Export of new car to another EU member state by individuals
- In force until further notice
Information for Finnish individuals purchasing a new car in Finland for removal to anothermember state for temporary stay.
The general rule states that VAT for sales of goods to individuals within the territory of the EU must be paid according to the tax rules prevailing in the country where the goods are sold, i.e. the place of supply. Individuals making purchases of goods in other EU member states must pay the VAT of the country of purchase. Nevertheless, new means of transport are an exception to the general rule. The country of taxation is the country where you use the car.
Definition of ‘new means of transport’
According to the VAT Act, a motorized land vehicle is ‘new’ if less than six months has passed after the date when it was entered into service for the first time, or if it has travelled no more than 6 000 kilometers. Additionally, ‘means of transport’ is defined as a motorized land vehicle with engine displacement exceeding 48 cc or engine power exceeding 7.2 kilowatts, intended for the transport of persons or goods.
Exporting a car to another EU member state for temporary stay
When a business entrepreneur sells a new car to an individual in Finland it is a transaction for which VAT must be paid in Finland.
However, the situation changes if the buyer is not going to use the new car in Finland. If he is moving to another EU member state to live there temporarily, he can take the car along to that country as an export-number-plated car. Such a sale of a car, for delivery to another EU member state, is an intra-Community supply. This is because the purchase of new means of transport is taxed in the destination country regardless of the identity of the buyer. The practice has been to define ‘destination country’ as the member state where the new means of transport is delivered after the sale and where it will be used in traffic.
‘Intra-Community supply’ means the sale of movable property where the seller, the buyer, or someone else on behalf of them transports the movable property from Finland to the buyer in another EU member state. Intra-Community supply means, and no VAT has to be paid in the sellers country.
The seller must deliver detailed information to Finnish tax administration on the sale of new means of transport intended to be put into service in other EU member states. The tax administration will pass the information on to the destination countries. This system ensures that the tax authorities of EU member states will maintain control.
VAT payable in another EU member state
To sum up, if you are a Finnish resident, temporarily moving to live in another member state, and you buy a new car in Finland, you can take it along with you with Finnish export license plates. The export license plates are valid for approximately one year. But it is entirely dependent on the laws of the destination country whether the Finnish export license plates will be sufficient, or whether you have to register your car locally. Regardless of whether you have Finnish export number plates or local (i.e. foreign) license plates, you are expected to contact the tax administration of the country where you have relocated, to clarify and take care of your VAT obligations.
If you did not pay the VAT for the vehicle in the member state of destination and you bring the car back to Finland, the destination member state will have the right to collect the unpaid VAT from you by tax recovery procedures.
Bringing the car back
When relocating back to Finland, the Finnish buyer can import such a vehicle back to Finland, and it will officially be treated as personal removal goods, and special tax rules will apply. No VAT will be payable in Finland for such a private vehicle. (For more information, see the Customs Bulletin ‘Importation of Personal Belongings and Private Motor Vehicles as Removal Goods into Finland’.)