What are the impacts of under-reporting the invoice amount for a new car?
3 Answers
Under-reporting the purchase invoice price for a car may result in a lower valuation during second-hand transfers. Here are the relevant details: 1. Relevant rules: The ex-factory price of a vehicle does not include value-added tax, meaning the invoice price is the ex-factory price plus tax, creating a certain difference between the two. The ex-factory price refers to the total price of the vehicle itself, excluding any additional fees, and is generally the manufacturer's suggested retail price (MSRP). 2. Drawbacks: If the invoice price is under-reported, when transferring the car, buyers will only refer to the invoice price, leading to a lower transfer price. Similarly, in cases of theft, flood, fire, or collision insurance claims, the insured amount is usually calculated based on the invoice price. Additionally, when pursuing compensation from the manufacturer for quality issues, it may be difficult to claim based on the actual purchase price, and compensation will only be based on the invoice price.
When I bought a car, I heard that under-reporting the invoice could save on purchase tax, but later realized the risks are significant. The temporary benefit of paying less tax is outweighed by the potential consequences if the tax authorities investigate. You might end up paying back taxes plus fines, which could exceed the amount saved, and in severe cases, you could be blacklisted, affecting loans or home purchases. Moreover, a low invoice amount also disadvantages you during insurance claims. For example, if your car is totaled, the insurer will compensate based on the invoice amount, leaving you to bear the actual extra cost. In the long run, this practice is not worth it. I advise against cutting corners—issuing a proper invoice is much safer. Buying a car is a major decision; ensure everything is legal to avoid future disputes.
As someone who has handled numerous auto insurance cases, I've seen issues arise from under-invoicing. The invoice amount determines the maximum compensation. If your car's actual value is high but the invoice is low, in the event of an accident, the insurance company will only cover the invoiced amount, leaving you to pay the difference out of pocket. Worse still, if the car is stolen or totaled, the loss is even greater. Additionally, while saving a bit on taxes might seem appealing, if caught, the fines can be doubled, not to mention the legal risks involved. Considering all factors, the disadvantages of under-invoicing outweigh the benefits. I advise car owners not to take the risk—normal invoicing protects your rights and interests.
