Buying in Montenegro.

[stillwaters]

We are currently thinking of switching our boating area to the Adriatic, initially mainly to Croatia, and I've noticed a couple of boats of interest, but both coincidentally happen to be for sale in Montenegro. Neither are EU registered or vat paid.
So the question is, is anyone aware of any particular pitfalls of buying here or, can anyone give any recommendations. For instance, one obvious problem would be regarding the vat payment - even if I was to leave a newly purchased boat in Montenegro, which might be debatable anyway, would it now be wise to still rely on the 6 month rule whilst temporarily visiting Croatia with the vat still unpaid. Incidentally, neither boat is British registered, although this is something I would do, though of course this has no bearing on the vat situation.
Also, does anyone know if there is any way, short of returning the boat to UK waters, of paying the lower 20% vat rate, in lieu of say the 25% Croatian rate?
Apologies if this has all been done before
Thanks in advance for any input.
J.

 

[Deleted User YDKXO]

BartW of this parish is the man to tell you all about this because he berths in Montenegro and cruises into Croatia regularly

In general and as I understand it, EU VAT is payable in the first country of EU entry. One alternative would be to take a trip to Malta and take advantage of their leasing arrangements which would allow you to legally pay EU VAT at about 6% of the boat value. One disadvantage is that I believe you have to make 2 trips to Malta, one at the beginning and one at the end of the lease agreement and the other disadvantage is that there is an admin cost to doing it

 

[stillwaters]

BartW of this parish is the man to tell you all about this because he berths in Montenegro and cruises into Croatia regularly

In general and as I understand it, EU VAT is payable in the first country of EU entry. One alternative would be to take a trip to Malta and take advantage of their leasing arrangements which would allow you to legally pay EU VAT at about 6% of the boat value. One disadvantage is that I believe you have to make 2 trips to Malta, one at the beginning and one at the end of the lease agreement and the other disadvantage is that there is an admin cost to doing it

I look forward to hearing from Bart then if he picks up on this, though isn't his boat Belgian registered?
Thanks also for the outside-the-box thought about Malta. Not sure about the downsides though, almost a year's boating in one trip, there and back, and I'm under the impression that in the ever-tightening world of EU taxation, that this may not be a loophole for that much longer. Still, worth looking into, thanks.

 

[Deleted User YDKXO]

I look forward to hearing from Bart then if he picks up on this, though isn't his boat Belgian registered?

Not sure but he certainly has experience of clearing in and out of Croatia from/to Montenegro and should be able to advise on the VAT situation

 

[Pinnacle]

Nope - BartW's boat is UK registered.

 

[Mad Pad]

Hi Guys,

I have been based in Porto Montenegro for about 6 years.

Had Bart on board for a few bevvies recently,his is berthed near me on D Pontoon.

He fly's a Belgian flag not UK.

OP, If you want me to check out your potential new purchase let me know....I'm going there on Thursday .

Best Mad Pad

Sorry to have missed the main issue,yes I believe VAT is payable at the rate prevailing at the first port of entry into the EEC.

 

[Pinnacle]

I bow to your more up to date knowledge. :encouragement:

ITU database stills shows Blue Angel as UK registered. I wonder if Bart has forgotten to update (or maybe they are slow!)?

 

[Tranona]

As already said VAT will be payable at first EU state of entry. There is no way you can use the boat at all in the EU unless you are a non EU resident. You may well find VAT in Croatia or Greece more favourable, even with the higher rate as valuations on which the tax is paid tend to be low, particularly on an older boat. You should investigate this directly, but you will probably have to use an agent - Deleted User can give you the name of a good agent in Croatia.

Once you have paid VAT you can move freely both within the EU and outside, provided you do not permanently take it outside. If you want to keep the boat in montenegro it is easy to make an annual visit to an EU state to maintain the VAT paid status. Having VAT paid in croatia will be a big advantage in the future as we don't know what will happen to UK VAT paid boats when we leave the EU.

As for buying a boat in Montenegro, much will depend on the history of the boat, its owner and state of registration. The key thing is that you get clear title with sufficient documented history to show the seller has the right to pass title.

 

[stillwaters]

OP, If you want me to check out your potential new purchase let me know....I'm going there on Thursday .

Very kind of you to offer, thanks. I also happen to be coming out to PM at the end of this week to check out at least one or maybe two boats nearby. Might see you there if the bevvies aren't that black stuff with the frothy tops.

 

[stillwaters]

As already said VAT will be payable at first EU state of entry. There is no way you can use the boat at all in the EU unless you are a non EU resident. You may well find VAT in Croatia or Greece more favourable, even with the higher rate as valuations on which the tax is paid tend to be low, particularly on an older boat. You should investigate this directly, but you will probably have to use an agent - Deleted User can give you the name of a good agent in Croatia.

