Differences in new car prices within the EU

Within the EU, there are significant price differences when purchasing a new car. This does not mean that people in Southern Europe, for example, tend to drive small cars, while in Scandinavia many SUVs are on the road, and therefore more money has to be spent on car purchases in Scandinavia. It is much more about the price difference that exists for the same manufacturer and the same model in different EU countries. This survey is carried out, among others, by the European Commission. Although it can be observed that prices are generally converging more and more, there are still considerable price differences when buying a new car, depending on the model and manufacturer. Important: The net price is considered. The price in Denmark, in particular, deviates massively from the list price advertised in Germany – and downwards. Price differences of several thousand euros can be found for most models. How is it that products are offered so much cheaper in Denmark?

Taxes make it expensive

Our neighbors to the north have a special tax system. Danes not only pay VAT when buying a car, but also an extremely high registration tax, which for obvious reasons is also called luxury tax. This tax can be up to 150%. In order to sell vehicles at all and, if possible, at attractive prices, manufacturers reduce profit margins to a minimum. The sale of vehicles in Denmark therefore has more of a representative value – significant profits are allegedly not made. Nevertheless, manufacturers want to be dominantly represented globally and therefore accept the low profit margins. Adjusting profit margins to the respective market is common. In some countries, people are less inclined to spend a lot of money on vehicles, in others it is a matter of course to regularly buy a new car and thus also present a certain standard of living. Due to the luxury tax, the price difference in Denmark is by far the most significant.

Reimport – What is it?

Taxes are only due where the car is registered. So, if a German buys a vehicle manufactured in Germany, which was produced for the Danish market and also exported there, they pay the net price in Denmark, which is significantly lower than the German net price. Since there are no tariffs on vehicles within the EU, the vehicle can be brought to Germany relatively easily. VAT is then due locally, which would also have been incurred when buying a vehicle in Germany – on a higher net price. Through reimport, the buyer therefore not only saves on the net price, but consequently also on VAT. This sounds quite simple. Is there no catch? Often, reference is made to possible safety concerns or quality differences. However, the safety concerns are unfounded: the vehicles come off the same production line and meet the same quality standards. Only the equipment can vary depending on the destination. For example, some equipment features are not available or not selectable on the significantly smaller Danish market. Various dealers specialize in reimport and can offer good purchasing advice that protects the customer from unpleasant surprises.