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Remember pratfalls that may await when selling vehicles abroad

November 16, 2010

A weakened U.S. dollar compared to foreign currencies has sparked a hefty increase in the number of foreigners who are contacting dealers to purchase vehicles.


As a reminder, the transaction is exempt from sales tax if the dealer delivers the vehicle to a freight forwarder who will arrange for shipment to the vehicle’s destination. If the purchaser takes delivery in Illinois but pledges that the car will be exported, sales tax must be charged.


Dealers also should remember the limitations imposed on them by their manufacturers for selling new vehicles abroad. Most, if not all, manufacturers prohibit U.S. dealers from selling new vehicles outside the country. When such sales do take place, dealers run the risk of substantial charge backs (loss of rebates and other manufacturer incentives). Manufacturer warranties also might be voided.