Ciarán Ahern (Dublin South West, Labour)
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611. To ask the Minister for Finance the steps he is taking to increase the supply of second-hand EV cars from neighbouring markets and disincentivising the importation of fossil-fuel cars; and if he will make a statement on the matter. [43153/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Finance Act 1992 introduced, from 1 January 1993, Vehicle Registration Tax (VRT) on the registration of a vehicle and the legislation sets out how the tax is assessed and calculated.

Under the law, the method for calculating VRT is based on the category of vehicle involved. VRT on Category A vehicles (passenger cars) is based on the vehicle’s value and its emissions level, with the level of the tax increasing in line with both factors. There are two components of the VRT charge for Category A vehicles, relating to their carbon dioxide (CO2) and nitrogen oxide (NOX) emissions. The CO2 component of the VRT charge is calculated by multiplying the value of the vehicle (its Open Market Selling Price - OMSP) by a percentage from a 20-band table, with the vehicle’s CO2 emissions level determining which band applies. Vehicles with the lowest CO2 emissions fall into band 1 (charged at 7%) while those with the highest emissions fall into band 20 (charged at 41%).

The NOX component of the VRT charge is calculated using a progressive scale starting from €5 and rising to €25 per mg/km of the vehicle’s NOx emissions level.

In this way, the charging structure for VRT means that cars with lower emission levels incur a lower tax charge than higher-emitting cars, and this applies irrespective of whether a car is registered here when it is new or whether it is imported as a used car.

In addition, the VRT legislation also includes a temporary provision that provides relief from VRT of €5,000 for electric vehicles with an OMSP of €40,000 or less registered before 31 December 2025, and a tapered relief if the OMSP is between €40,000 and €50,000. This relief applies to all qualifying vehicles registering before the end of this year, whether new or imported second-hand.

For vehicles imported from outside the EU, Customs Duty and VAT may be payable. A vehicle that has previously been in use in another Member State, or in Northern Ireland, can be registered in the State without liability to additional customs duties and import VAT. The EU-UK Trade and Cooperation Agreement (TCA), that was concluded between the EU and the UK, entered into force in May 2021. The TCA allows for zero tariffs on specific goods that comply with the specific ‘rules of origin’ set out in the Agreement. Specifically, motor vehicles imported from the UK can claim a zero-duty rate, provided the appropriate documentation confirms the vehicle adheres to the rules in the TCA. If such proofs cannot be provided, a duty rate of 10% must be applied. It should be noted that cars imported to Northern Ireland from other parts of the United Kingdom since Brexit are also subject to the same requirements.

Where a vehicle is imported from the UK (excluding Northern Ireland) to Ireland, it will be subject to import VAT, in accordance with the European VAT Directive. This is the same as the treatment of all third countries. On import to Ireland, VAT is charged at the standard rate, currently 23%, on the total of the customs value of the vehicle plus any applicable customs duty, and this must be paid prior to registration.

The rules regarding Customs and VAT charges are set at an EU level, and Ireland does not have discretion to change them to incentivise EV imports. However, as outlined above, the VRT regime has a strong environmental rationale, which includes a very low 7% rate for EVs combined with a €5,000 tapered relief for EVs.