Anyone having a car in Budapest?

Oh my.

There's some super-high, totally non-EU-compliant "registration tax" (duty) when you "import" a vehicle. You are much better of pretending you are just visiting. The extra you have to pay on your French insurance to cover you here (if any) is surely less than the prices and taxes here.

Except... now for anyone who can afford a nice car it's worth opening a front company in Slovakia and buy the car there to dodge the duty and other taxes on cars. While perfectly legal, this is portrayed as the worst form of criminal activity imaginable (well, maybe second to smoking pot) and is expected to be "cracked down on"... So the situation may change.

Hello!  thanks fo answering!

Do you know how much are those registration taxes? Just to have an idea.

Thanks for the other idea, but I'm not going to try this one

It depends on engine size, fuel, EURO-2, 3 or 4 rating, age, etc:

http://regisztraciosado.info/regisztrac … lator.html

A few thousand euros.

ok thanks! I'm going to take a look at the link

Just to correct minor issue

Actually the registration tax as such is totally eu compliant and similar scheme is used in several eu countries beside Hungary, actually i believe it is more common than not having very high taxes. The main exceptions are countries which are big producers of cars themselves.

What is tricky with EU rules is how to apply the registration fee for second hand cars - and again together with several other eu countries Hungary has been in the eye of european court with this part in the past.

"The European Court of Justice (ECJ) has consistently held that a Member State is not prohibited from levying a vehicle tax such as one on the first registration of a vehicle in that Member State but provided that the tax is in conformity with Article 90 of the EC Treaty. This means that a Member State must not impose any internal tax, directly or indirectly, on the products of other Member States of a kind in excess of that imposed directly or indirectly on similar domestic products. The ECJ has declared that Article 90 requires a Member State to take an imported second-hand vehicle's actual depreciation into account in calculating registration tax. Otherwise the tax imposed would exceed the residual tax incorporated in the value of similar second-hand motor vehicles already registered in the national territory (see ECJ cases Nunes Tadeu, C-345/93; Commission v Denmark, C-47/88; and Commission v Hellenic Republic, C-375/95)."

I'm sure lawyers twisted it around enough to comply with the letter of the EU laws. That won't change the fact it goes straight against the spirit and the whole point* of the EU: no internal duties and barriers of interstate commerce.

*: besides but not unrelated to economically tangling up France and Germany with each other too much for them to go to war against each other ever again.

Sorry, but you kind of missed the point, EU does not mean that there are no internal duties or difference between taxation of different countries - there are a lot actually, from varying kinds of products, it means that there are no barriers for trade between different countries, the point specifically being that domestic and products from other eu countries are treated similarly - i.e. that the payment does not differ from the origin of the product as long as it is from within EU itself.

Secondly it is incorrect assumption that if you have company in another EU country, the company can buy a car that you can use in another country. According to EU regulation vehicle related taxes should be paid in the primary location of usage not point of sales (the same applies for boats etc). The problem has been to prove where is the location of main usage - Hungary thus far has been pretty tolerant in this usage - in contrast with countries like Austria (which also has car duties), Finland etc. My understanding is that the burden of proof is considered to be moved to the user from the state also in Hungary.

This is not legal twisting but this is the basic essence of the EU regulation. It is captured in easy to understand format as follows "This means that a Member State must not impose any internal tax, directly or indirectly, on the products of other Member States of a kind in excess of that imposed directly or indirectly on similar domestic products."

The complication comes from assessing the value of second hand products and this is the situation that has been similar at least in Denmark, Greece, Finland, Hungary, Portugal and i assume several others which has exactly similar duty on cars.

A few years ago, before we moved out here I had a Vauxhall Cavalier 1.8. It was worth about £300 in England but was a good, solid, reliable car. I was going to bring it to Hungary and use it here until I checked out the re-registration costs...over £2,000!!
We then bought a 7 seater people carrier, 2.2 diesel which we used here for some time before having to either re-register it or sell it. The cost to re-register was about 800,000 huf so we bit the bullet and sold it, bought an old Peugeot on Hungarian plates and started from scratch.
There is much talk at the moment about Hungarian residents owning foreign registered cars and how the government canforce them to buy Hungarian registered cars or get them to re-register their own vehicles. I know several people who own English and German cars who live here permanently. Personally I don't like it but until the Hungarian government make it more affordable this practice will continue.
Another big issue is the amount of Hungarians who own English cars but then don't have road tax, mot or insurance. There are quite a few around Eger. I can usually tell who they are by the age of the car. I just hope, for their sake, that we're never involved in a road accident.
One thing the Hungarian government has done though is reduce the cost of re-registering a foreign vehicle by 50% until the end of the year. Whether people take them up on this offer is another thing.......

PDIinHungary wrote:

Another big issue is the amount of Hungarians who own English cars but then don't have road tax, mot or insurance. There are quite a few around Eger. I can usually tell who they are by the age of the car. I just hope, for their sake, that we're never involved in a road accident.

