How Could Brexit Effect Expat Car Owners?

The EU Referendum brings with it a level of uncertainty for many people not least those living or moving abroad.

This week Insignis Cars was asked by AutoExpress magazine what we thought the impact of a Brexit would be on the car market. As a general theme the UK car industry has come out in favour of remaining in the EU from small car dealer to major motor manufacturer with the single market being a major driver in this decision. Fundamentally the reduced customs paperwork and tariff free ability to import and export is the largest factor here.

The reality is we don’t know what kind of deal could be done between the UK and the European Union. It is highly unlikely that it would be anything as beneficial as total free trade without contribution or free movement as this surely would set precedent for everyone wanting to leave and get the same deal. We can look to existing arrangements like the Switzerland deal. Now lets look at this in the context of cars:

On new and used LHD cars the Swiss do impose an import duty on cars taken into Switzerland and the market for new cars leaving Switzerland isn’t in existence as they don’t build any. However on used cars a Swiss used car attracts both import duty and VAT. So if a Swiss used vehicle is imported to the EU potentially you will pay 10% import duty and the local rate of VAT. The only way around this is if you import the car as part of your change of permanent residency which can be done tariff and VAT free.

So the impact of this is two fold for those looking to buy used left hand drive cars it makes it more expensive but maybe more crucially British cars even if owning a 10 year old car would be subject to customs tariffs. So the car you have owned forever and a day could cost you 31% in duty and IVA on import to Spain. So you would have effectively paid VAT in the UK and then again in Spain.

What about new left hand drive cars. Well in theory there “could be possible” dispensations for tax and duty for new car buyers and Insignis is already working on plans to manage this. Where the difficulty comes is with clients whom we call “grey area customers” who live in multiple locations who effectively have a choice as to where to register with UK registration being a primary choice both through economics and through necessity. Effectively there is less incentive to register in the UK in case you want to register abroad later on.

The fact of the matter this one area like so many other that is full of uncertainty. What we do know is there that it would be at least two years before this really became an issue but a concept well worth factoring in to your left hand drive car buying thinking!