Committee Reports::Report No. 36 - Imports of Personal Property and of Certain Means of Transport Tax Exemptions::30 June, 1976::Report



1. Proposals Examined

The Joint Committee has considered the following proposals by the Commission for Council Directives:—

(a) Tax exemptions applicable to permanent imports from a Member State of personal property of individuals (R/2689/75); and

(b) Tax exemptions within the Community for certain means of transport temporarily imported (R/2688/75).

The proposals are based on Article 99 of the EEC Treaty which deals with the harmonisation of national laws relating to turnover taxes, excise duties and other forms of indirect taxation. As in the case of the tax free allowances for travellers already in force in all Member States, the broad aim of the present proposals is to help to make the general public in the Member States feel that the Community is a reality. To achieve this, the Commission is trying, in respect of the movement of persons and their personal property within the Community, to reduce border formalities to the minimum and to prevent, as far as possible, double taxation.

The Commission has requested the Council to act on these proposals in the first half of 1976.


2. Property for Personal Use

The proposal is to require every Member State to exempt from turnover tax, excise duty and other consumption taxes property imported permanently from another Member State by an individual for the personal use of himself, his family or his employees. The property must be used property and must be for installation in a dwelling which the importer owns or has taken for a nine month tenancy at least. Local taxes must have been paid on the property in the Member State where it was purchased and it must not have been acquired for export. For twelve months after importation it may not be voluntarily disposed of, hired out or lent.

Motor vehicles, other means of transport including riding horses and pets would qualify for exemption only when the importer is transferring his principal place of residence to the State of importation. Motor vehicles (including trailers), caravans, mobile homes, pleasure boats and private aircraft must have been acquired at least six months before importation and local taxes must have been fully paid.

The draft Directive would also allow the tax-free importation of new goods by an individual intending on marriage to establish his or her principal place of residence in the State. In the case of any article worth more than 125 units of account, the importer would be required to show that it had been fully tax-paid in a Member State.

The proposal also deals with personal property of a deceased person situate in a Member State. A person acquiring the beneficial ownership of such property by inheritance may import it tax-free into another Member State within six months of entering into possession.

Finally, the draft Directive would allow a Member State to allow more liberal arrangements than are provided for in the proposal if it so wishes.

3. Present Irish Law

Imports for installing in a residence, imports on marriage and imports of bequests are at present governed respectively by sections 17, 18(a) and 18 (b) of the Finance Act, 1936 as extended by subsequent enactments, which provide as follows:—

(a) installation in a residence:—On a change of permanent residence to the State, articles, other than stock in trade, used prior to entry by the importer, his family or household, may be allowed in free of customs duty and VAT for such continued use.

(b) marriage:—A person ordinarily resident outside the State before marriage and intending to reside permanently in the State after marriage may be allowed to import wedding presents of a portable character free of duty and tax.

(c) bequests:—A person related to the deceased by blood or marriage succeeding by inheritance to articles forming part of the personal estate of a person dying outside the State may be allowed to import them free of duty and tax.

Adoption of the proposal would involve the amendment of those provisions to limit their application to imports from non-Member States and the enactment of new provisions for imports from Community countries.

Under the Motor Vehicles (Registration of Importers) Act, 1968 the Minister for Industry and Commerce has discretionary power to authorise a person to import a motor vehicle. He has power under delegated legislation made under the Imposition of Duties Act, 1957 and the Finance Act, 1962 to grant a reduction in the rate of customs duty.

From July, 1977, customs duties will cease to be an obstacle to the movement of personal property within the Community, since these duties will have disappeared for the goods mainly concerned in these proposals. National rates of VAT and certain excise duties will remain.

4. Views of Joint Committee

If the proposal is adopted, used personal property could be imported without payment of Irish taxes for installation in a residence here even if the residence is not to be permanent. Another change would be that wedding presents would not need to be portable to qualify for the concession. These changes are of a type to be expected of any process designed to promote the free movement of persons within the Community and any disavantages that may ensue for this country should be balanced by the advantages that would accrue to Irish residents moving to other Member States.

