Moving home with a car? Make sure you get your timing right

We are moving back to Ireland in August, and are planning on bringing our car back with us. We have owned it for more than three years and own it outright, so we assume we don’t have to pay any fees on it on the basis of an article you wrote a while back.

If we were to buy a new car now in April and bring the car over in September (allowing for a six-month period to elapse) and pay cash for it here in the UK, would we therefore not have to pay any fees on this vehicle? Given how high car prices are in Ireland, we feel we might be better off trading up now.

If we move the car back before the six-month period, are we liable for 20 per cent fees against the value of the car?

Mr RC

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In general, bringing cars into Ireland will expose you to sometimes significant costs. However, there is relief granted to people who are moving to the State permanently from abroad – be they Irish people coming home or citizens from other countries moving here permanently, or as permanently as anything is in the world of work these days.

The specific relief is called Transfer of Residence. You can see the sense in it. There is a very big difference between someone trying to bring their family car with them when they move home to this State, and another person looking to tap the fairly wide difference in sticker price on a new or used car between the UK and Irish markets.

It would make no sense for the Revenue Commissioners to be imposing a tax regime on vehicles here, only for everyone to go border shopping on a tax-free basis.

So, as you might expect, there are fairly specific regulations governing transfer of residence relief. First up, it applies only to private individuals permanently relocating their place of residence to the Republic from abroad. If you’re a business, there are apparently separate reliefs available.

You will be charged tax on this side if you bring a vehicle into the State with you that you have owned for less than six months

There are several taxes at issue here. For VRT, you simply have to have been out of the state for more than 185 days a year. However, for VAT and commons customs tariffs, you must have lived outside the EU for at least two years.

You need to fully own the vehicle at the time it is transferred and, crucially, must have had “possession and use of the vehicle” outside the State for at least six months before the transfer.

I cannot find an explanation as to why this precise figure, but I am assuming it is precisely to stop someone looking at well-taxed motor vehicle prices in the State and deciding to buy a new car just before moving over here.

So yes, you are correct that you will be charged tax on this side if you bring a vehicle into the State with you that you have owned for less than six months. And those taxes can be significant – more than the 20 per cent that you mention.

If the car’s country of origin is the UK, there will be no customs duty, although you will have to make a customs declaration. That is likely to be the case in your circumstances. If, however, the country of origin is elsewhere outside the EU, you could face a 10 per cent duty charge.

It certainly makes financial sense to make sure you have this new car for six months before moving over here

You will, in any case, be charged VAT at 23 per cent on the value of the car. And then there is VRT. Under a new regime, this is assessed on the basis of both the car’s carbon dioxide emissions and its nitrogen oxide emissions. In the case of the former, the charge is on a sliding scale of between 7 and 41 per cent; the lower the emissions, the lower the charge.

Nitrogen oxide is also assessed on a sliding scale, and charges in three bands – €5, €15 and €25 – per milligram of emissions per kilometre.

As you can see, it certainly makes financial sense to make sure you have this new car for six months before moving over here.

While you don’t have to bring the vehicle with you, it does need to be imported here within one year of you moving over yourselves.

There are other conditions as well: you cannot be a returning student from a foreign third-level institution, or someone who went abroad for less than a year for a specific project. Finally, unsurprisingly, they limit how often you can avail of the relief – no more than once every five years – which seems reasonable.

And of course, there will be a clatter of paperwork as you persuade the authorities that you are who you say you are, and that you are entitled to the relief.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice