Buying a car in the European Union

Buying a new car is in most cases a major purchase. As a result, many consumers make use of the European Single Market to compare offers from car dealers throughout the European Union (EU) in order to buy the car of their dreams at the best price.

This section aims to provide the main information on buying a car in the EU, importing it and registering it in your country of residence.

VAT

Buying a car in another EU Member State (MS) raises the question of whether VAT should be paid in the buyer’s or seller’s country. It is therefore essential to define the concepts of new and used cars.

For tax purposes, a used car is defined as a vehicle that has been registered for more than 6 months and has been driven for more than 6,000 km. VAT on such a car will have to be paid in the seller’s country.

The buyer of a new car, on the other hand, pays VAT when the car is imported into their country of residence. The price to be paid to the seller is therefore the price without VAT.

Note: If the seller demands payment of VAT at the time of the sale, ask for a written commitment to see the VAT refunded as soon as one can prove that the car has been exported. This can be done by sending the seller a copy of the VAT document proving payment of VAT and the registration document in one´s country of residence.

Contract of sale

Even if an oral contract is legally binding, it is still difficult to prove a commitment as such.

In order to be able to prove such an agreement, it is essential to specify the characteristics of the car and the conditions of the sale in a written contract.

The following information is to be included in the sales contract :

  • The name and address of the seller and, if applicable, his VAT and company registration number.
  • The price
  • When selling a new car exported to another EU Member State, the price should be stated without VAT
  • When selling a used car, the selling price should include VAT
  • A detailed description of the vehicle, included equipment and its identification number
  • The mileage of the vehicle at the time of sale
  • The terms of payment of the selling price
  • the terms of delivery
  • The duration of the commercial guarantee (if applicable)
  • The trade-in price of the old car (if applicable)
    Also : When handing over the car, make sure that the seller gives you an itemised invoice, the original versions of all vehicle documents (the vehicle registration document, in Germany ‘Zulassungsbescheinigung Teil 1 und 2’) and the European Certificate of Conformity (COC).

At this point, consider examining the car and its equipment for possible defects such as scratches in the paintwork or other damage.

Legal guarantee and commercial guarantee

In the context of the conclusion of a sales contract between a consumer and a trader, a distinction must be made between the legal guarantee and the commercial guarantee.

The conditions of the legal guarantee are defined by law and any clause to the contrary is deemed to be null and void. Thus, every consumer is protected by the provisions of the legal guarantee.

On the other hand, the conditions of the commercial guarantee are a matter of contractual freedom and are freely defined by the trader offering this additional guarantee to the consumer.

Legal guarantee

In principle, the seller is liable for defects in the goods within two years of the conclusion of the sales contract. Thus, the costs of repairs are normally covered by the seller under the legal guarantee.

However, when you buy a second-hand car, the seller may decide to reduce the duration of the legal guarantee to one year.

A professional seller cannot exclude the legal guarantee, neither for a new nor for a second-hand car.

If you find a defect within 12 months following receipt of the vehicle, it is up to the seller to prove that there was no defect. After the first 12 months period, it is up to the buyer to prove the existence of the defect, usually by means of an expert opinion.

It is important to note that a seller may refuse to pay for repairs if they are carried out by a third party (e.g. another garage) or by the buyer themselves whilst the seller has not agreed to the repair beforehand.

Therefore, one should be sure to report any defects to the seller as soon as they appear and duly obtain the seller’s consent to repair the defect.

Note: not all defects automatically constitute a case triggering the applicable legal guarantee.

Normal wear and tear of certain parts, such as that of the brakes or tyres, is not covered by the legal guarantee.

Commercial warranty

When buying a second-hand car, it may be useful to opt for a commercial warranty.

The latter is useful, yet it is however  important to find out beforehand what the scope of the contractual guarantee is, as freely defined by the dealer.

In particular, the dealer may stipulate the types of repairs and the level of repair costs which is covered by the commercial guarantee.

The terms of the commercial guarantee often provide that

  • the exchange or repair of certain parts is excluded (e.g. the exchange or repair of wearing parts).
  • labour costs are not or only partially covered (e.g. when the actual repair time exceeds the time specified by the producer for such a repair).
  • depending on the mileage of the vehicle, repair and labour costs are only partially covered.
  • any defect must be reported to the person who issued the commercial guarantee (the seller, the manufacturer, the insurance company responsible for the guarantee) before it is repaired.

Please note: the protection afforded by the legal guarantee exists regardless of whether or not a commercial guarantee has been agreed to. The repair of a defect that appeared within the legal period must therefore in any case be carried out under the legal guarantee.

Registration in luxembourg

Various documents must be presented when registering new or used vehicles acquired in another EU Member State.

The following documents are required for the registration of a new vehicle:

  • The form ‘Application for a registration certificate’ completed and signed;
  • The stamp(s) ‘Droit de chancellerie’
  • The original invoice. If necessary, a translation of the document may be required;
  • A valid insurance certificate;
  • The customs document, sticker ‘705’;
  • The registration document, if one has been produced;
  • The European certificate of conformity;
  • A photo of the manufacturer’s plate;
  • The presentation of a passport, an identity card of the owner and/or holder of the vehicle;

Each document to be produced must be presented in its original version

Source: SNCA

The following documents are required for the registration of a used vehicle:

  • The form ‘Application for a registration certificate’ completed and signed;
  • The stamp(s) ‘Droit de chancellerie’;
  • The original invoice, in case of sale by a company, or the original sales contract, in case of sales between private individuals. If necessary, a translation of the document may be required;
  • A valid insurance certificate;
  • The custom document, sticker ‘705’;
  • The registration document. If necessary, a translation of the document may be required;
  • The presentation of a passport, an identity card of the owner and/or holder of the vehicle;

If the vehicle was registered for the first time after 1 February 2016:

  • The European certificate of conformity;
  • Where the vehicle is subject to periodic technical inspection:
  • the valid technical inspection certificate issued for the vehicle by a technical inspection body approved in Luxembourg;
  • the valid technical inspection certificate issued by the competent authorities in the country where the vehicle was last registered (applies to the Member States of the European Economic Area or Switzerland). This certificate may be accepted when registering the vehicle in Luxembourg, provided that the period of validity of the certificate does not exceed that provided for by Luxembourg regulations. The roadworthiness certificate must be written in one of the official languages of Luxembourg. If necessary, it must be translated by a sworn translation agency in Luxembourg in order to be accepted (under cover of the conformity of the technical inspection).

In the absence of a translated roadworthiness certificate, the vehicle may also be presented to a Luxembourg-approved roadworthiness testing organisation before registration.

Each document to be produced must be presented in its original version. For more information, see "Periodic roadworthiness inspection of vehicles".

Source: SNCA