Question regarding VAT on imported commercial vehicle.

finbarrk

Hi, If a business purchases a commercial vehicle from NI, it can be bought legally without paying any VAT on it. But what happens in the future if the business sells on the vehicle privately to a buyer?
Is there some sort of VAT payment due from the resale?
Thanks.

davindub

finbarrk wrote: »

Hi, If a business purchases a commercial vehicle from NI, it can be bought legally without paying any VAT on it. But what happens in the future if the business sells on the vehicle privately to a buyer?
Is there some sort of VAT payment due from the resale?
Thanks.

Assuming you are VAT reg.

It is not VAT exempt, just 0% VAT rated for the purposes of accounting for the VAT in Ireland.

This means that it is the same as purchasing from an Irish dealer in terms of VAT. You reclaim the VAT in your next VAT return. If imported at 0% from a EU state, you claim an equal input and output of the value of the VAT due.

So when selling, you charge VAT on the sale.

finbarrk

Ok Davin, thanks. But that means a VAT registered business could buy a vehicle from the North, say for €25,000 without paying VAT to the seller, and sell it on the following year, down here, for more than €25,000 to a private buyer, with VAT included, and make a profit.
There must be a catch.

duffysfarm

yes you could buy for lets say €25k and sell for €26k and make €1k profit. the vat on the sale would be separate and would be payable to revenue
if you were a business and you made €1k profit on the purchase and sale of the motor vehicle then the profit would be taxable in the business
note - there would be vrt on the import also

there is a saving to be made and a lot of people are doing it but it. you have to be careful about the number of times you do it however as it may trigger something else with revenue

finbarrk wrote: »

Ok Davin, thanks. But that means a VAT registered business could buy a vehicle from the North, say for €25,000 without paying VAT to the seller, and sell it on the following year, down here, for more than €25,000 to a private buyer, with VAT included, and make a profit.
There must be a catch.

davindub

finbarrk wrote: »

Ok Davin, thanks. But that means a VAT registered business could buy a vehicle from the North, say for €25,000 without paying VAT to the seller, and sell it on the following year, down here, for more than €25,000 to a private buyer, with VAT included, and make a profit.
There must be a catch.

It doesn't really work out like that.

If you buy the van for 25k in the EU and sell for 29338k in Ireland you would then need to pay 4338 (21% of sale price to customer) to revenue for VAT when sold.

As opposed to buying the Van for 29338 in Ireland, reclaiming Vat of 4338 from Revenue and when selling for 29338, pay 4338 to Revenue.

But yes, there is scope for profit considering VRT and purchase cost, but there is no arbitrage in the VAT element.

finbarrk

Ok, so lets say the vehicle is kept and used by the business for maybe 4 years. Sold then for say €10,000. Does the €2,000 approx VAT have to be paid to revenue?
Thanks.

duffysfarm

vat would always have to be paid on the sale of the motor vehicle

finbarrk wrote: »

Ok, so lets say the vehicle is kept and used by the business for maybe 4 years. Sold then for say €10,000. Does the €2,000 approx VAT have to be paid to revenue?
Thanks.