Car Buying & Moving within the E.U.

Basic Info:

• Vehicles drive on the right side of the road : - i.e. Left Hand Steering. (Except UK)
• Distances and car speedos are in Kilometres and Kilometres Per Hour. (Except UK)

We have discovered a link that will provide you with information about moving a vehicle from one E.U. country to another. (As far as Value Added Tax - VAT is concerned). This changed in 1993. (VAT is called: "Mehrwertsteuer" in Germany, "TVA" in France, and "IVA" in Italy.

A summary of the information is given below but for the full (and possibly updated text you could take a look at This European Union Page:

A. Value Added Tax

1. Individuals: new VAT system

CHANGES AFFECTING INDIVIDUALS FROM 1993

. . . . . . . . From 1 January 1993, there will no longer be any customs checks on baggage and merchandise carried by persons travelling between two Member States, whether by air, sea, rail or road. Consumers are the big winners. They will be able to bring home anything they have bought in another country, without stopping at the border or making any declaration whatsoever. The only condition is that those purchases must be made for their own or their family's consumption and must not be intended for resale. The purchases may include hi-fi, computer or video equipment, jewellery, antiques, electrical household appliances - in short, any item that is for sale, whatever its value.

Under the new VAT system, private individuals pay VAT only once, in the country where they make the purchase. . . . . . . . .

. . . . . . . . Nevertheless, there is a special scheme for new cars (and other new means of transport, e.g. boats and aircraft). These are cars which have travelled less than 3 000 kilometres or are less than three months old. An individual may purchase such a car in the country of his choice but VAT is payable in the country where the car is registered.

When purchasing a new car, he can therefore take advantage of price competition, but not of differences in VAT rates. But for used cars, i.e. cars which are both more than three months old and have travelled more than 3 000 kilometres, VAT is no longer payable in the individual's own country, i.e. in the country of registration. Used cars can be bought anywhere, and VAT is payable in the country where they are bought because it is included in the purchase price. . . . . . . . .

. . . . . . . . SALES OF NEW VEHICLES

Introduction

As part of the transitional VAT arrangements, a special scheme applies to the taxation of new means of transport, and in particular to the purchase of cars in another Member State.

The intention is to ensure that all purchases of such goods are directly taxed in the country of destination, thus avoiding any trade distortions and revenue losses for Member States that may result from the remaining differences in VAT rates.

Situation from 1993. The special scheme:

By way of derogation from the basic principles of the new VAT arrangements, all intra Community purchases of new means of transport by individuals and other entities which would not normally be taxed in the Member State of destination are taxed there. This means that individuals in particular are liable for VAT on the acquisition of such means of transport even though they do not need to be identified by a VAT number.

Sales between VAT-registered businesses of new means of transport delivered from one Member State to another, e.g. from a manufacturer in one Member State to a distributor in another Member State, are subject to the normal rules applying in intra Community trade.

The purchaser:

Where the purchaser is not already covered by the general VAT arrangements, including the requirement to submit periodic returns, he has to pay VAT on the acquisition of new means of transport to the tax authorities in his own Member State in accordance with the declaration and payment procedures laid down by that Member State provided, of course, that these procedures do not give rise to formalities linked to the crossing of an intra Community frontier.

In the case of cars, it is likely that Member States will opt to tie declaration and payment to existing car registration procedures.

Definition of new means of transport:

New means of transport are defined in the following way:

•boats over 7.5 metres in length;
•aircraft with a take off weight greater than 1 550 kg (consequently, "ultralight" aircrafts are not covered by this scheme);
•motorized land vehicles with an engine capacity greater than 48 cc or the power of which is greater than 7.2 kilowatts (i.e. motorbikes are generally included, but not mopeds), whether intended for passenger or goods transport.

Commercial sea going vessels, lifeboats, coastal fishing boats and aircraft used for international traffic by airlines are excluded.

Means of transport are no longer considered as new when they:

•are supplied more than 3 months after their first entry into service;
•have travelled more than 3 000 km (land vehicles),sailed more than 100 hours (boats) or flown more than 40 hours (aircraft).

The special scheme does not apply unless these two conditions are met.

The seller:

Where the seller is a VAT-registered business selling to a similar business, the normal obligations in intra Community trade apply.

Where the seller is a VAT-registered business dealing with a non taxable person, he is obliged to provide information to his authorities about the transaction. It is for the Member States to lay down the practical rules for supplying such information.

In all cases, the seller has to issue an invoice which must indicate whether or not the means of transport ranks as new on the basis of the above criteria.

If the seller is not a VAT registered trader, special procedures apply which enable him to recover the VAT he paid in his Member State on the purchase of the means of transport. The refund is made when the means of transport is resold and is limited to the VAT paid on the purchase.

Furthermore, the VAT refundable may not exceed the VAT he would pay on the sale of the means of transport in his Member State. For example, he buys a car for ECU 10 000 and pays VAT of 15%, i.e. ECU 1 500. He then resells to a buyer in another Member State for ECU 8 000 while the car still ranks as a new means of transport. The refund is limited to ECU 1 200 (8 000 x 15%).

Sales of means of transport that are not new:

Sales by a taxable person of second hand means of transport that no longer rank as new means of transport are subject to the rules applicable to second hand goods in general.

Since 1 January 1993, sales of second hand means of transport between private individuals in different Member States are no longer taxed on importation into the country of destination.

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