It's going to be very difficult to avoid having insurance now in the UK because since July (?) because the DVLA (the British vehicle registration agency) now cross references the MID (Motor Insurance Database) with vehicle registrations. In other words, you can be picked up very easily with the ANPR system (Automatic Number Plate Recognition) system in the UK as being untested (MOT - Ministry of Transport certificate on road worthiness), uninsured and untaxed (there's a yearly tax on road usage). If one has a car, untaxed or uninsured, it must be SORN'd (Statutory Off Road Notification) but that's trivial to do. 

Generally, they are getting much more organised and more joined up on the whole thing in the UK.

As Hungary is in the EC, ALL car insurance issued in the UK (and any other EC country) includes the minimum liability cover for Hungary. It is no longer necessary to have a Green Card. This also applies to countries in the EEA - Norway etc and Croatia. However, most insurance companies like you to have a Green Card as it is easier to understand internationally for the police etc.

On the subject of duties, there are NO "duties" on car imports inter-EC countries. These are registration "fees" (ok, might call them taxes). Vehicle taxation is not part of the EC remit and is a "local" policy. All that ECJ stuff is about VAT really, not the actual fee itself. VAT is within the competence of the EC. The EC policy is to move away from countries having these kinds of excessive taxes because it's not only contrary to the free market, it's also against the free movement of labour and establishment of individuals in other EC countries. Basically, it's a disincentive and barrier to move around the EC.

Generally having a foreign car is not a problem in any EC country if one does a lot of travelling cross border. Having a job and a place to live are probably the biggest indicators of residence when it comes to determining your vehicle registration.

The biggest hassle is the outdated yearly test system (MoT) in the UK. Having to drive back there every year is a nuisance. On the other hand, I think most expats will do it once a year anyway, so not a major hindrance but it costs loads of money - minimum would be EUR 600 and up per trip when one considers the fuel, hotels, ferry etc. I think the UK coalition government is now considering two year tests for the MoT so that would be very helpful.

Incidentally, I just came back from Albania. At least 10% of the cars there have British registration numbers and some have very clearly false number plates as well. Taxi driver told me his elderly Mercedes cost EUR 5000 to buy 2nd hand in Switzerland and EUR 5000 to register in Albania. So it's not just in Hungary, it's all over the region with the looney car registration fees. I am not surprised people go for UK cars, the initial outlay is minimal with very low registration fees and relatively low road tax fees.  Countries with excessive registration fee costs only have themselves to blame. People vote with their feet.

I've also seen chatter on Austrian web sites about police raids on businesses where it's suspected people are using foreign registered cars on a regular basis without paying the registration fees/environmental taxes. Mrs Fluffy said a similar thing was planned in Hungary but I think the idea fizzled out.

You can find easy to understand information on vehicle registration from here http://ec.europa.eu/youreurope/citizens … ex_en.htm. You can also chose where to pay your first VAT if you move the car between the countries (as with any vehicle, including boats, planes etc).

Whether people are breaking the rules intentionally or not is another matter and if they rely on the luck with police is something else, but the rules are very simple. Thus far Hungary has been very lenient in applying the rules for foreigners (or Hungarians for that matter), in contrast to some other countries like Austria, Scandinavia (except Sweden) where you are very likely to be caught sooner or later (the burden on the proof is usually on the driver not the police). In some of those countries the fees are even more expensive that here.

"No tax on the products of other Member States in excess of that imposed on similar domestic products" Hungarian interpretation:
Super high "tax" on importing cars because they are not made locally in any significant quantity. (And following the notion of "GE does not pay taxes" I'm pretty sure the Esztergom Suzuki factory was able to negotiate a similarly sweet deal anyway.)

Free movement of people, goods and services my ass.

Sure, I'm free to move between states and follow jobs every few years as long as I don't mind paying close to the full price in duties on my single most expensive household item. (people and goods covered.) Car insurance: you must have a local one, kiss your positive driving history bonus good bye (At least no special treatment for services.)


Forget all my ranting, just consider this on its own merit:
Were it not customs duty, the member state you export the car from would need to refund it in full or with the same deprecation they apply to imports. You should only be required to pay (or keep!) the difference when moving a car between member states.

szocske wrote:

Forget all my ranting, just consider this on its own merit: Were it not customs duty, the member state you export the car from would need to refund it in full or with the same deprecation they apply to imports. You should only be required to pay (or keep!) the difference when moving a car between member states.

VAT (not talking about registration taxes/fees or customs duties) is paid where the item is "consumed". i.e. if I buy a pair of EC sourced trousers and use it in the EC, the VAT is X% (dependent on country) but if I buy the same trousers and take them to Thailand and wear them there, the VAT is 0%.  This assumes I can of course buy trousers by some mechanism where I have the option not to hand over the VAT (e.g. tax free at an airport).

The same applies to cars even within the EU. It's possible to buy a car effectively without VAT being paid and drive it to another country and pay the rate of VAT there (where the car will be "consumed"). There are a whole variety of such schemes in operation.