Once you have paid VAT you can move freely both within the EU and outside, provided you do not permanently take it outside. If you want to keep the boat in montenegro it is easy to make an annual visit to an EU state to maintain the VAT paid status. Having VAT paid in croatia will be a big advantage in the future as we don't know what will happen to UK VAT paid boats when we leave the EU.

As for buying a boat in Montenegro, much will depend on the history of the boat, its owner and state of registration. The key thing is that you get clear title with sufficient documented history to show the seller has the right to pass title.

Thanks, there are at least two interesting points you make, firstly regarding the usefulness of a possible low valuation, and then of course, the eventual UK vat position with the EU, anyway. Presumably though, when paying tax wouldn't it now be usual to have to present an actual bill of sale to prove the amount of vat to be paid, or is this still 'negotiable'?

 

[westernman]

Thanks, there are at least two interesting points you make, firstly regarding the usefulness of a possible low valuation, and then of course, the eventual UK vat position with the EU, anyway. Presumably though, when paying tax wouldn't it now be usual to have to present an actual bill of sale to prove the amount of vat to be paid, or is this still 'negotiable'?

If you have just bought the boat, then you will have a hard time getting/justifying a valuation different from your purchase price.

AFAIK getting a low valuation is only possible if you have owned the boat for at least a year before importation. This was the case when my boat was imported into the UK when it was about one year old. The value accepted by UK customs at arrival in Cowes after having sailed from Canada was a fraction of its build cost.

 

[Deleted User YDKXO]

Thanks, there are at least two interesting points you make, firstly regarding the usefulness of a possible low valuation, and then of course, the eventual UK vat position with the EU, anyway. Presumably though, when paying tax wouldn't it now be usual to have to present an actual bill of sale to prove the amount of vat to be paid, or is this still 'negotiable'?

I kept a 53 footer in Croatia for 4 yrs and whilst I was there I took advantage of the 5% VAT amnesty that Croatia had in place prior to its accession to the EU. The idea of that amnesty was to discourage boats from leaving Croatia for places like Montenegro and Bosnia when the full rate of VAT was brought in on accession. Anyway before you ask that 5% VAT amnesty is now history. When the value of my boat was being assessed for VAT I was unhappy with the valuation and I made that clear to the agent who was handling the process. He found another surveyor who was willing to make a lower assessment of its value for a modest consideration and everybody was happy. There was never any issue about what I actually paid for the boat

The agent handling my VAT process was Maritimus http://www.maritimus-consultant.hr/. The man's name was Sinisa and he used to post on this forum a few years ago. I dont know whether he's still around but it might be worth contacting them to see how flexible the VAT process in Croatia can be.

Tranona is right IMHO. All things being equal it is probably wise to pay EU VAT somewhere else other than the UK. Nobody knows how UK VAT paid boats might be hassled in the Med after Brexit

 

[stillwaters]

I kept a 53 footer in Croatia for 4 yrs and whilst I was there I took advantage of the 5% VAT amnesty that Croatia had in place prior to its accession to the EU. The idea of that amnesty was to discourage boats from leaving Croatia for places like Montenegro and Bosnia when the full rate of VAT was brought in on accession. Anyway before you ask that 5% VAT amnesty is now history. When the value of my boat was being assessed for VAT I was unhappy with the valuation and I made that clear to the agent who was handling the process. He found another surveyor who was willing to make a lower assessment of its value for a modest consideration and everybody was happy. There was never any issue about what I actually paid for the boat

The agent handling my VAT process was Maritimus http://www.maritimus-consultant.hr/. The man's name was Sinisa and he used to post on this forum a few years ago. I dont know whether he's still around but it might be worth contacting them to see how flexible the VAT process in Croatia can be.

Tranona is right IMHO. All things being equal it is probably wise to pay EU VAT somewhere else other than the UK. Nobody knows how UK VAT paid boats might be hassled in the Med after Brexit

Yes, I remember reading your interesting posts on this at the time. Maritimus still has a live website, so guess he's still plying his trade, and I will give him a call if I get to the buying stage. How long though had you had your boat, as others have said, timescale might be quite important in order to do this. I also wonder, with the supposedly ever-tightening tax enforcement that exists, if this is still as easy to do now, or whether paperwork has now become more relevant.

Tranona's point opens up a whole new can of worms, of course. Perhaps paying vat in Greece might not be wise either, then? I have heard that there are some great boating areas in North America, by the way!

Just on another point though, it wasn't just the tax situation when buying in Montenegro that I was questioning. Obviously, I didn't clarify this adequately, but I was also wondering how straightforward brokers etc were to deal with there, and whether anyone had come across any problems that it could be useful to be forewarned about.
J.

 

[stillwaters]

If you have just bought the boat, then you will have a hard time getting/justifying a valuation different from your purchase price.

My thoughts entirely, and potentially quite a gamble as the difference involved could be quite a lot of money.
J.

 

[Deleted User YDKXO]

How long though had you had your boat, as others have said, timescale might be quite important in order to do this.

