When is a car, not a car?

macplaxton

I seem to remember reading somewhere (possibly a motoring magazine some years back), that Fiat used to import Cinquecentos from Poland (prior to Poland being part of the EU), but importing them without mirrors or wheels fitted so that for import tax purposes they would qualify as spare parts with a lower tax tariff (c. 25%), than whole cars (c. 35%). Upon being imported, the critical items were assembled locally.

A similar tax position I occurs with bicycles from places such as Bangladesh, where certain components are removed (as as few as possible), so instead of being classified for tax as a bicycle, it being spare bicycle parts at a lower rate.

The question would be then, what would be the minimum / easiest route to making a "mechanically propelled vehicle", not a "mechanically propelled vehicle"? (I know it's quite easy if you take everything off, but the name of the game is the least/easiest number of components.)

The only thing I've found so far is a UK piece of case law from 1963 Smart v. Allen. about tax.

sogood

I know of a guy who buys cheap cars here in Ireland and then strips them to the extent that they are "scrap" or "spares" and ships them off to underdeveloped countries, reverses the process, and voila, a car with reduced import taxes! I dont know the ins and outs of it, but he was telling me thats what he does. I dont know how much of an earner it is for him, but it is obviously worth his while. Of course, this applies to the tax laws and legislation of other countries. Bringing cars into Ireland might be a whole different matter.

Anan1

I can't see how it would make any difference when importing cars into Ireland, as we have a registration tax. Interesting thought, though.

MercMad

In Ireland, AFAIK, it was never viable to import a spare new shell as the taxes are based upon the chassis i.e if its a Fiat XYZ shell, then it gets a certain rate. Even if you were repairing a damaged car the new shell would be taxed as a new car.

However that is many years ago and was specifically for new cars/new parts. As far as used spares/cars go I dunno but there have been changes lately too for VRT.

Quazzie

When its turning into a field


Badumtish

macplaxton

Anan1 wrote: »

I can't see how it would make any difference when importing cars into Ireland, as we have a registration tax. Interesting thought, though.

The difference it would make would be to remove the obligation to have the "parts" registered within the current 7/30 day window.

Anan1

macplaxton wrote: »

The difference it would make would be to remove the obligation to have the "parts" registered within the current 7/30 day window.

But how/where would you register the resultant car?

macplaxton

Interesting extension to the question. I suppose you'd have to have some water-tight evidence to prove when it became a taxable entity again.