How is VRT calculated on brand new vehicles?

CiniO

I know when you buy a new vehicle from dealer say for €20k, then VRT is already included in price.

However how much of VRT dealer actually pays in such case?
Purely for example purpose let's take band E (171 to 190 g/km) with 30% VRT rate.

Does that mean that vehicle cost was €15,384 and dealer paid 30% vrt of that price which sums up to €20,000.

Or does that ment that vehicle cost was €14,000 and VRT was 30% of sale price (30% of €20k) which equals to €6,000 in VRT so whole price at €20,000


Which option is that?

Voodoomelon

You can see a good breakdown here, albeit without the actual VRT %.

colm_mcm

the vrt is on the estimated open market selling price which is loosely based on the rrp. the garage pays vat on the purchase price from the distributor and the vrt is paid by the garage upon registration.
The customer isn't in a position to claim vat back unless it's for a disabled driver or passenger.

CiniO

Voodoomelon wrote: »

You can see a good breakdown here, albeit without the actual VRT %.

Thanks for that. It's very interesting breakdown.

However I'm getting even bit more confused now.

Leaving aside dealer fitted accesorries and other items on which VRT is not due, we have the following:

Vehicle value: €45,319.79
VAT: €10,423.55
VRT: €8,036.22


So now:
If VRT was percentage of vehicle value, it would be 17.73% (8036.22 is 17.73% of 45319.79)

If VRT was percentage of vehicle value inclusive of VAT, it would be 14.42% (8036.22 is 14.42% of 55743.34)

If VRT was percentage of vehicle value inclusive of VAT and VRT, it would be 12.60%.

None of those is possible, as there are no such VRT rates.
It says that CO2 emissions are 49g/km (at the top of the document) so correct VRT rate for that is 14%.

So if VRT of 8036.22 is 14% of some value, then this value is €57,401.57

So what is this value - because looks like that's the value on which VRT was paid.
As it's higher than vehicle value with VAT, then surely this price must be based on something else.

Would that be OPEN MARKET SELLING PRICE established by revenue?
If so, for a brand new car, why is it different than price dealer is selling such vehicles? (lower)

colm_mcm

all the extras have omsp's as well. they're different to retail price


wait just realised they are on the breakdowno

robbie99

For BMWs, the OMSP is 90% of the RRP.

To me this suggests that the dealer has 10% margin to work with. The VRT amount due doesn't change after a discount is applied to the final price.

Terrontress

What happens when a new vehicle is launched? If VRT is based on the market rate, and not the cost of the car, how do they work it out? Does the importer come up with the end price, including VRT, then tell Revenue what they'll be getting?

Sam Russell

I think Revenue agreed a 10% from RRP some time ago. This was because dealers claimed that is what they gave (usually in the form of higher trade in values).

Total fiction of course.

RedorDead

The whole concept of OMSP is a farce and needs to be overhauled or removed. The level of VRT depends on the Co2 levels of the car in hand. To use a BMW as an example:

Example Car - new 7 Series - Price = €100,000
OMSP therefore is €100,000 * 90% = €90,000
Say if its emissions are 140g therefore its in band b3 which means it qualifies for 19% VRT - therefore €90,000 / 100 = €900 * 19 = €17,100

The same works for options.

Just to confuse things even more, some smart bollix in the EU decided that because bigger wheels emit slightly more co2, they should be taxed as the same. So on the above example, if i add a slightly bigger alloy to the standard wheel which increases the Co2 by 1g, the car goes into band C and all the VRT increases by 4% pushing up model price and option price significantly! Such a mess!

colm_mcm

Hardly a farce now.

hi5

Terrontress wrote: »

What happens when a new vehicle is launched? If VRT is based on the market rate, and not the cost of the car, how do they work it out? Does the importer come up with the end price, including VRT, then tell Revenue what they'll be getting?

Here's an example of how they do it.

If the costs before VRT is 14000 euro and we know the vrt rate is 30% then divide 14000 by 70 (70%) and multiply by 100, that gives you 20000 euros which is the total including VRT.

CiniO

robbie99 wrote: »

For BMWs, the OMSP is 90% of the RRP.

To me this suggests that the dealer has 10% margin to work with. The VRT amount due doesn't change after a discount is applied to the final price.

Ok, that explains it.

On the example above with BMW, vehicle sale price is €63,779.56.
90% of that is €57,401.60.

And VRT comes at €8,036.22 which is exactly 14% of €57,401.60.

So used cars imported, have to pay VRT on Open Market Selling Price,
while new car pay VRT on only 90% of Open Market Selling Price.

Interesting to know.

As well as the fact, which many people don't realise, that it's simple mathematical trick which they are using, baseing VRT as percentage of price which already includes VRT.
It's very simple way to make effective VRT rates higher than they really are.

Example 1.
Used car.
Open Market selling price in Ireland €10,000.
CO2 emissions - 180g/km so VRT rate 30%.
Now - VRT is 30% of OMSP so it comes at €3,000.
Therefore you buy car abroad for €7,000, pay VRT of €3000 so for €10,000 you have car worth €10,000. All good.
However you paid €3,000 VRT tax on product which cost you €7,000.
So in other words you paid VRT at the rate of 42.85% instead of advertised 30%.

