Getting a car from the UK? You may pay VAT twice

Some Maltese buying second-hand vehicles from the United Kingdom are being forced to pay VAT twice, since they are being charged 18 per cent of the purchase price once they register their car in Malta.

The VAT charge is being applied to second-hand cars less than six months old or with less than 6,000 km on the clock since these are considered as 'new' vehicles under the law. This means VAT must be paid in the recipient country as opposed to the country of origin.

The Malta Transport Authority's (ADT) Registration Tax and Annual Circulation Tax Guidelines, a complicated 18-page document available on the ADT's website, provides a definition of second-hand vehicles that are considered 'new' but it does not explain that anyone who imports such a car will have to pay VAT in Malta.

Neither does it warn potential buyers that they should not pay VAT on such cars in the UK, nor offer any information on what customers can do to claim a refund if they would have paid VAT twice. EU law states that VAT is only payable in one member state. Speaking to The Sunday Times, Greta Cassar, who recently imported a car that is less than six months old, said: "If I had known this, I would have never gone through with it. With all the money I have paid and considering all the effort that I went through, it was definitely not worth it. When the ADT asked for additional money, almost €2,000 for VAT again, I couldn't believe it. And nobody gives you any explanation."

Questions sent to the Transport Ministry requesting clarification on the legitimacy of VAT charges and how customers could be compensated were forwarded to the Finance Ministry, which did not provide any replies to questions sent at the start of last week.

Ms Cassar was unaware that she could claim back the VAT paid in the UK. Help was provided by another person who went through what he also described as an "ordeal".

Clement Fenech said: "When I objected to having to pay VAT again, I was simply told to go and reclaim VAT in the UK if I wanted to. When I asked how, no information was given to me. I was left to find out for myself."

Mr Fenech explained that detailed information on how to reclaim VAT paid in the UK together with all the required forms were available on the HM Revenue and Customs website: www.hmrc.gov.uk/vat/consumers-vehicle.htm. The site is user-friendly and the forms clearly explained, unlike the information provided in the ADT's Registration Tax and Annual Circulation Tax Guidelines, which have been described by an importer of a personal second-hand car as "more like a minefield than a guide".

The Malta Chamber for Small and Medium Enterprises (GRTU) also said a lack of information had compounded delays when it came to registering personal car imports from EU countries.

This had prompted the union to put up An Unofficial Users Manual on its website offering a step-by-step guide to the process, arguing that Malta had managed to "turn a mindless procedure into an epic saga".