The average price of a new car in Ireland went up by €4,500, with a third of the cost going towards VAT and VRT

The average price of a new car rose this year by almost €4,500 to €38,665, an increase of 13 percent.

And nearly a third of that went to the tax official in the form of VRT and VAT payments.

The average VAT charged on a car was €5,905 while VRT was €5,851, according to new figures obtained by the Society of the Irish Motor Industry (SIMI). Irish Independent.

A total of almost 12,000 euros – almost a third of the price of a new car – went to the Treasury.

In total, new car buyers paid 514,415,180 euros in VAT, the VRT invoice amounted to 509,661,031 euros.

The state treasury will thus benefit from more than one billion euros from new car sales alone by the end of July.

The vast majority of cars are bought in the first seven months of the year as they span two registration periods starting in January and July.

And just because your car is zero emissions doesn’t mean you’ll escape the tax office. Figures show that new battery electric vehicles (BEV) were charged an average of €8,733 in VAT and €2,250 in VRT.

The above-average value added tax is mainly due to the fact that many BEVs are more expensive than petrol or diesel vehicles anyway.

The underperforming VRT bill stems from partial or full exemptions from this tax as part of government incentives to purchase a BEV.

Overall, new car prices rose by 13 percent year-on-year up to the end of July.

It looks like prices can only go higher for at least the first half of 2023 as demand is expected to outstrip supply.

Prices are based on official estimates by the Revenue Commissioners of a car’s value on the market.

You calculate the vehicle registration tax (VRT) on this amount. The number is known as the Open Market Selling Price (OMSP).

Actual selling price may vary at dealer level depending on demand, model, trade-in and time of year.

A wide range of factors contributed to the 13 percent increase this year.

These include production delays due to the pandemic, supply shortages due to pent-up demand, higher specification levels, shortages of microchips for use in car systems, the war in Ukraine and increased energy costs.

BEV production has been hit by commodity price increases of up to 400 percent in the case of lithium (used in batteries).

SIMI Director General Brian Cooke said any price increase automatically means higher VAT and VRT revenues. He said high tax rates are a key reason why relatively few new cars have been purchased over the past decade.

“VRT has been increased in each of the last two budgets, but if we really want to optimize emissions reductions from new vehicles, we need to stop increasing VRT and continue our support for electric vehicles.”

He urges the government not to include any further VRT or vehicle tax increases in the budget.

He said this would only increase the cost of new cars, dampen demand, increase inflation and reduce consumer confidence.

“Retaining EV supports is also critical as we strive to create an active used EV market.”

Compared to 2019 and 2022, the average CO2 emissions (WLTP) of newly registered passenger cars have fallen by a total of 19 percent.

https://www.independent.ie/news/average-price-of-a-new-car-in-ireland-soared-by-4500-with-a-third-of-the-cost-going-to-vat-and-vrt-42013676.html The average price of a new car in Ireland went up by €4,500, with a third of the cost going towards VAT and VRT

Fry Electronics Team

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