You're reading: How to import a vehicle without paying a fortune

Imported cars can cost 40 to 100 percent more in Ukraine than in the European Union or North America. The culprits are customs duties, excise taxes and value-added tax. Complex rules of the game, however, mean that a number of loopholes can be used by resourceful individuals to bypass the extra costs.

A vehicle’s make, age, engine size and fuel type determine the customs duty. Then there’s an excise tax based on the engine’s size. And then there’s a 20 percent value-added tax, which consists of the total customs value of the car, customs duty and excise tax.

These are all costs that auto importers are forced to pass on to buyers.

“The killer is the (20 percent) VAT,” said Petro Rondiak, premium brands director for Winner in Kyiv, an importer of Ford, Jaguar, Volvo, Land Rover and Porsche cars.

Thus, a used car no older than five years valued at $10,000 with a 2.3-liter, gas-run engine will cost $9,989 to get across the Ukrainian border, according to InfoCar, an online automotive consultancy. The breakdown includes: a 10 percent customs duty of $1,000, an excise tax of $5,658 at two euros ($2.44) per cubic centimeter of engine and then the 20 percent VAT of $3,332.

If anyone bypasses the local car dealership, the initial car registration with traffic police will run at $57, at Hr 0.20 per cubic centimeter. An additional $500 goes to the pension fund.

InfoCar project manager Pavlo Kashchuk said these measures, meant to protect domestic producers, are illogical. Ukraine’s national automaker ZAZ doesn’t produce luxury cars like Lexuses or pick-up trucks, he explained, only compact and city class cars. Instead, the heavy taxes exist “to fill state coffers,” said Kashchuk.

There are, however, legal ways to bypass customs.

There’s a clear-cut window of opportunity for permanent residents of Ukraine to save money if they bring a car purchased from their former country of residence within six months of receiving their residency permit in Ukraine. The car’s title must be registered in their name, the owner must accompany the car when entering Ukraine’s customs zone, and it must have been purchased at least one year prior to receiving permanent residency status.

“The new permanent resident must have resided in their former country of residence, where they bought their car, not less than three years,” said Mykhailo Budul of the Justicon law firm.

Permanent residents can also bypass customs if they inherit a car abroad or win a vehicle in a foreign competition. Foreigners can also bring in vehicles as part of an investment.

“Let’s say you’re a Dutchman who is invested in a Ukrainian farm. You could bypass customs and bring in a pick-up truck or other vehicles that you must prove are in-kind investments,” explained Budul.
Non-residents, including expatriates who temporarily reside and are legally employed in Ukraine, can keep their cars in Ukraine for up to one year without making customs or VAT payments, according to the new customs code that came into force on June 1.

But car owners must register with the traffic police if their vehicles stay longer than two months in Ukraine.

Cars of Ukrainian citizens who reside abroad could stay for up to 60 days without having to pay customs or VAT. But to bring a car into Ukraine, they would have to be registered at their local consulate abroad as residing outside Ukraine.

“Presumably, all you would have to do is drive your car to the nearest border point, exit and re-enter to stay an additional term,” said Budul.

But this implies the owner can legally stay in Ukraine for that long, Budul added, which carries its own set of problems.

Finally, the so-called “co-ownership” clause also exists. Both residents and non-residents listed as co-owners of a vehicle with a foreigner living outside Ukraine on the car’s deed or title can enter Ukraine without paying customs or VAT. Relevant legislation is unclear.

Ukrainians who are registered as co-owners with a foreigner in car brought into Ukraine can only stay in-country for 10 days without paying VAT or customs.

“But if the foreign co-owner drives the car, they can stay for up to one year, but they are the only ones who can drive the car, not even the other Ukrainian co-owner,”said Budul.

Kyiv Post staff writer Mark Rachkevych can be reached at [email protected].