Ireland & the Single Market post Brexit

Peregrinus

View wrote: »

Suppliers that insist that Irish companies and consumers can only be served by U.K. based companies are the ones subjecting Irish companies and consumers to what is “in substance a tax on imports”.

That “in substance a tax on imports” could be avoided completely were those suppliers to supply Irish companies and consumers directly from other EU countries.

It would be a voluntary choice for those suppliers as to whether or not they want their profits to be subject to an additional tax or not.

Tariffs are always a voluntary choice - you can always avoid tariffs by not importing goods. So the point you're making here, while valid, does nothing to counter the argument that the policy you propose would be in substance the imposition of tariffs, which a member state cannot do.

View wrote: »

And don’t presume that the CJEU is going to ride to the rescue of those suppliers. Our VRT, which is levied not as a flat charge but rather on the differing market value of each and every car model, is not classified as a tax on importing even though that most definitely is what it is (and indeed it was first introduced by just renaming an actual import levy that we had previously).

They won't be riding to the rescue of the suppliers; it's the importers who will suffer the additional tax you propose. And their argument will be that they are disadvantaged relative to competitors in other EU member states, who could import the same parts from the UK without attracting the extra "tariff" and then freely distribute them into Ireland.

They'd also be acting in defence of the TCA, under which the UK has tariff-free access to the EU market. The UK would argue - I think correctly - that your measure was a disguised tariff, and so a violation of the TCA.

Peregrinus

View wrote: »

You aren’t aiding an industry by levying taxes on them - taxes they can fully avoid by rejigging their supply chains by supplying Ireland via France rather than via the U.K..

You wouldn't be aiding the Irish importers of these products; you'd be aiding importers in other EU member states, by giving them a competitive advantage over Irish importers. There's little discussion about state aids provided to businesses in other member states — for obvious reasons — but the practice is just as legally problematic as given state aids to businesses in your own country.

View

Nody wrote: »

Yes you are; you are targeting specifically non EU companies for imports into the Irish market; that's by definition a tariff or barrier of entry that you are implementing and that's against WTO rules as well as EU rules. Either they remain competitive or they don't; either way it's not for the Irish state to decide how they import the cars. And if Irish consumers wish to pay a premium because that's their choice of stupidity; same way we said UK customers would still buy BMWs with a 10% increase in cost due to Brexit at a no deal.

No I am not.

If VW or BMW insist on supplying Ireland via their U.K. subsidiaries, they are the ones deciding that the end consumer will have to pay additional costs on those imports, as a result of their decisions.

They both have the option of supplying Ireland via their French subsidiaries (or direct from Germany), this avoiding all additional costs on those import for the end consumer here.

The additional tax would be made on their corporate profits and it would be completely avoidable based on their choice. That is not a tariff or barrier of entry since it is completely avoidable by them based on whether or not they insist on us being subject to the “U.K. tariff” as a result of them insisting that we can only be supplied via the U.K.

Sam Russell

Peregrinus wrote: »

Theres a particular problem with cars in that the parts requirements for LHD and RHD cars differ. So you can't just supply Ireland directly out of your existing (say) Belgian centre; you have to upgrade the Belgian centre so that it can meet the demand for parts appropriate to the Irish market. And the Irish market is relatively small, and may be very small if you're a minor presence in the Irish market. Upgrading an existing EU centre to serve the Irish market might be one thing if you are Volkswagen or Toyota; quite another if you Volvo or Suzuki.

There are few parts in a car that are handed - differ between LHD and RHD. Even where there are differences, the parts are not necessarily high use requiring substantial stocking. Furthermore, many of these parts would be ordered from the mothership by the UK subsidiary to be passed onto the Irish subsidiary and then passed onto the dealer.

There is no justification at all for this behaviour. It would be simple for the manufacturer to bring the distribution back to their major warehouses. It is not that difficult.

Nody

View wrote: »

No I am not.

You are targeting a specific country and add on additional cost for goods from them. That is by definition a tariff as you are making it more expensive to buy from a specific country. You can dress it up any way you want but it's still a tariff. It's exactly the same as with EU applying tolls on Chinese steel; the companies can simply buy from somewhere else but that does not make it any less a tariff and yes it would be struck down by ECJ as the Irish government overstepping their role. Everything else you write is purely your justification but at the core what you are doing is making it more costly to import from a specific country and that's a tariff no matter how you try to claim it's a tax instead or they got other options etc.

Sam Russell

If I buy something on ebay.co.uk that is second hand, and sold by a VAT registered entity, does it attract UK VAT (shouldn't) and does it attract Irish VAT on importation?

