Are you in the process of Importing a car from the UK to Ireland? After voting to leave the European Union in 2016, the UK and EU officially brokered a deal to define the relationship at the end of 2020. Still, the ins and outs of that relationship are complex.
Post-Brexit, many things have changed. The freedom to live and work between the UK and the EU has ended. The UK are free to set its own trade policies and negotiate with other countries. In Ireland, we have already seen delays caused by additional paperwork and disruptions at trade borders.
For dealerships based in Ireland, Brexit will have long-lasting effects. The most important facet of new Brexit deals is the EU-UK Trade and Cooperation Agreement. Previously, there were big financial savings to be made because of the low value of Sterling versus the Euro. However, because of Brexit trade deals, it is no longer as cheap to import most cars into Ireland.
EU Trade Agreements with UK After Brexit
The trade agreements between the UK and EU do not match the level of economic integration previously enjoyed before Brexit. However, the Trade and Cooperation Agreement goes beyond free trade agreements, and “provides a solid basis for preserving our longstanding friendship and cooperation” with the UK.
There are zero tariffs and zero quotas on all goods that comply with the appropriate rules of origin. This led many to believe there would be no additional cost on importing goods into Ireland, and that things would proceed as they always had. Unfortunately, this is not always the case.
Importing a car from the UK to Ireland? These are the rules on Importing cars to Ireland
The important thing to note, in the above terminology, is the compliance with appropriate rules of origin. The fine print here means that all goods imported to the EU, which originate in the UK, have 0% duty. This ‘country of origin’ is based not just on the location of goods when purchased, but where the materials used to produce the goods originate from.
For example, a car made in the UK must have at least 55% UK or EU content to be classed as ‘UK origin’, and to be eligible for 0% duty on import. To further complicate matters, this rule is applied differently between new and used cars. Once a car is used, it loses its ‘country of origin’ status.
Importing Used Cars to Ireland from the UK
According to Irish Revenue, certain types of used cars imported from the UK (not including Northern Ireland) will not qualify as UK origin. This includes vehicles of EU origin used in the UK, and vehicles of third-country origin used in the UK. For these cars, a customs duty of 10% is payable, as well as 23% VAT.
The Cost Of Car Imports from Northern Ireland to Ireland in 2021
Importing cars to Ireland from Northern Ireland is, fortunately, more straightforward. A vehicle brought into NI before 2021, which has remained there since, can be registered in Ireland with no customs or import duty. If the car’s first registration was after December 2020 and in Northern Ireland, the import duty will not apply and the Irish VAT will not be charged.
If a vehicle has a second UK registration in NI, or was imported to Ireland via Northern Ireland, then the vehicle must be declared and are liable to VAT and customs duties if applicable.
Brexit And The Car Industry: What Impact Will It Have For Ireland
Previously, around 100,000 used cards were imported into Ireland from the UK each year. Since January 1, 2021, it has become considerably more expensive to import cars to Ireland. Brexit has caused an increase of €4,000 on the cost of most imported used cars from England, Scotland and Wales. This is a combination of customs duty, VAT, and VRT fees.
Prices for premium used cars aren’t far off the prices of brand new models.
“Now that Brexit has actually happened, UK imports will drop… This loss of supply will keep used values strong in 2021 and likely 2022. Irrespective of the age of the car, it’s not a bad time to buy used.” says Rob Hume, General Manager of DoneDeal.
Emma Mitchell, Operations Director of the Society of the Irish Motor Industry (SIMI) said that “we don’t expect that we will see used imports continue as they have done in the previous years… What we expect will happen is used imports will probably find a new normal level. And used car stock will then be fed from new car sales, rather than importing the used cars in to stop that gap.”
Once the new car market gets back to a reasonable trading level at 140,00 to 150,000 cars a year, that business should generate sufficient used trade-ins to supply the used car market, says Enda Conefrey, Dealer Principal at Brady’s in Dublin.
For now, Brexit has certainly caused disruptions to the market, compounded by Covid-19 – but we should see uplifts in the market in 2021, and the market should stabilise shortly thereafter, and dont forget to check our car finance calculator if you do decide on importing a car from the UK to Ireland