Example 2.
New car.
Open Market selling price in Ireland €30,000.
CO2 emissions - 180g/km so VRT rate 30%.
Base for VRT is OMSP which is 90% of sales price, so 90% of €30,000 = €27,000.
Now - VRT is 30% of OMSP so it comes at €8,100.
So cost of car without VRT is €30,000 - €8,100 = €21.900.
However you paid €8,100 VRT tax on product which costs €21,900.
So in other words you paid VRT at the rate of 36.99% instead of advertised 30%.

So in other words our VRT rates are purposely shown as lower than they really are.

In case of used vehicles it's nearly 43% higher rate than advertised, while in case of new vehicle it's 23% higher rate than advertised.

In both cases that's very sneaky way of doing things by revenue.

But worth remembering. If they say you pay 30% on used car, in reality you pay €42.85.
If they say you pay €14% VRT on brand new car, in reality you pay 20%.
And so on...

daRobot

CiniO wrote: »

As well as the fact, which many people don't realise, that it's simple mathematical trick which they are using, basing VRT as percentage of price which already includes VRT.
It's very simple way to make effective VRT rates higher than they really are.

Yep this very much the case. Glad you saved me the time posting by doing such a comprehensive outline of it.

You're being charged VRT on a price that has already had VRT and VAT factored into it.

It's absolutely outrageous when you really think of it.

vintagevrs

That 90% thing is good to know. I called revenue regarding the vrt on my own car. And what was paid was less than I would have expected. I assumed dealer put it through as less and rest was profit. 90% makes more sense now. Cheers

R.O.R

CiniO wrote: »

So used cars imported, have to pay VRT on Open Market Selling Price,
while new car pay VRT on only 90% of Open Market Selling Price.

No.

Used cars pay VRT on the Open Market Selling Price.

New cars pay VRT on the Open Market Selling Price.

Open Market Selling Price is a discounted figure based on the published Recommended Retail Price.

Discount used varies from manufacturer to manufacturer. Generally 10%, but some use 8% and I'm surprised that BMW is 10% as there isn't that margin available on them.

colm_mcm

Cinio wrote:

As well as the fact, which many people don't realise, that it's simple mathematical trick which they are using, basing VRT as percentage of price which already includes VRT.
It's very simple way to make effective VRT rates higher than they really are

This old argument gets aired every so often. "It's a tax on a tax" etc etc

People don't care about or have a clue about vrt percentage rates. They respond to the actual price of the car including taxes.

VRT take on the average car is way down since 08. If govt wanted more money out of VRT, they'd take it. If they wanted to mislead over percentages, do you not think they'd make these misleading percentages visible when customer was buying a car?

I honestly don't think there's a more workable system (for a tax like VRT that's based on market value rather than cost) than OMSP for new and used cars, where the customer can buy the same car for many different amounts.

grogi

CiniO wrote: »

I know when you buy a new vehicle from dealer say for €20k, then VRT is already included in price.

However how much of VRT dealer actually pays in such case?
Purely for example purpose let's take band E (171 to 190 g/km) with 30% VRT rate.

Does that mean that vehicle cost was €15,384 and dealer paid 30% vrt of that price which sums up to €20,000.

Or does that ment that vehicle cost was €14,000 and VRT was 30% of sale price (30% of €20k) which equals to €6,000 in VRT so whole price at €20,000


Which option is that?

With a new car the OMSP is the price of the car plus VRT plus related charges, such as delivery.

This is unfair to private importer, because VRT is calculated on top of OMSP of similar cars sold in the state, which already includes the VRT.

grogi

RedorDead wrote: »

Just to confuse things even more, some smart bollix in the EU decided that because bigger wheels emit slightly more co2, they should be taxed as the same. So on the above example, if i add a slightly bigger alloy to the standard wheel which increases the Co2 by 1g, the car goes into band C and all the VRT increases by 4% pushing up model price and option price significantly! Such a mess!

It is not rubbish.

Bigger rims have different mass distribution (more mass closer to the edge), hence higher moment of inertia. It takes significantly more energy to spin it up to same rotational speed than a wheel with a smaller rim.

Also, bigger rims usually come with wider tyres as well - which increases the drag.

R.O.R

grogi wrote: »

With a new car the OMSP is the price of the car plus VRT plus related charges, such as delivery.

No, no it isn't.

unkel

R.O.R wrote: »

Discount used varies from manufacturer to manufacturer. Generally 10%, but some use 8%

A point often overlooked. The distributor sets the OMSP percentage for his make. Most are 92% or thereabouts. I am surprised too that BMW is lower than that these days...

CiniO

colm_mcm wrote: »

This old argument gets aired every so often. "It's a tax on a tax" etc etc

People don't care about or have a clue about vrt percentage rates. They respond to the actual price of the car including taxes.

VRT take on the average car is way down since 08. If govt wanted more money out of VRT, they'd take it. If they wanted to mislead over percentages, do you not think they'd make these misleading percentages visible when customer was buying a car?