I am looking at a car part costing about £200. If it does not attract UK VAT, I could get it sent to a UK address. If it does not attract Irish VAT I can get it sent direct to me.

Otherwise, I will not buy it.

rock22

I am talking about a major manufacturer, not a small niche one.
This was apparent before Brexit for many goods. I remember taking up an item, made , from Italy, in Easons which had a Euro price for almost all of the EU and a Sterling price from UK. The Irish price was the Sterling price plus about 40% converted back into Euro. So many supply chains supply Ireland via the UK. I worked in health care and, when the Euro was introduced, asked a supplier to guarantee we would pay the same as all other countries using the Euro. They refused and said we would pay the Sterling price plus .

But now this practice involves an EU member being treated as a non EU member state. Effectively, Irish is being taken outside the single market by EU and Irish government inaction and it will have an affect on the ability of Irish consumers to benefit from membership of the EU. This is one case where the marketplace will not work becuase the customer paying for it all has no power to change the supply chain.

FirstUp, thanks for that information about one Japanese OEM. Perhaps when we know what companies are adjusting their supply chain we could choose to change out purchasing.

Nody

Sam Russell wrote: »

If I buy something on ebay.co.uk that is second hand, and sold by a VAT registered entity, does it attract UK VAT (shouldn't) and does it attract Irish VAT on importation?

I am looking at a car part costing about £200. If it does not attract UK VAT, I could get it sent to a UK address. If it does not attract Irish VAT I can get it sent direct to me.

Otherwise, I will not buy it.

The only applicable VAT is Irish VAT as it's an import; however that does not mean that the UK company always deduct the UK VAT on the price (as it's free profit for them not to). Hence if you send it to a UK address you'd still have to pay Irish VAT on the import once it comes on over because the Irish state don't care what other VATs you may have paid previously.

Sam Russell

Nody wrote: »

The only applicable VAT is Irish VAT as it's an import; however that does not mean that the UK company always deduct the UK VAT on the price (as it's free profit for them not to). Hence if you send it to a UK address you'd still have to pay Irish VAT on the import once it comes on over because the Irish state don't care what other VATs you may have paid previously.

I suspected that would be the case.

Is VAT charged on second hand goods?

Nody

Sam Russell wrote: »

I suspected that would be the case.

Is VAT charged on second hand goods?

As far as I'm aware the answer would be yes, VAT is charged on everything no matter the state of it. The only main difference being the value would be lower (which Revenue don't always believe).

CelticRambler

Sam Russell wrote: »

If I buy something on ebay.co.uk that is second hand, and sold by a VAT registered entity, does it attract UK VAT (shouldn't) and does it attract Irish VAT on importation?

I am looking at a car part costing about £200. If it does not attract UK VAT, I could get it sent to a UK address. If it does not attract Irish VAT I can get it sent direct to me.

Otherwise, I will not buy it.

The vatable value of imported items has no relationship to the price paid (or not paid, in the case of personal goods) - it is the importing customs office's estimation of the item's value that counts. Back in the good old days (which the Brexiters have so long wished for) many English people moving to France had to pay import VAT on their personal possesions when crossing the Channel to live their new French Dream. There is, however, an implicit cost-benefit evaluation carried out at the border, e.g. no customs officer is going to try and calculate the value of your well-used Calvin Kleins prior to letting you out of the Red Channel ... but might well slap a charge on the brand new packet stuffed way down in your rucksack.

Sam Russell

CelticRambler wrote: »

The vatable value of imported items has no relationship to the price paid (or not paid, in the case of personal goods) - it is the importing customs office's estimation of the item's value that counts. Back in the good old days (which the Brexiters have so long wished for) many English people moving to France had to pay import VAT on their personal possesions when crossing the Channel to live their new French Dream. There is, however, an implicit cost-benefit evaluation carried out at the border, e.g. no customs officer is going to try and calculate the value of your well-used Calvin Kleins prior to letting you out of the Red Channel ... but might well slap a charge on the brand new packet stuffed way down in your rucksack.

That is the system used for VRT purposes. The car is valued at 'on the market' value and bears little account of the price paid for the car.

So, yes - forget the purchase for the time being.

View

Nody wrote: »

You are targeting a specific country and add on additional cost for goods from them. That is by definition a tariff as you are making it more expensive to buy from a specific country. You can dress it up any way you want but it's still a tariff. It's exactly the same as with EU applying tolls on Chinese steel; the companies can simply buy from somewhere else but that does not make it any less a tariff and yes it would be struck down by ECJ as the Irish government overstepping their role. Everything else you write is purely your justification but at the core what you are doing is making it more costly to import from a specific country and that's a tariff no matter how you try to claim it's a tax instead or they got other options etc.

