The price of second hand vehicles imported from the United Kingdom is expected to go up significantly as a result of Brexit. From the beginning of this year, once a used vehicle is imported from the U.K. the VAT will have to be paid and in certain cases even customs duty.
Till the end of last year, importers of vehicles from the UK paid VAT if the vehicles had less than 6,000 kilometres or less than six months had elapsed since their registration. The rest of vehicles were exempted from VAT.
However, from this year, if a car was manufactured in the United Kingdom, the vehicle owner does not need to pay customs duty, but the person pays VAT. The same applies to a car bought from the UK and manufactured in an EU member state, unless it had not been more that three years since its importation from the UK. In that case, the importer has to pay a 10% customs duty and 18% VAT.
If the car is manufactured in a third country, Transport Malta deputy head Gilbert Agius said that this implies a substantial increase in the vehicle price. “Customs duty is multiplied with the vehicle’s price and 18% VAT on the whole price. If a vehicle is valued €10,000 and you increase 10% duty and 18% VAT, its price will increase with almost 30%”.
Prior to UK’s exit from the EU, Mr Agius stated that vehicles imported from the UK which arrived in Malta before the end of 2020, their owners had the opportunity to send a list of all vehicles so that they will not pay duty and VAT. The list included some 3,000 cars. He added that last week, Transport Malta reached an agreement with Customs on cars bought before end of last year from the UK, however are still on their way to Malta.
“Owners of vehicles in transmit have 30 days to register them when they arrive this year, if they present the cmr document and confirm the shipper that the vehicle left the English port before the 31st December. We do not need to sent the vehicle owner at customs”.
Mr Agius added that vehicles which left the UK after the beginning of the year have to follow new regulations, similar to those who import vehicles from Japan.
Second-hand importers and dealers who spoke with TVM said that they are calculating expenses on the impact of the new regulations on their business, although they agreed with the calculations made by Transport Malta officials.
Etienne Bezzina, a vehicles importer, said that other expenses have to be added. “Panel beaters, sprayers, part suppliers, tyres, are all affected because cars are now very expensive. Even the Government will lose because it had revenues of millions of euro through registration taxes on UK imports of recent years”.
Alex Spiteri, an importer and dealer of second hand cars, said that they are in limbo about their sector future, however other importers complained by the lack of fair competition. “Between second hand and new vehicles, we will not have a fair ground to play on. This is because even licences of new vehicles will have a scheme less than our imported second hand vehicles”.
9,000 second hand vehicles were imported from the United Kingdom in 2019 – some three times more than the imported second hand cars from Japan. 6,000 vehicles were imported last year.