I'd had my boat about 2 yrs before I applied to pay VAT in Croatia but nobody asked what I paid for it or to see any bill of sale. What counts is the value on importation. Without being too blunt about it, the customs authorities know that bills of sale or invoices can be artificially fabricated to show a low value and they've got no real way of knowing what you actually paid for the boat anyway. FWIW in Spain the authorities have an official book by which they calculate the value of a boat for tax purposes and possibly in other countries they do the same. However in Croatia a valuation by a recognised surveyor was sufficient at the time I paid my VAT

 

[Tranona]

If you have just bought the boat, then you will have a hard time getting/justifying a valuation different from your purchase price.

AFAIK getting a low valuation is only possible if you have owned the boat for at least a year before importation. This was the case when my boat was imported into the UK when it was about one year old. The value accepted by UK customs at arrival in Cowes after having sailed from Canada was a fraction of its build cost.

That is not the case in all states. The "rules" state that VAT can be based on valuation, and states operationalise this differently. Croatia, for example used a German based equivalent of "Glasses Guide", other states use their own valuation, Greece uses a depreciated figure based on original purchase price and years.

 

[BartW]

Our Boat is now her 3th season in Porto Montenegro,
we had her re- registered to private / Belgium flag
actually the boat is NOT vat paid, but it is a special case; the boat was bought by my VAT registered co in Belgium, from a VAT registered co in Italy
(inter EU transaction between VAT co's is no VAT to pay)
we have all doc's onboard to proove this, and never had a issue when passing the Croat border.
we did many passages of the border from Montenegro to Croatia, and had quite a few inspections of the papers, but never had a problem
our first season, (3y ago) we had customs staff asking for the VAT papers during each passage,
the last two seasons, they didn't asc anymore for the VAT docs, It appears that they don't care about it anymore,

now re OP,
I see more and more eu people in the port, and some of them bought the boat there locally,
there are quite a few brokers operating in the region,
so I guess the buying process in Montenegro is now organised and going OK, but I have no practical experience on this
There are quite a few Britisch people working in management positions...
so I guess they apply quite normal procedures, I can asc locally if OP wants to know more info, or has specific questions.

I agree with other posters above, that when a EU or Brit citicen will buy a non VAT paid boat in Montengro,
they will have to pay VAT when entering EU.
as explained above, there are quite a few options to lower the value of the boat, or lower the VAT, but I'm no expert in this, so can't give more advice.


FYI
using a commercially registered boat in Croatia has become much more complicated,
for every change of guests in Croatia you should make a new charter contract, and a VAT declaration,
and some harbour masters are very strict on that, and apply big penalty's when you don't do that correctly
I heard a story of a owner of a big MY, that could not go onboard his commercially registered vessel in Dubrovnik !
actually it should be the same all over europe, but I don't know in other EU country's if they are as strict as the Croats.
only solution is: change guests alway's in Montenegro / outside europe, or register the boat privately

 

[stillwaters]

Thanks Bart for all that useful info. I'm actually due out there on Thursday to check out a boat or two, as well as to see if I fall in love with the place in the continuous rain that is forecast.
It's quite interesting that you bought your own boat via your company, and yet it is not apparently commercial. Surely, as we do in the UK, if company owned, do you not have to prove it is being chartered?
J.

 

[BartW]

last Sunday I've just returned from Tivat, spending a week on the boat,
we had very good weather, 20° ! , but heavy rain started the day when we left, and its still raining I believe.

in this period of time november - marsh, it can be very rainy or nasty cold (norther wind)
but you can also have a Sunny day, and eating outside (out of the wind...)
in bad weather the place looks sad, (as everywhere I guess ;-) ) but in sushine, the place is fantastic
FYI we are very pleased with the marina, and like the place and region very much !
pls check Blue Angel on D23

re boat on a company, basically;
you can register commercially but than you need to charter her for every useage,
but you can aswell register non commercial, for own / pleasure use, but then you need to make a arrangement with the taxman, for your private use.

 

[stillwaters]

in bad weather the place looks sad, (as everywhere I guess ;-) ) but in sushine, the place is fantastic


pls check Blue Angel on D23


re boat on a company, basically;
you can register commercially but than you need to charter her for every useage,
but you can aswell register non commercial, for own / pleasure use, but then you need to make a arrangement with the taxman, for your private use.

I think that we'll look bl**dy sad ourselves if the rain doesn't let up while we're there!
We're actually travelling on the same flights as Patrick on D33, and looking forward to seeing his lovely (in the rain?) Silver Ormidale (any reasonable offer accepted, allegedly), so of course, will check out Blue Angel as well. I hope you don't expect us to clean her for you at the same time though - of course, if it wasn't raining.
Understand your ownership status now, thanks - an arrangement to pay benefit in kind whilst you presumably write-down the value of a company asset to help offset the tax. Basically what I do myself.

Thanks for your feedback.
J.