Revenue may have to refund slice of €750m VRT collection

THE Revenue Commissioners will have to refund a significant portion of the €750 million collected annually in Vehicle Registration Tax (VRT) if a legal challenge on export rebates is successful, it has emerged.

The details were revealed in Department of Finance published papers of the Tax Strategy Group (TSG), an interdepartmental committee comprising senior officials and advisors from the Departments of Finance, Taoiseach, Enterprise Trade and Employment, Social Community and Family Affairs and the Revenue Commissioners.

If the challenge is successful it will have the knock-on effect of providing an outlet for second-hand cars in Ireland which it is anticipated will have the net effect of increasing their value, making the purchase of new cars less expensive for existing car owners as trade-in values rise.

The papers reveal that Park Lane Ltd, one of the three or four top importers into Britain, is seeking €2.5 million in VRT rebates on used cars exported from Ireland.

“Ross & Craig Solicitors, England, has issued legal proceedings against the Minister for Finance, the Revenue Commissioners and Ireland regarding our VRT.

“VRT is not being questioned as a tax by Ross & Craig, but rather the fact that no rebate is payable on the export of vehicles from the State.

“At present rebates of VRT paid are not provided for by our national legislation on the exportation of vehicles registered in Ireland,” the paper reveals

. “Ross & Craig have constantly referred to the European Court of Justice case of Cura Anlagen to justify their entitlement to a rebate.

In this case, the ECJ found against Austria because it failed to provide for some rebate mechanism upon the subsequent export of an imported hire car.

“Irish VRT, however, has no purpose other than to raise revenue for the Exchequer and is charged as a ‘once off’ payment on the first registration of a vehicle in Ireland. It is not related to fuel consumption or indeed to the use of the vehicle itself.”

Tax Strategy Group paper also sates: “While public perception is that Irish rates of VRT are particularly high, a recent study for the EU Commission showed that Denmark, Finland and the Netherlands all had higher rates of average registration tax.

“Nevertheless, the relatively high Irish VRT rate does result in on-going lobbying from SIMI (Society of the Irish Motor Industry) for reduction or abolition of the tax, not to mention frequent media coverage of the subject.”