Recently issued guidelines from the Finance Ministry concerning VAT payments on car registration tax could distort price competition, and are discriminative against car imports, according to tax experts at Deloitte Rt. The experts said the problems emerged from the legal interpretation of the ministry, which says the registration tax is subject to VAT, while registration tax advance payments – another term in the law for the same fee – are not.
“There are three basic cases put forward by the act on car registration fees. For cars that are imported from outside the EU or from [another country] within the EU, the importer or buyer pays the registration fee.
For cars that are locally acquired, the local dealer charges the fee,” explained Péter Oszkó, tax partner at Deloitte. “However, local dealers do not charge registration tax, but registration tax advance payments, which, according to the ministry, are not subject to VAT.”
According to Oszkó, this means that entities buying cars from local dealers get a better deal by saving hefty amounts of VAT.
“Buying the same car is cheaper in Hungary than in Austria. That qualifies as distortion of competition,” he said.
Interpretation of the law especially hurts leasing companies, Oszkó added. That stems from the fact that the registration fee is part of the book value of the cars, so it is included in the lease amounts.
“Because of uncertainty at local dealerships as to whether or not to charge VAT on the registration tax advance payments, several leasing companies recently decided to suspend selling their financial leasing schemes till everything clears,” he said. “Leasing firms simply do not know what kind of invoice to expect, and also fear that the differences between the price at the dealer and the leasing company may frighten away customers.”
“Although financial leasing accounts for only a fraction of our revenues, we are aware of the VAT problem and are waiting for a final solution,” confirmed Zoltán Czura, sales director of Postabank Leasing Rt.
Oszkó said local car dealers recently turned to the ministry for guidance, and received a response that freed them from paying VAT on the registration tax advance. He added that the National Tax Office (Apeh) first rejected the Finance Ministry’s interpretation of the law, but now accepts it.
“The relevant pieces of legislation contradict each other on several points,” confirmed Krisztina Kaposvári, CFO of Raiffeisen Leasing Rt.
Kaposvári said Raiffeisen is following the logic of the VAT Law, calculating the VAT for an amount that already includes the registration tax.
“Lawmakers should clearly specify the right conduct in the Registration Tax Law,” said Kaposvári. “Then, leasing companies would not have to worry that Apeh will specify the law source it considers authentic, and punish every enterprise that chose a different conduct.”
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30.07.2004