If you’re thinking about buying a used car in the UK, the Revenue website has a very useful VRT calculator, which calculates the VRT that you will pay when you import a car into the Republic.
All you have to do is specify the make, model, and version of the car (all from drop-down menus), specify the mileage and date of first registration, and it will calculate the VRT liability. The whole process should take only a minute or two.
The only quibble I have about the VRT calculator is that it is prone to producing nonsensical results. For the fun of it, I input the details of a 1997 Seat Cordoba 1.4 litre petrol saloon with 225,000 miles on the clock – a car in fact that I used to own. The Revenue calculator produced a VRT bill of €480, on the basis of an “Open Market Selling Price” of €2,000!
Needless to say the €480 bill would be a multiple of the car’s true worth. And if you can find anyone silly enough to give you €2,000 for a 13-year old car with 225,000 miles on the clock, run quickly to your local scrapyard, buy as many clunkers as you can for €50 each, sell the first one to your punter offering €2,000 and then ask him where his friends live.
Then again, the Revenue have probably assumed that not many people want to import clapped-out junk cars from the UK, or anywhere else for that matter. In fairness this is hardly an unreasonable assumption.
That said, if you are importing an older car, it might perhaps be best to review the VRT treatment with a real human being in Revenue, rather than take the VRT calculator’s results as gospel.
Thomas McGibney & Company 
They may have changed it recently, but when I was looking at the calculator in 2008 and 2009 the Open Market Selling Prices were very high for a lot of newer cars too. They seemed to be quoting Celtic Tiger prices for many cars and didn’t take account of the fact that actual prices for second-hand cars have dropped significantly due to supply and demand economics.
I queried this with Revenue at the time and was told that you have the right to challenge their estimate if you can back up your challenge with documentary evidence, e.g. printed adverts from dealers showing lower values etc. But the unfortunate part of the system was that you could only mount such a challenge AFTER having paid the VRT and therefore bought and imported the car. This struck me as an unsatisfactory system if you’re trying to buy the best car you can within your budget.
That’s an interesting perspective, and raises a serious question: what is the purpose of VRT?
Obviously, the purpose of any tax is to raise revenue for the Exchequer. In the case of VRT, it seems operate in a manner that discourages people from importing vehicles. This doesn’t seem to make sense. The more people who import vehicles into the State, the more VRT revenue is collected by the Exchequer. Hence it would be in the Government’s interests to encourage more vehicle imports and therefore maximise VRT receipts. Yet it does the opposite, and in doing so, it artifically deflates its own VRT revenue.
Revenue spokesmen have previously complained of the effect that “aggressive tax avoidance schemes” have on Exchequer tax receipts. In effect these schemes are artificial constructs that are designed solely or mainly for the purpose of avoiding or minimising tax liabilities, while remaining 100% compliant with existing tax laws.
It strikes me that the VRT system displays at least some of the characteristics of an “aggressive tax avoidance scheme”. It is utterly bizarre that this particular form of tax avoidance is instigated, not by taxpayers or their advisors, but by the State itself. Or am I mistaken?
I suppose it’s a tricky balancing act for the Government. On the one hand, if they encourage people to import second-hand cars they increase their VRT take.
On the other, in doing so they potentially threaten jobs in the Irish motor industry.
I’ve no idea which of the above would have a bigger overall impact on the Irish Exchequer but I suspect the threat of job losses would be politically sensitive enough to keep them from touching it.
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