Did a service member stationed in Germany qualify as a new Texas resident when bringing home a foreign-purchased vehicle?

Plain-English summary

The Texas Comptroller said a U.S. Army sergeant stationed in Germany remained a Texas resident for motor vehicle tax purposes because he maintained Texas as his home of record.

The service member therefore did not qualify for the new-resident alternative when bringing the newly purchased vehicle into Texas. The letter also stated that the vehicle had to have been previously registered to the new resident elsewhere, which this never-registered vehicle had not been.

For a Texas resident buying a vehicle outside the state and later operating it in Texas, the letter imposed use tax on the purchase price. It allowed credit for similar tax paid to another state but not for tax paid to another country. The requester said the vehicle purchase would not bear German tax.

STAR expressly warns that the 6 1/4% use-tax rate and $15 new-resident amount quoted in the original text are no longer current.

What this means for you

Military personnel

Being stationed outside Texas did not make a person with a Texas home of record a new resident upon return under this historical rule.

Vehicle importers

The letter distinguished tax paid to another U.S. state from tax paid to a foreign country when calculating credit.

Relocation advisers

Check home-of-record and prior-registration facts separately from the physical location of the service member.

Common questions

Q: Was the service member a new Texas resident?

A: No.

Q: Did the letter allow credit for foreign-country tax?

A: No. It allowed credit only for similar tax paid to another state.

Q: Had the vehicle been registered elsewhere?

A: No. The requester described it as new and never registered.

Q: Are the rates in the letter current?

A: No. STAR expressly warns that they are obsolete.

Citations and references

• Texas Tax Code motor vehicle use tax and new-resident provisions; the letter did not identify section numbers.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/9902248L

Original ruling text

ALERT: The tax rates (including the New Resident rate) cited in this article are no longer the current motor vehicle sales tax or motor vehicle rental tax rates.

February 18, 1999

<**>

Dear **:

Thank you for your recent email concerning the taxability of a motor vehicle that you may purchase outside this state and then later bring the unit into Texas.

A Texas resident who purchases a vehicle outside this state and then operates it into Texas is subject to a 6 1/4% use tax based on the purchase price. Credit is allowed for similar tax paid only to another state, not another country.

A new resident to this state who brings a vehicle into this state is subject only to a $15 new resident use tax in lieu of the 6 1/4% tax. A person in the military who has maintained Texas as their home of record is not considered a new resident for this purpose. Also in order to qualify for the new resident provision the vehicle must have been registered to the new resident previously elsewhere.

If you have any questions please feel free to contact this agency. From within the US you may contact one of our tax specialist by calling 1-800-252-1382, toll free.

Sincerely,

Curt Swenson

Tax Policy Division

To whom it may concern,

My name is **, I am a sergeant in the US Army based in Germany, Europe. I am due to return to Texas in November of this year after completing a three year tour. I am currently thinking of buying a new car over here in Germany and shipping it back to the States when I return. The vehicle is a 1998 Mazda MPV van. Although it is a 98 model it is a brand new vehicle and has never been registered before. It is of course US specifications. Due to me being stationed over here under a SOFA agreement I do not have to pay any German taxes on the purchase. My question is, when I come back to Texas in November (under government orders) and I register the vehicle in Texas, what taxes (if any) will I be liable for. My home of record is * TX ***.

I am about to purchase this vehicle but do not want to get a massive tax bill when I return.

Thank-you in advance for your help. Please reply by email to this address.

Yours sincerely