What the ECJ cases were about the valuations on cars and the amount of residual VAT present in the car. The Hungarians were using some unusual valuation scheme (using new values, even for old cars) which had the effect of taxing imported cars differently from domestically sold cars. This kind of behaviour has been tried on several times by countries in the EU, including Greece and Denmark.  The Hungarians have tried to get around this by using a complex environmental method/logic to punish car ownership as this kind of tax falls within their competence and not the EU's.

I should also say that if you buy a car in say, Germany, even secondhand, take it to the UK, there has to be a declaration that the VAT was not refunded. In the UK, VAT cannot be refunded on cars, even for businesses. It is however possible to get VAT refunded on vans and trucks (but not cars, unless they are new exports). In Germany, VAT on cars can be reclaimed by businesses, hence the need for a declaration when trying to import into the UK. If the VAT was refunded, then it has to be paid in the UK at the appropriate rate(but only on the depreciated value - the purchase invoice would be used plus other justifications like how long it was used, number of km driven etc).

szocske wrote:

Sure, I'm free to move between states and follow jobs every few years as long as I don't mind paying close to the full price in duties on my single most expensive household item. (people and goods covered.) Car insurance: you must have a local one, kiss your positive driving history bonus good bye (At least no special treatment for services.

Presumably you mean houses for full price duties ("stamp duty"). I agree with you on that one. If you move inter-state, you should be able to offset the costs against taxes in the new country, particularly on real estate costs. I believe this was the subject of some debate recently in the EC.

On the other hand, expats on overseas packages presumably get their houses back home paid for while they are temporarily in-country. The lucky few I guess.

The fluffy is correct, only minor addition: for most consumer goods to be used in EU, you pay the VAT at the point of sales, ie. if i buy pair of trousers in Italy, even though i live in Hungary, i pay the VAT in Italy. In case of vehicles, however, you pay the VAT at the country where you use vehicle, which is the country of usual usage of the vehicle (it is not only cars, the same applies to boats etc - e.g. if you buy new swedish sailing boat, and plan to take it to Portugal, you pay the VAT in Portugal (which happens to be less than in sweden...). You can still register the boat in Sweden and you can be resident of Sweden but the VAT is paid in Portugal. If you are using offshore schemes, then the boat (or car) has to be also registered offshore and its time of usage in EU is limited (as any of us who has such kind of boats know).

tomasc wrote:

The fluffy is correct, only minor addition: for most consumer goods to be used in EU, you pay the VAT at the point of sales, ie. if i buy pair of trousers in Italy, even though i live in Hungary, i pay the VAT in Italy.

Yes, that's correct BUT if you were flying to Thailand and you bought them at the tax free/duty free shop at the airport, you would not pay VAT (so long as you flew directly to Thailand). However, if you returned from Thailand, with goods over your allowances - say a laptop computer - you would pay VAT on the laptop computer at the point of entry to the EU, even if you intended to use it in a different country within the EU. This assumes you declare it.

There are some differences in VAT treatment. In the UK for example, there's no VAT on food, books or children's clothes. Useful if you like eating, reading and are very small. A very strange one (I think) are milkshakes in UK McDonalds. If you consume it inside the place, it's with VAT, as it's a "restaurant" and therefore a service which is subject to VAT. If you take it away, it's a food and therefore not subject to VAT. Laughable really. I'd better not start on the muesli bars (again).

tomasc wrote:

In case of vehicles, however, you pay the VAT at the country where you use vehicle, which is the country of usual usage of the vehicle (it is not only cars, the same applies to boats etc - e.g. if you buy new swedish sailing boat, and plan to take it to Portugal, you pay the VAT in Portugal (which happens to be less than in sweden...). You can still register the boat in Sweden and you can be resident of Sweden but the VAT is paid in Portugal. If you are using offshore schemes, then the boat (or car) has to be also registered offshore and its time of usage in EU is limited (as any of us who has such kind of boats know).

It's also true of planes. You see many North American light aircraft at UK airports. Planes from NA are cheaper and of course, are not imports and therefore VAT has not been paid.

PDlinHungary wrote:

One thing the Hungarian government has done though is reduce the cost of re-registering a foreign vehicle by 50% until the end of the year. Whether people take them up on this offer is another thing.......

This sounds too good to be true, coming from the Hungarian government, or from any government for that matter!

If I could be sure it wasn't a cunning plan, to entrap unsuspecting resident drivers of foreign plated vehicles, I might go for it.

Do you have more info about this limited time offer?

PDlinHungary wrote:

Do you have more info about this limited time offer?

I'd be interested too!

SALUT TOUT LE MONDE, est ce que les voitures sont chère en Hongrie ,

Hello everybody,

thank you very much for all your answers! I didn't get the time the read most of them for now, and some of them are very detailed, but I will do for sure, and I am sure lots of them will be very usefull!

Thank you very much!!!

PS: Lina Stephan, I think you are supposed to speak in English here

Hello lina stephan!

You should write in English on this Anglophone forum so that other members may understand and participate.

Thank you,
Harmonie.

Further to various postings, I thought other readers might be interested in this item.....

http://todayilearned.co.uk/2011/08/03/u … t-customs/