Answer to Roger Helmer (NI) question to the EC on car imports

Publication date: 26 February 2009

WRITTEN QUESTION by Roger Helmer (NI) to the Commission

At a news conference on 20 November 2008 Irish Minister for Finance Brian Lenihan made the following statement: ‘Following concerns about the number of cars being imported from Britain and Northern Ireland, the Bill will mean an NCT assessment must be carried out on such vehicles before they are registered in Ireland. The Department says this is to ensure the cars are correctly registered, with the aim of reducing the number of vehicles that may be fitted with extras that are not currently declared. In addition, vehicles brought into the State for more than 42 days will have to be temporarily registered in the State. The Minister says he is responding to concerns from the motor industry in this regard and these measures are one element of an overall strategy to reduce the number of cars being imported to the detriment of the industry here.’

This statement seems to clarify the protectionist stance of the Irish Government when it comes to the Irish car retailers.

Further evidence of this policy of trying to restrict imports of used cars to Ireland can be seen in the application of an inflated rate of VRT (an Irish car registration tax) to car imports. The mechanism used to determine the level of VRT applied to imported cars is being skewed by the use of an artificially high OMSP (open market selling price) which is used to determine the level of VRT charged. In a market where car prices are falling rapidly the use of an inflated OMSP increases the cost of car imports to Ireland, to the detriment of the UK car trade. Although a process is in place for appeals against the OMSP, this requires the full VRT to be paid in advance, and there is no guarantee the appeal will be successful. This means the actual cost of importing a car to Ireland cannot be accurately assessed. This policy of the Irish Government has a direct impact on those selling cars in the UK, both commercially and privately. Surely there should be free movement of goods within the EU, and the Irish Government’s attempt to protect its car retail industry is in direct breach of EU rules?

Answer given by Mr Verheugen on behalf of the Commission (23.2.2009)

According to the Commission’s understanding of the draft No 2 Finance Bill 2008, the Irish Government intends to impose a technical and administrative inspection on every second-hand vehicle before it can be re-registered in the name of another purchaser of the vehicle and not only on imported ones. This measure would apply the same way to all vehicles irrespective of the country in which they were previously registered, which means that Irish vehicles would also be concerned by the measure. The last condition is essential as the measure envisaged must not be discriminatory compared to vehicles imported from another Member State. This measure presents numerous advantages in terms of road safety and consumer protection. In addition, stolen vehicles could also be detected and possible frauds pursued and punished.

Experience in many Member States applying such measures over a long period of time shows that it does not give rise to market distortion and pre-registration checks are, on the contrary, welcomed by consumer associations. In addition, the Commission recalls that the European Court of Justice in its jurisprudence  admits the existence of such controls. Regarding the setting up of a register for vehicles temporarily imported under specific fiscal regimes, it should be stressed again that this practice is common in the Member States. In respect of taxes such as the Vehicle Registration Tax (VRT), the Court of Justice has repeatedly stated that taxes may be levied by Member States on the first registration in their national territory of cars produced or purchased in other Member States, provided those taxes do not discriminate against cars originating in other parts of the Community. In particular, the Court has made clear that in order to avoid discrimination; Member States should make sure that the taxable value attributed to the imported used vehicle by the revenue authorities actually reflects the value of a similar used vehicle already registered on the domestic market. The Commission would like to inform the Honourable Member that it is examining the way in which the Open Market Selling Price (OMSP) is determined in order to assess whether the VRT is levied without any discrimination.

Source: European Parliament