First up, you are making the major assumption that the CJEU would have jurisdiction on this when there is no obvious reason why a corporate tax matter - a domestic matter - falls under the competence of EU law. We are perfectly entitled to set our own corporate tax rates as we so loudly and frequently insist. Equally, you are ignoring the example of VRT where renaming an import levy on cars and calling it a registration tax meant there was no problem with VRT under EU law even though both apply to the value/price of the imported car.

Second, your analogy with Chinese steel doesn’t work. The additional corporate tax would not apply because the parts are German or Japanese (ie their origin). It would apply because of how they are routed while being supplied to Ireland. It would only apply if a supplier is basically being pig-headed and insisting on acting in a manner that would ensure additional costs to the end consumer here as a result of their routing decisions.

Third, it is very simple to write the law in such a way that it applies to profits generated from imports from ALL non-EU countries if those imports are routed in such a way that they incur additional costs to the end consumer here (but not elsewhere in the EU) as a result of being routed indirectly to us through any non-EU country. It would be irrelevant if that non-EU country is Brazil or Britain. Any company wishing to avoid the additional corporate tax merely has to show that their supply chain to us involves no more non-EU countries than, let’s say, Belgium or Sweden and/or additional charges to the end consumer as a result.

A major responsibility of government regulation and one we fall down on is to ensure the smooth operation of the market. Failure to act to eliminate abuses is not in the consumers or taxpayers interests as the example of Anglo-Irish so clearly showed.

VRT applies to all cars from all countries. I think that analogy simply doesn't work when suggested to offer the ability to implement targeted measures.

Nody

View wrote: »

Third, it is very simple to write the law in such a way that it applies to profits generated from imports from ALL non-EU countries if those imports are routed in such a way that they incur additional costs to the end consumer here (but not elsewhere in the EU) as a result of being routed indirectly to us through any non-EU country. It would be irrelevant if that non-EU country is Brazil or Britain. Any company wishing to avoid the additional corporate tax merely has to show that their supply chain to us involves no more non-EU countries than, let’s say, Belgium or Sweden and/or additional charges to the end consumer as a result.

Good luck getting any change then because your definition means not a single car company would fall foul of it. Why is Ireland different compared to Germany? Market size. Why compared to Lithuania? Different geographical location in terms of location of the plant etc. I can make every excuse under the sun why Ireland is not discriminated against and simply picking geographical location or that we don't have a subsidiary there and you can't punish a company on the single market for not having a legal entity there. That's before we start with cooking the books with internal loans etc. to ensure there is no profit to tax.

So instead you've created a completely toothless law that does sod all in reality for car dealers and managed to drive up cost for other companies who are not big enough to dodge and made Irish companies in general less competitive in Europe (remember Irish companies import a whole lot than cars from outside EU and you are now taxing them further than their EU counterparts making them less competitive or they need to spend significant time proving that EU markets are not cheaper).

Sam Russell

The routing might be a competition matter.

For example, by insisting in forcing garages, or the Irish distributer, to purchase from the UK at a significantly higher price than the price charged throughout the EU, and not allow the items to be purchased from within the EU, and specifically the Euro zone, is surely a question that the competition authority should look into with some urgency.

Perhaps Leo Varadker might take an interest.

An Ciarraioch

Meanwhile, the Taoiseach wants European languages to be taught in primary schools, which is the time when acquisition of fluency is generally considered to be highest:

https://www.irishtimes.com/news/education/taoiseach-wants-european-languages-to-be-taught-across-all-primary-schools-1.4462422?utm_source=dlvr.it&utm_medium=twitter

beggars_bush

An Ciarraioch wrote: »

Meanwhile, the Taoiseach wants European languages to be taught in primary schools, which is the time when acquisition of fluency is generally considered to be highest:

https://www.irishtimes.com/news/education/taoiseach-wants-european-languages-to-be-taught-across-all-primary-schools-1.4462422?utm_source=dlvr.it&utm_medium=twitter

what are they going to get rid of to make room for european langauges?
religion - it would be a step in the right direction

Eric Cartman

View wrote: »

No I am not.

If VW or BMW insist on supplying Ireland via their U.K. subsidiaries, they are the ones deciding that the end consumer will have to pay additional costs on those imports, as a result of their decisions.

They both have the option of supplying Ireland via their French subsidiaries (or direct from Germany), this avoiding all additional costs on those import for the end consumer here.

The additional tax would be made on their corporate profits and it would be completely avoidable based on their choice. That is not a tariff or barrier of entry since it is completely avoidable by them based on whether or not they insist on us being subject to the “U.K. tariff” as a result of them insisting that we can only be supplied via the U.K.

tbh , is BMW insist on doing the uk route for supply, I can see more Irish people buying the cars direct from Munich, you can order and collect your car and they give you a German temporary plate and insurance for either 7 or 14 days, you pay a little bit to do it but also save on delivery charges. You'd have to VRT the car yourself when you got back but its a fun way to go collect a brand new car and cuts out any of that Britain middleman craic.

