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Vehicles as an investment from a non-resident

Recently, the Internet is full of information that 2018 is the latest year when it is possible to purchase a vehicle that has been used for “preferential excise tax”.

As it is known, from 01.08.2016, the Law of Ukraine of May 31, No. 1389-19 on the stimulation and development of the market of second-hand vehicles, came into force. This law is valid until December 31, 2018 and provides for a significant reduction in excise tax rates for the import of used cars, subject to special conditions and restrictions.

We, in turn, are talking about the acquisition of a non-used and completely new car, using a ready-made business tool – a non-resident company.

The starting point of our acquisition is, in fact, the choice of a vehicle. In this case, the higher the cost of the car (its class), the more significant the saving will be.

So, in stages:

  1. Choice of a vehicle. There are many online resources where you can have a great time choosing a vehicle. As an example, here is www.lexus.com. On this site, you can easily find the model you are interested in and choose the equipment that suits your needs. Perhaps, it will be necessary to enter the so-called postal code to search for the appropriate dealer and choose the equipment. All zip codes can be seen at this link http://amerikos.com/usa/post-s/. It is better to choose the state which is the closest to the port, since subsequently the purchased car must be transported for loading on the ship. To be honest, we will compare the model 2018 RX 450h F SPORT (worth $51055 in America) with a similar model from the Ukrainian salon (worth $90,500). The cost of delivery of a car to Ukraine consists of the costs of transporting it to the port of departure and from the port of departure to the port of destination. As an example, the average cost of shipping from the port “Newark” to the port of entry “Odessa” (Ukraine) is about $ 1600, including transportation directly through the territory of America. If desired, you can additionally make vehicle insurance for the entire delivery period. The cost of such insurance is 1% -1.5% of the declared value of the car.
  2. Amendments to the constituent documents of the Ukrainian company. While the car is on the way, it is necessary to go through the procedure of amendments to the constituent documents of the Ukrainian company (if it already exists). Namely, include a non-resident company in the composition of the participants of the Ukrainian company, which, in turn, will contribute to the authorized capital of the Ukrainian company with the property – a vehicle. Usually, this is done by increasing the authorized capital of the Ukrainian company. The only thing is that it is important to take into account the regulatory act that determines the status of the Ukrainian company as a company with foreign investment. The enterprises (organizations) of any organizational and legal form, created in accordance with the legislation of Ukraine, foreign investment in the authorized capital of which, if available, is not less than 10% were included in the category of “enterprise with foreign investment”, taking into account the provisions of Ukrainian legislation (art. 1 LU “On the regime of foreign investment”, Article 63 of the СC of Ukraine). The registration of such changes will not be a significant expense and can be estimated by us up to $150. All information about the vehicle, which will be the subject of a contribution to the authorized capital, can be obtained on the basis of documents confirming the purchase of such a car. This is actually the original of the technical passport (Title), documents confirming the purchase (Bill of Sale), and a Bill of Landing. After the adoption of the Law of Ukraine on May 31, 2016 “On Amendments to Certain Legislative Acts of Ukraine concerning the abolition of mandatory state registration of foreign investments”, the need to register a foreign investment for exemption from payment of an import duty has disappeared.
  3. Actual arrival. Upon the arrival of the vehicle in the port of Odessa (in practice it takes about 6-8 weeks), it is necessary to carry out customs clearance of the cargo. Guided by the numerous offers of online calculations of customs payments, we have come to the conclusion that the approximate costs of customs clearance of such a vehicle would amount to $21,600. In addition, it will be necessary to pay the vehicle’s certificate of conformity and brokerage services. The approximate cost of such services will not exceed $1000. Thus, having combined all payments, we will receive a total amount of $75405, which is 16.8% less than the market value of such a vehicle on the Ukrainian market.

On the one hand, this is a fairly substantial discount in the scale of such an acquisition, and on the other hand, you are engaged in this process yourself, expect the arrival of your vehicle within 7-8 weeks, not including the time for choosing a car and customs clearance, and, after all, you take care yourself of putting such a vehicle on warranty service in Ukraine. The choice is yours.