VW boss admits Irish cars face extra tax liability

Volkswagen has notified the Government that extra tax may be due on Irish cars caught up in the firm’s latest emissions scandal. Last week Volkswagen said up to 800,000 cars across its brands were sold with understated CO2 figures.

In a letter to Minister for Finance Michael Noonan, the car giant's chief executive Matthias Müller says that as CO2 values are relevant for taxation "this could affect taxes or other public charges already assessed or to be assessed".

"We would like to inform you and the taxing authorities which are subordinated to your ministry – also in the name of the Group companies Audi AG, Seat SA and Skoda Auto AS – that this could also be the case in your country." However, he said the company would meet the cost of any increased tax liability.

Changes to official CO2 emission figures are likely to have implications for Vehicle Registration Tax (VRT) paid on the purchase of the cars and annual motor tax. Several models sold by Volkswagen, Skoda, Seat and Audi suspected of being caught up in this scandal are within a few grammes of CO2 from a change in their tax band.

In the letter seen by The Irish Times, Mr Müller states that while the scale of the understatement in emissions is still unclear, the firm “guarantees that potential additional taxes will be settled by Volkswagen Group”.

“We would be grateful if also you would be willing to allow – if necessary through legal or administrative measures – that the competent tax authorities do not impose any potential additional public charges to our customers but rather to Volkswagen directly.”

The latest emissions scandal was uncovered during the firm’s internal investigation into an earlier admission in September that it had fitted cheat software to 11 million vehicles in order to deceive US regulators testing for harmful nitrogen oxide (NOx) emissions.

Meanwhile, Irish dealers have been issued with forms for buyers of new Audi, Skoda, Seat and Volkswagen models suspected to be part of the latest scandal.

The forms state the customer accepts that sales staff have explained that CO2 emissions and fuel consumption values “for the vehicle which I am purchasing, as described in the brochures, catalogues and in any other marketing materials I have received or seen relating to the vehicles, may be inaccurate. I have been told that these values are currently under revision and may increase.”

A spokesman for VW Group last night said: "We are reacting to the press release of last week highlighting 800,000 vehicles under review for CO2 values – and proactively informing customers if they are ordering a passenger car potentially impacted."

While the NOx scandal was regarded as the worst in the German firm’s history, the tax implications from this CO2 admission are more significant for European buyers. There is no proposed fix or recall of cars over the understated CO2 figures, so VW is likely to have to cover not only the underpayment of tax in the past, but also any future increase in motor tax due on the cars.

It is still unclear which models are affected, although it has been confirmed that the latest scandal concerns EA 288 engines, although not all these engine types are involved. The EA 288 engine has been sold in 1.4l, 1.6l and 2l diesel variants. Some petrol models are also affected in the CO2 scandal.