The position in regard to motor vehicles, which the proposal envisages being imported, in a case of a permanent change of residence only, without payment of Irish taxes is somewhat different. Protocol No. 7 of the Treaty of Accession made special provisions to protect the Irish motor car assembly industry and in recognition of those provisions, the proposed Directive should not, as far as Ireland is concerned, extend the facilities which exist at present in the case of motor cars. Any restrictions which the Revenue Commissioners and the Minister for Industry and Commerce are entitled to impose under their present statutory powers should be continued. The Joint Committee understands, for example, that an Irish resident returning after temporary residence abroad must have resided abroad for at least two years and must have acquired the car for substantial use abroad, a requirement which is satisfied by one year’s ownership. This requirement should remain.


5. Proposed Directive

The proposal would allow a resident in a Member State to import into another Member State for his private use for a six month period in any year a motor car (including trailer), caravan, pleasure boat, private aircraft or bicycle without paying taxes or duty. He would also be allowed to import a motor car for business use (excluding the carriage of passengers for reward or of goods) under the same conditions provided such vehicle had borne all local taxes in the Member State where registered. The vehicle could not lawfully be sold or hired (subject to a minor exception in the case of car-hire firms) during the period of importation. Portable tools, commercial literature and samples imported with the vehicle would also be exempt. Horses imported for horse-riding excursions would also be exempt for three months.

6. Present Irish Law

The temporary importation of motor vehicles and caravans is at present governed by the Motor Vehicles (Temporary Importation) Regulations, 1970, made by the Minister for Finance under Section 29 of the Finance Act, 1963. Adoption of the proposal would involve amendment to these Regulations to limit their application to vehicles imported from non-Community countries and the enactment of new provisions for the temporary importation from EEC countries of the means of transport specified in the proposal.

Present Irish provisions for temporary importation permit certain vehicles to be imported free of duty or tax, by a person whose only or principal place of residence is outside the State, for a period not more than 12 months subject to certain conditions the principal of which are that such vehicles are not used for the transport of persons for reward inside the State and that they are not driven by anybody except the importer.

7. Views of Joint Committee

The Joint Committee notes that the proposed Directive would allow only 6 months’ exemption compared with 12 months allowed by existing Irish regulations in the case of motor cars and caravans. However, there is provision in the Directive for the grant by a Member State of more liberal treatment than is specified in the Directive. In effect, the Directive need cause no appreciable change in Irish conditions for temporary importation except in one respect—proof of residence abroad.

Under present Irish regulations, the importer who claims the right to import his car temporarily must satisfy the Customs that his only or principal place of residence is outside the State. There are no statutory rules for establishing residence. Where an officer requires proof of entitlement to exemption he would call for the Registration Book to see if the importer is registered as owner and with an address abroad. Other documentary evidence such as an International Circulation Permit, a driving licence, certificate of insurance, carnet or triptyque is usually accepted. The proposed EEC Directive would establish rules for proving residential status. It is proposed that the importer shall provide evidence of residence by producing his passport, identity card or, in the absence thereof, any other identity document recognised as valid by the Member State of importation. If the Authorities of that State have doubts about the evidence furnished they may request additional evidence and if still not satisfied shall permit temporary importation for a period not exceeding 6 months subject to security for the duty. If the importer produces a certificate of liability to income tax in another Member State in respect of all his earned income, security for the duty will not be required on importation and any security already given will be discharged.

The competent authorities of each Member State are on request to issue to any person a certificate in respect of his liability to income tax for production to the authorities of a Member State into which such person intends to import his car. The Directive would also provide for direct consultation between tax authorities on questions arising from the issue of a certificate of income tax liability by one authority to an individual importing a vehicle into the territory of the other authority. This provision would require specific legislation for its application in this country.

The Joint Committee considers that these requirements are largely technical and as such can be left to the Revenue Commissioners to evaluate.


Chairman of the Joint Committee.

30th June, 1976.