With all the uncertainty surrounding Brexit it’s time to assess what the possible implications may be for the Irish motorists and the motor trade in general. It’s difficult to say exactly when Brexit might happen. At the time of writing (Tuesday 12th March 2019) there is a key vote due to happen in the UK parliament tonight on Theresa May’s “improved” Brexit deal. The outcome of this vote will determine how soon or otherwise Brexit could happen.
While the British PM claims she has secured “legally binding” changes to the controversial “Backstop” during last minute talks with the EU, it remains to be seen if this will be enough to persuade doubters, with many believing it will again be rejected.
If it is again defeated, the UK would then be expected to extend Article 50 and delay Brexit until at least July 2019. While the EU would have to approve such a request – it is presumed that they would do so.
Whatever happens – and whether they leave with or without a deal - it’s clear that Brexit will have a serious impact on many aspects of the motoring industry in Ireland.
Importing cars from the UK
Up until Brexit comes into effect there is still free trade across the EU and Britain so it has often made good financial sense to purchase second hand cars from the UK and re-register them in Ireland for use on Irish roads.
This has never been popular with Irish motor dealers as it has adversely affected Irish car sales. Customers have made significant savings on travelling to the UK to assess and buy British cars, and while importing cars into Ireland (pre-Brexit) does incur Vehicle Registration Tax (VRT), no further import duties or fees apply.
VRT is judged on the open market selling price of the same make, model and year of car in Ireland - so a percentage of that estimated value is due – and this rate would rise or fall depending on the emissions of the car. Lower emissions mean less VRT to pay. As such savings made can vary from hundreds to thousands of euros, depending on the car bought.
If / when Britain leaves the European Union – and certainly if they do so without a deal – then all this will change. The benefits of being a part of the European Single Market will disappear in the event of a no-deal exit, and all UK car exports to the EU would then become subject to an additional 10% tariff due to World Trade Organisation rules.
Importing of car parts / impact on car servicing
These tariffs would also apply to the import of car parts from the UK into the EU – and it’s estimated that this will add an extra 4.5% cost to parts coming into the country. Secondly, all imports will likely be subject to VAT for both vehicles and parts.
With the uncertainty around Brexit and the border between Northern & Southern Ireland, it is also likely that there could be delays in terms of the sourcing and delivery of such parts as new trading rules and practices are put into place post Brexit – and where there are such delays, there’s usually added costs.
So effectively it could be a triple whammy on the cost of parts / servicing in Ireland.
Driving in Northern Ireland & Britain post Brexit
Before 1992 anyone driving outside of the European Union would typically need a green card in order to remain covered by their insurance policy. It’s not clear with will happen post Brexit and many insurance companies are now looking at what may be required so that they can provide green cards to their customers here - if they will be required.
It’s even technically possible that driving in the North post a no-deal Brexit could result in vehicles being impounded. At a minimum it may be required (as before 1992) to inform your insurance company of specific dates where you will be driving in non-EU countries well ahead of time in order to remain covered in the UK.
While extra charges from insurance companies for green cards cannot be ruled out, they are unlikely as they could cause customers to shop around.
The government is reported to be working on a solution to this and it’s hoped that an interim arrangement can be put into place for at least a number of months after Brexit to allow for more time to find a solution.
Will driving licenses be recognised across the EU / UK?
The UK’s Department of Transport maintains that Northern Ireland / UK driving license holders will not need an International Driving Permit (IDP) to drive in the Republic post Brexit. However, if a no deal Brexit occurs, an IDP may be required in addition to their driving license in order to drive in other EU or EEA countries.
Motorists from the republic will apparently not need anything in addition to their current drivers’ license to drive in Northern Ireland / the UK.
Let’s look at the Swiss situation. Switzerland is neither an EU nor a European Economic Area (EEA) member but is part of the single market - this means Swiss nationals have the same rights to live and work in the UK as other EEA nationals. Anyone with a current license and insurance can now drive in Switzerland because of this and the Schengen Agreement in which internal border checks between 26 European states have largely been abolished.
With Britain also looking to leave the single market and the customs union however, the position post Brexit remains unclear.
Cost of petrol / diesel post Brexit
Most of the refined fuel product that comes into Ireland comes from the UK. This would likely be subject to a 3% tariff under current World Trade Organisation rules. Given that much of the cost of petrol and diesel to the Irish customer comes in the form of 60% tax applied and VAT, the impact of a 3% tariff is deemed to be small.
It’s more likely that the global price of crude oil along with supply and demand will impact what we pay at the pumps far more than Brexit. Global conflicts can have a disastrous impact on pricing. The Irish Budget can be a big factor but the government did not raise carbon tax or fuel duties in the October 2018 budget so there was no effect there.
It’s hard to know what the landscape will be post Brexit in almost every aspect of Irish life. The only certainty is uncertainty for the foreseeable future, and until a final agreement is in place post Brexit there remains more questions than answers.