Tax and Import
Importing a Car Into the European Union: Duty and VAT
Customs duty on a car entering the EU is 10 per cent, and it is the smaller half of the bill. Import VAT is charged on the value plus the duty, so the two compound.
The figure everyone quotes for bringing a car into the European Union is 10 per cent. That is the customs duty, it is correct, and on a serious car it is the smaller half of what lands on the invoice. Import VAT is charged afterwards on the customs value plus the duty already added, at a rate the destination country sets, and the two compound rather than sitting side by side. Since June 2026 the 10 per cent is also no longer universal.
Two taxes, and the order matters
Customs duty and value added tax are separate charges levied by different authorities under different rules, and they are applied in sequence. Duty is assessed first, on the customs value. VAT is then assessed on the customs value with the duty already included in it. A reader who adds 10 and 21 and expects 31 per cent has understated the bill, because the VAT is charged on a base that the duty has already enlarged.
On a car with a customs value of 200,000 EUR the duty is 20,000 EUR, and the VAT base is therefore 220,000 EUR, not 200,000. Every percentage point of VAT is worth 2,200 EUR rather than 2,000. The gap is small in isolation and it is not small once the rate is 21 or 27 per cent.
| Destination | Standard VAT | Duty at 10 % | VAT on 220,000 | Total tax | Landed |
|---|---|---|---|---|---|
| Luxembourg | 17 % | 20,000 | 37,400 | 57,400 | 257,400 |
| Germany | 19 % | 20,000 | 41,800 | 61,800 | 261,800 |
| Netherlands | 21 % | 20,000 | 46,200 | 66,200 | 266,200 |
| Hungary | 27 % | 20,000 | 59,400 | 79,400 | 279,400 |
The spread between the cheapest and the most expensive column is 22,000 EUR on the same car, decided by nothing except which border it crosses. That is before any national registration tax, which several member states levy on top and which can exceed both of these charges combined.
Origin decides the duty, not the port
Duty rates attach to where a car was made, not to where it was shipped from. A car built in Japan and exported from a dealer in California is Japanese origin for customs purposes, and a broker who assumes otherwise has mispriced the job. Origin is evidenced by documentation, not by the seller's address.
This distinction became worth real money in 2026. Following the joint statement between the Union and the United States, the EU legislated away its remaining customs duties on US industrial goods, passenger cars included. The European Parliament adopted the two regulations on 16 June 2026, the main act by 417 votes to 154 with 71 abstentions and the second by 437 to 144 with 60 abstentions. The Council gave final approval on 25 June 2026, with the rules taking effect the day after publication in the Official Journal.
A US built car therefore now enters at 0 per cent duty where the identical model built elsewhere enters at 10 per cent. On the 200,000 EUR example that is 20,000 EUR of duty removed, and because VAT is charged on the smaller base it drops too: at 19 per cent the VAT falls from 41,800 to 38,000 EUR. The total saving is 23,800 EUR, not 20,000, for the same reason the charges compounded in the first place.
Two cautions belong next to that. The preferences carry a sunset clause and a safeguard mechanism, so they are not permanent. And secondary reporting on the vote widely quotes "440 to 151 with 50 abstentions", which matches neither of the two actual results. When a tariff decision is worth five figures on a single car, the Parliament's own record is the one to read.
What the customs value actually is
The customs value is not the number on the bill of sale. It is the transaction price brought to the frontier of the Union, which means the price paid plus the costs of getting the car there. Freight, insurance and any handling before the border are inside the value and therefore inside both the duty and the VAT.
- Freight to the EU frontier. Enclosed transport and container shipping are part of the value, so a more careful shipping method raises the tax as well as the freight bill.
- Insurance in transit. Also inside the value.
- Costs after the frontier. Onward transport within the Union sits outside the customs value, which is why the place the goods enter free circulation is a decision and not an accident.
- Buying commissions. Treated differently from selling commissions, and this is a common point of dispute at declaration.
A car bought for 200,000 EUR with 6,000 EUR of freight and 1,200 EUR of transit insurance has a customs value of 207,200 EUR, not 200,000. At 10 per cent duty and 19 per cent VAT the total charge rises from 61,800 EUR to 64,024.80 EUR. The 7,200 EUR of shipping therefore carries 2,224.80 EUR of tax with it, which is 30.9 per cent of the shipping cost, because the duty taxes it once and the VAT taxes it again along with the duty.
The case where none of it applies
A car that was already in free circulation in the Union, was exported, and comes back unaltered may qualify for relief as returned goods. The conditions are narrow and they are about identity and time rather than about ownership, which surprises people: the question is whether the goods coming back are the goods that left, not whether the same person owns them.
This is the route that matters for a car taken abroad for a season, for a rally, or for a period of residence. It is also the route most frequently lost through paperwork, because proving that the car left is a document that nobody keeps unless they were told to keep it before they left.
Customs is not the end of it
Clearing customs makes the car legally present. It does not make it registrable. Type approval, national registration tax and the annual circulation tax are separate matters decided by the member state, and in several of them the registration charge is larger than the duty and the VAT together. Denmark's progressive registration tax reaches 150 per cent on the portion of taxable value above DKK 237,400, a rate that makes the 10 per cent at the border look like a rounding item.
The practical order for anyone pricing this properly is: establish origin, then customs value, then duty, then import VAT, then the destination state's registration regime, then the annual charge. Stopping after the second step is how a car arrives at a price that bears no relation to the one that was budgeted.
Questions readers ask
Is the duty on a car entering the EU really only 10 per cent?
The duty is 10 per cent of the customs value for cars of CN heading 8703 from a third country without a preferential agreement. It is the smaller charge. Import VAT follows at the destination state's standard rate, calculated on the customs value plus that duty, and the standard rate is at least 15 per cent everywhere and reaches 27 per cent in Hungary.
Do duty and VAT simply add together?
No. VAT is charged on the customs value with the duty already included, so the two compound. On a 200,000 EUR customs value at 10 per cent duty and 19 per cent VAT, the VAT is charged on 220,000 EUR and comes to 41,800 EUR rather than 38,000 EUR.
Does a US built car still attract 10 per cent duty?
Not since the 2026 regulations. The EU removed its remaining customs duties on US industrial goods including passenger cars, adopted by the Parliament on 16 June 2026 and finally approved by the Council on 25 June 2026. Origin decides this, so a Japanese car exported from the United States is not covered.
Does freight count towards the taxable value?
Yes, up to the frontier of the Union. Freight and transit insurance to the border are inside the customs value and are therefore taxed twice over, once through duty and once through VAT. Transport onward within the Union is outside it.
What if the car was originally sold inside the EU?
It may qualify for relief as returned goods, provided it is the same goods coming back and the conditions on time and condition are met. The relief is usually lost on evidence rather than on eligibility, because proof that the car left has to be created before it leaves.
Is customs the largest charge?
Frequently not. Several member states levy a national registration tax that dwarfs it. Denmark charges 150 per cent on the portion of taxable value above DKK 237,400, so the border charges can be a minority of the total cost of putting the car on the road.
Sources
- European Commission, Combined Nomenclature, on the classification of passenger cars under heading 8703 and the duty rate attached to it.
- European Commission, VAT rates, on the requirement that the standard rate be no less than 15 per cent, with no maximum.
- European Parliament, green light to tariff legislation, for the vote counts of 16 June 2026 on both regulations.
- Council of the EU, final approval, on the adoption of 25 June 2026 and entry into force the day after publication.
- Motorstyrelsen, registration tax and rates, for the Danish bracket structure quoted in the closing section.