When you think about buying a car from abroad, one of the biggest concerns is paying VAT (value added tax). “Do I have to pay VAT twice?”, “Do I have to pay Italian VAT in addition to that of the foreign country from which I am buying the vehicle?”. These are just some of the doubts that are frequently asked before purchasing an imported car. But what is the actual situation?
In this article we clarify the regulations that govern the payment of VAT on imported cars and dispel some false myths.
Auto Import VAT: The Difference Between Displayed VAT and Margin VAT
To address the issue of paying VAT on imported cars, it is important to first focus on an important distinction: that between cars with VAT displayed and cars with VAT on the margin.
- Cars with VAT displayed are vehicles that have previously been owned exclusively by companies (therefore never owned by a private individual)
- Cars with VAT at the margin are vehicles previously owned by at least one private owner. They are, therefore, cars without VAT, as the VAT payment has already been made by the first private person who purchased the car.
The payment of VAT is different, in fact, if the vehicle belongs to one or the other category. Let’s see both cases together.
Buying a car with VAT displayed
Cars with VAT displayed have been owned exclusively by companies that have always deducted the value added tax. When a dealer sells these vehicles, therefore, the total price is composed of a net value plus the percentage of VAT.
Let’s take, for example, a car sold by a dealer in Germany. In this case the total selling price will be composed of:
NET VEHICLE PRICE + 19% VAT
Consequently, if a private individual decides to purchase a used car directly from a German dealer, he will pay a tax of 19% and not 22% as in Italy. And he will have to declare to the Revenue Agency that he has already paid VAT in Germany.
Instead, if you do not have the time or desire to manage all the bureaucratic part and interface with the Revenue Agency, you can contact us. We will take care of purchasing the car on your behalf, which we will invoice you with the Italian VAT rate. In this case, therefore, 3% must be added to the net price of the car reported in the ad, which corresponds to the difference between the two VAT rates, the German one and the Italian one.
In addition, on cars with displayed VAT, those who are eligible can take advantage of the benefits provided by Law 104.
Fiscally used car
For a private individual, this advantage on VAT payment is only possible if the purchased vehicle is used for tax purposes. What does this mean?
A car is used for tax purposes when it simultaneously satisfies two conditions:
- It has travelled more than 6,000 kilometres
- More than 6 months have passed since the first registration
Fiscally new car
Instead, if it has less than 6,000 kilometers or less than 6 months from the first registration, it is considered a new car for tax purposes. In this case:
- VAT is mandatory in Italy
- The Italian rate (22%) is applied to the net price of the car
Returning to the previous example, therefore, a private individual who intends to purchase a fiscally new car from a German dealer can follow two paths:
- Buying the vehicle through IMPORTAMI AUTO: in this case the dealer sells to IMPORTAMI AUTO, which acts as an intermediary and, in turn, invoices the customer for the cost of the vehicle including VAT at 22%
- Buying the vehicle yourself: in this case the private individual must pay the invoice to the dealer and then pay the VAT, with an F24 form, to the Revenue Agency in Italy. In fact, the chassis of the vehicle will be unlocked only after the buyer has paid the VAT.
Deposit for new cars
For a private individual who intends to purchase a vehicle independently (i.e. without going through an intermediary) from a foreign dealer, the operation can become even more complicated due to another factor: the requirement for a deposit.
Often, in fact, foreign dealers require a deposit equal to the value of the VAT in force in their country and this amount is returned only when the car arrives in Italy or after registration.
Returning to the previous example, therefore, it will be more advantageous for our private individual to purchase the car from the German dealer through an Italian intermediary like us, who will take care of the payment of the German VAT deposit and will avoid having to advance considerable sums.
Buying a car with VAT on the margin
The situation is completely different, however, if a private individual intends to purchase a car with VAT at the margin, i.e. without VAT. How is it possible for vehicles to be sold without VAT? These are vehicles that have been owned by at least one private owner. In the case of a sale within the European Union, therefore:
- VAT has already been paid by the first private buyer
- It is not necessary to pay VAT again in Italy
- The selling price is the actual price to be paid (excluding any discounts)
Is VAT on imported cars paid twice?
All this discussion, therefore, is also useful to dispel a false myth. The one according to which VAT on imported cars must be paid twice. It is clear that things are not like that. A private individual who independently purchases a fiscally new vehicle from a dealer in the European Union will only have to pay the difference between the rate in force in the country of purchase and that in force in his own country. For example, if an Italian buyer purchases a car from a German dealer, he will have to pay a tax of 3%, equal to the difference between the rate in force in Germany (19%) and that in force in Italy (22%). Therefore, it is absolutely not correct to think that VAT must be paid twice on cars purchased from abroad.
Avoid VAT problems when buying a foreign car
Before proceeding with the purchase of a vehicle from abroad, therefore, it is important to be very informed and prepared on the various regulations, to be very clear about the condition of the vehicle from a fiscal point of view (whether considered new or used) and what VAT regime will be applied.
If you are considering buying an imported car, contact us to avoid unpleasant surprises, waste of time and money. We will take care of all the bureaucratic and fiscal procedures, we will help you in every phase and you will only have the pleasure of driving the car of your dreams.