Mercedes already have their parts and distribution here anyway so they're unaffected.

I can see a lot of German brands taking advantage of how slowly the Japanese and Koreans are going to react and putting the cars straight from the vaterland to holland on to that new samskip container route. Could have a nice year of being considerably cheaper than the marques from the east.

An Ciarraioch

beggars_bush wrote: »

what are they going to get rid of to make room for european langauges?
religion - it would be a step in the right direction

In many countries, religion is taught after school by the various priests/rabbis/etc, so better an option.

Datacore

In the end if BMW or VW do that and allow prices to be hiked within an EU and Eurozone market by Brexit, several of their competitors won’t and will take advantage of their inertia and they would likely also soon have a PR and political disaster to contend with.

It’s a small market but their dealer network can provide plenty of feedback and sales would drop.

L1011

Certain brands in Ireland are represented by private distributors who may be sub-contracted from a UK distributor - even a company with a name like "[BRAND] Ireland" may be privately held and imported, e.g. Toyota Ireland.

A fair few are not - I'd be surprised if any of these force you to use UK supply chains, except possibly for RHD parts.

Datacore

I would also suspect many contracts could end up being walked away from due to “Force majeure” or circumstances beyond our control type legal clauses.

There’s no way a U.K. subsidiary could reasonably argue that it has exclusive market territory access here if, due to regulatory and legal jurisdiction changes, it can no longer operate as normal.

It would be no more reasonable than forcing an Italian customer to deal with a US supply chain instead of the German one.

Geuze

rock22 wrote: »

This was apparent before Brexit for many goods. I remember taking up an item, made , from Italy, in Easons which had a Euro price for almost all of the EU and a Sterling price from UK. The Irish price was the Sterling price plus about 40% converted back into Euro. So many supply chains supply Ireland via the UK. I worked in health care and, when the Euro was introduced, asked a supplier to guarantee we would pay the same as all other countries using the Euro. They refused and said we would pay the Sterling price plus .

I get the feeling there was (and still is?) a lot of this happening in Irish supply chains.

Sam Russell

Geuze wrote: »

I get the feeling there was (and still is?) a lot of this happening in Irish supply chains.

Before we joined the EU, Ireland was treated as the sub office of the Liverpool office as it was considered a tiny market of no consequence.

Currently, Ireland has a larger GDP per person than the UK.

Why would a supplier based within the EU zone, export product out of the EU, with the price converted into GBP, only to re exported back into the Eurozone suffering another conversion? It can only up the price the customer pays for no benefit.

CelticRambler

Sam Russell wrote: »

Why would a supplier based within the EU zone, export product out of the EU, with the price converted into GBP, only to re exported back into the Eurozone suffering another conversion? It can only up the price the customer pays for no benefit.

There is a benefit: in a "sealed" chain of distribution, the company makes more money if the customer pays more.

Remember there are always two sides to these stories - those who sell and those who buy. Irish customers as a whole have been quite happy to pay UK+ prices for decades in return for ... em ... GB plugs ... English instruction booklets ... things sold in imperial measurements ... stuff that looks like what they see on British celebrity and reality TV.

This willingness to pay more for no real benefit isn't unique to the Irish (the French are very happy to pay three times as much for mediocre as long as someone convinces them it's the best in the world because it's Made in France) - but if the Irish customer base, en masse, doesn't demand European products from European distributors at European prices then the existing hokey-cokey in-and-out supply chain will persist, and Irish customers will pay the price for their own inertia.

First Up

Ireland and the UK were a single market for 60 years. Life (and logistics) were a lot simpler then. Some people are slower to realise that than others

Peregrinus

First Up wrote: »

Ireland and the UK were a single market for 60 years. Life (and logistics) were a lot simpler then. Some people are slower to realise that than others

Ireland and Great Britain were a single market for about a hundred years, from 1926 to 1922. From 1922 onwards there was no single market covering both Great Britain and Ireland until the EU constructed one. The UK has now put an end to it.

Professor Moriarty

Peregrinus wrote: »

Ireland and Great Britain were a single market for about a hundred years, from 1926 to 1922. From 1922 onwards there was no single market covering both Great Britain and Ireland until the EU constructed one. The UK has now put an end to it.

1826?

Peregrinus

Professor Moriarty wrote: »

1826?

Yes, sorry, 1826 (or thereabouts) when the Irish and British customs systems were unified.