Whether you call it tax free sales, duty free sales or tourist sales there is nothing overtly complicated about the whole process of buying a left hand drive car tax free. We are commonly asked whether or not the process is a “tax dodge” or “exploitation of a VAT loop hole” but the truth of the matter is that it is quite simply managing duty across borders something that happens all around the world everyday transacted by private and commercial buyers dealing from country to country.
When you buy a LHD car from a company like Insignis you have the opportunity to buy it tax free or netto. Essentially at a price without Value Added Tax. The purpose of this is so that you can then register the vehicle and ultimately pay the duties and VAT in your destination country. Within the EU it is made even simpler for prospective buyers as you have no import duties to pay when buying a car from one EU country and importing it to another.
You’re only responsibility is to pay VAT on the car at the local VAT rate. This is sometimes known as TVA in countries like France and rates vary across the EU. The golden rule is that VAT must be paid in an EU country at some point once this has been done there is no need to pay VAT or it’s equivalent again. The only additional costs maybe local registration taxes and fees. in the UK this would be first registration fee and and road fund license.
We are often asked about scenarios whereby you can operate a vehicle for a period of time without paying the VAT element. Technically this is correct but this should only be used in transit situations. For example, if you bought your car in the UK and it arrived 6 weeks prior for you leaving for France. Technically if you buy a car on export plates you could do this for a period of up to 6 months. This rule is a European wide ruling as well and gives people the ability to manage the VAT element more effectively. Attempting to do this for any prolonged period would be classed as Tat Evasion.
As an example:
Mr Brown buys tax free Range Rover Evoque. He has the car delivered to the UK and is ultimately planning to permanently export his left hand drive car to France. He takes delivery of the car and has it put on export plates and 3 months later drives to France. A couple of weeks later he arranges to pay VAT in France at 19.6% and pays local registration fees to put the car on to French plates.
In another situation Mrs Edgar buys a left hand drive Jaguar XF and decides to pay to have the car registered in the UK as well as paying UK VAT at 20% before permanently exporting it to Italy where after 6 months she decides to register on Italian plates paying local registration fees but not having to pay the 21% VAT rate in Italy as she paid the VAT in Britain.
Whilst processes differ from country to country. Fundamentally when you register the vehicle locally you will need identification documents such as passports, vehicle registration documents, a certificate of conformity (supplied with all EU cars) proof that VAT has been paid somewhere and then fees for registration.
So what about tax free cars for the rest of the world. These differ dramatically and can involve import duties, additional registration taxes based on emissions or vehicle weight as well as differing fees. Some countries have trade agreements with the EU that offer advantages. Switzerland is one such country whereby import duties aren’t specifically required. Countries like Morocco have agreements with certain EU countries that allow for cheaper import duties.
Either way whether you are buying a LHD car for use in the EU or elsewhere in the world your Insignis adviser will assist and research the process for you. To find out more why not get in touch?