Advocate General Ruling on Cross Border VRT Regime

Published: March 3, 2017
Categories: News Article

“The opinion of the Advocate General of the European Court of Justice, that Ireland is breaching EU law by charging the full amount of Vehicle Registration Tax (VRT) on vehicles brought into the state on a temporary basis, will hopefully be confirmed by the ECJ.

“This opinion has important implications for all the vehicles registered in Northern Ireland that are being used in the Republic on a temporary basis for a fixed period. Up to now, Ireland has charged the full VRT on all vehicles brought into the state and used even on a temporary basis. Revenue then refunds a certain portion of the VRT when the vehicle left the state and charges an administration fee of €500 euro. Furthermore, the Irish authorities refuse to pay any interest on the portion of money refunded.

“The minor issues involved here are the administration fee and the refusal to pay any interest on monies that were not owed in the first place. In the meantime, the Irish authorities have reduced the administration fee to €100 euro but have refused to pay interest. According to the judgement ´the part exceeding the amount due for the period of use of the motor vehicle will constitute a tax levied in breach of EU law´ and ´Member States are required to repay, with interest, taxes levied in breach of EU law´. Clearly, this means that all individuals who have found themselves in this position over the years will now be in a position to claim interest on the excess VRT they were charged.

“The core issue here is that, if the ECJ endorses the Advocate General’s opinion, Ireland will no longer be able to insist on the full payment of VRT when a vehicle from abroad is being used in the state on a temporary basis. This would be a very significant change in how we apply our laws and will ensure a fairer regime for citizens particularly those living along the border.

“It also worth noting that the case in question involved vehicles that were leased or rented for a fixed period but the Advocate General took a wider view and in several places in the opinion used terms like ´fixed period´, ´temporary basis ´, ´not used on a permanent basis´ and ´temporary use´ etc. Therefore, it is quite clear that, if the ECJ confirms the Advocate General’s view, this will represent a very significant change in how we implement and police our legislation in regard to vehicles from abroad being leased in the state on a temporary basis”.