I honestly don't think there's a more workable system (for a tax like VRT that's based on market value rather than cost) than OMSP for new and used cars, where the customer can buy the same car for many different amounts.

Well you must admit it's misleading.
You have a quick look at VRT rates. It says you will pay 30% for car in CO2 band you are looking for.
You go abroad, buy a car for €10k, and you find out you have to pay €4,285 VRT, so it's not 30%, it's 42.85%.

I don't know and never seen any other tax in any country, which would be calculated on base inclusive of this tax.

Henry Ford III

CiniO wrote: »

Well you must admit it's misleading.
You have a quick look at VRT rates. It says you will pay 30% for car in CO2 band you are looking for.
You go abroad, buy a car for €10k, and you find out you have to pay €4,285 VRT, so it's not 30%, it's 42.85%.

I don't know and never seen any other tax in any country, which would be calculated on base inclusive of this tax.

I agree it's misleading.

There's nothing you can do about it though, and I can't see VRT going away anytime soon either.

RedorDead

colm_mcm wrote: »

Hardly a farce now.

Well its hardly transparent. Taxes should be transparent and for all to see. Guessing a manufacturers OMSP to evaluate tax is ridiculous!

Sam Russell

CiniO wrote: »

Well you must admit it's misleading.
You have a quick look at VRT rates. It says you will pay 30% for car in CO2 band you are looking for.
You go abroad, buy a car for €10k, and you find out you have to pay €4,285 VRT, so it's not 30%, it's 42.85%.

I don't know and never seen any other tax in any country, which would be calculated on base inclusive of this tax.

Actually, the OMSP may not be related to the amount you paid for the car abroad. Some cars, like BMW 3 series high power convertibles are much higher than the UK price, while others are very low values.

For example, Mazda MX5 cars about 10 years old are much cheaper in Ireland than the equivalent car in the UK when you add VRT - not sure why.

The only odd aspect is the Revenue allowing a discount for new cars. That is very strange - more so because it is not public knowledge.

colm_mcm

It's not public knowledge that you don't have to pay full RRP for a car?

If the VRT was charged on the RRP of the new car you'd have way more people giving out about that.

Sam Russell

colm_mcm wrote: »

It's not public knowledge that you don't have to pay full RRP for a car?

If the VRT was charged on the RRP of the new car you'd have way more people giving out about that.

What is not public knowledge is the detail calculation of VRT in the case of a new car - the fact that the OMSP is not the RRP, nor that fees and charges levied by the dealer are not included in the calculation for VRT, whereas they are for VAT.

If I buy a brand new car - say in Germany - and import it with 0km on it, how is the VRT calculated? Assume I pay €20,000 net of German taxes, and delivery costs €250.

R.O.R

Sam Russell wrote: »

What is not public knowledge is the detail calculation of VRT in the case of a new car - the fact that the OMSP is not the RRP, nor that fees and charges levied by the dealer are not included in the calculation for VRT, whereas they are for VAT.

If I buy a brand new car - say in Germany - and import it with 0km on it, how is the VRT calculated? Assume I pay €20,000 net of German taxes, and delivery costs €250.

The VRT amount depends on how much the brand new car is in Ireland.

The VRT payable for the new imported car and the new Irish version would be the same, and that's why VRT is levied as it is - to create a level playing field for all vehicles.

robbie99

R.O.R wrote: »

I'm surprised that BMW is 10% as there isn't that margin available on them.

Ah there is. Sure anytime you ask a BMW dealer for a discount on a new car they'll say "oh no, we can't give you more than the 5% we're already offering you, we give the fleet buyers 6% and they buy a lot more cars than you'll ever do from us." The dealers are still making a profit selling to the leasing companies.

It's difficult enough to get more than the standard 5% discount. The salesmen will push you to buy one of their existing pre-registered demo cars rather than sell a brand new one. I recently got a discount, not 10% admittedly, but more than the 6% fleet buyers get. This was only after the dealer principal got involved to close the sale. Another dealer principal phoned me soon after to price match (and more) but it was too late then.

You have to look at the discounts that the UK brokers such as http://www.coast2coastcars.co.uk/car-quote/ can offer. E.g. 320d is 15% and 330e is 8.5%. Convert the UK discounted prices to euros allowing for the higher Irish VAT rate and VRT in order to see what sort of a price a dealer can sell for without making a loss and negotiate off that. The stronger Sterling gets vs the Euro, the bigger the discounts you see in the UK. But the Irish prices and the UK discounted prices when converted to euro remain stable. This suggests that the underlying price that BMW AG sells to BMW UK and Ireland is set in Euros which shouldn't be a surprise seeing as Germany is Euro. The 5% discount at Irish dealers is achieved so easily that you wonder if it's a 'Recommended Retail Discount'

hi5

The VRT is based on the OMSP because when it was originally based on the invoice price it was found that invoices particularly used cars from the UK were being falsified to lower amounts.

colm_mcm

When was VRT from uk imports based on invoice prices?