st to not be liable for VRT. Or alterntively negotiate an extra €50k bonus to cover the VRT.

Mr. Incognito

What are the Residency Requirements?

For VRT purposes you must have had your normal residence as defined below, outside the State at the time of transfer. In the case of a transfer from outside the EU, you must have had your normal residence outside the EU for a continuous period of at least 12 months prior to transfer.

Normal Residence means:

* the place where you usually lived, for at least 185 days in the year ending on the date of transfer, because of occupational and personal ties
* if you had no occupational ties, the place where you usually lived for at least 185 days in the year ending on the date of transfer, because of personal ties
* if your occupational ties were in a different country from your personal ties then the country of your personal ties is taken as your normal residence if you returned there regularly (i.e. for most of your non-working days).

You easily fulfill this.

What are the requirements relating to the Motor Vehicle?

The following requirements apply to the vehicle:

* it must be your personal property
* it must have been acquired with all the appropriate local taxes paid and these must not have been exempted, or refunded in any way. (There are certain exceptions in the case of diplomats and members of international organisations recognised by the Department of Foreign Affairs. Details are outlined in a separate leaflet available at any Vehicle Registration Office (VRO). Regional VRO Contact Details.
* you must have had possession of and have actually used the vehicle outside the State for at least 6 months before your transfer to Ireland. In the case of relief from import charges, you must have used the vehicle at your former normal place of residence. Any possession and use in the State, even during times when you were living abroad, does not count
* you must bring the vehicle into the State within 12 months of the date of your transfer of residence.

So you must have it in the UK 6 months before your transfer and transfer within 12 months.

So you buy the car in May, you can bring it over in November and claim the exemption from VRT.

As to whether you get some brown nose red tape civil servant that wants to raise the argument that your transfer is Sept 1, I would argue immediately that the purpose of the 12 month exemption is to cover the fact that a transfer does not happen immediately but is incrimental.

Inquitus

Country Index Price
Switzerland 87
Greece 90
Italy 93
Belgium 95
France 96
Spain 97
Germany 98
Sweden 98
UnitedKingdom 99
CzechRepublic 99
Hungary 99
Poland 99
Austria 106
TheNetherlands 120
Portugal 124
Ireland 128
Finland 133
Norway 167
Denmark 193
EuropeanAverage 100

Interesting to note the relative Car Prices in this 2008 Index, Ireland 28% above average, but also some other countries indulging in similar practices to the VRT.

I am pretty sure the VRT is against EU Rules as per:

The European Court of Justice has ruled aspects of vehicle registration tax are effectively a form of double taxation.

The court has ruled this is illegal under the EU treaty.

The ruling was welcomed by the European Commission which has called for the abolition of the tax.

The Commission said states should ensure that their VRT systems did not impose a double taxation burden on those importing second hand cars from member states.


The ruling may affect the operation of Vehicle Registration Tax in other states, notably Denmark and Ireland, which also charge high rates of VRT.

Not that anything seems to be being done to resolve this matter.