1979 Swiss registered yacht in America, What are the issues in bringing it back

[kunyang]

Just found this

41' Hallberg-Rassy 41 Ketch


Year: 1979
Current Price: US$ 90,000
(£ 59,175)
Located in Deltaville, VA
Hull Material: Fiberglass
Engine/Fuel Type: Single diesel
YW# 6944-2565223

and wondered what the issues would be in bringing it back to the uk. Saw similar at Ancastra last week for another £30k, so this looks like a good deal. Or is it?

 

[Tradewinds]

Good friends of mine. Cruised together in the 90s.

I think she will have been well looked after.

A powerful cruising ketch. Spent a lot of time between the Chesapeake and Bahamas in recent years.

Edit: Sorry not the answer to your question.

I'm sure Tranona will be along to give you the lowdown re: VAT, RCD etc etc

 

[Tranona]

Right on cue!

Should be no problem with RCD as it was built in the EEA, but would get confirmation from CE Proof. Otherwise VAT at 20% plus cost of getting it to UK. It is in a location where shipping is easy or for sailing it back. Shipping is likely to be over £10k with handling costs and you have to pay VAT on that, so your £30k difference has almost disappeared. Clearly less cost if you sail back yourself, but you might find the boat needs a lot of work to prepare for the crossing.


Chances are a 30+ year old boat in the US would not be in similar condition to a European based one, but don't know until you see it. Old boats are generally lower priced in the US because the market is less strong, but not really attractive to European buyers because of the costs of importing. There are, of course always exceptions so you have to look at the individual boat.

BTW registration is irrelevant for the purposes of importation and paying taxes. You will need to be sure of ownership in the normal way and then (if you qualify) put it on the SSR. The current owner will need to remove it from the Swiss register.

 

[kunyang]

i'll probably wait, but she looks very pretty!

 

[jonic]

Right on cue!

Should be no problem with RCD as it was built in the EEA, but would get confirmation from CE Proof. Otherwise VAT at 20% plus cost of getting it to UK. It is in a location where shipping is easy or for sailing it back. Shipping is likely to be over £10k with handling costs and you have to pay VAT on that, so your £30k difference has almost disappeared. Clearly less cost if you sail back yourself, but you might find the boat needs a lot of work to prepare for the crossing.


Chances are a 30+ year old boat in the US would not be in similar condition to a European based one, but don't know until you see it. Old boats are generally lower priced in the US because the market is less strong, but not really attractive to European buyers because of the costs of importing. There are, of course always exceptions so you have to look at the individual boat.

BTW registration is irrelevant for the purposes of importation and paying taxes. You will need to be sure of ownership in the normal way and then (if you qualify) put it on the SSR. The current owner will need to remove it from the Swiss register.

Beat me to it!

 

[Uricanejack]

Im missing something.

If the boat was built in Euyrop Ecanomic Community. Its not subject to VAT when imported back from America.

But if boat is Swiss then it was exported from the EEC.

If it was exported from EEC as a new boat. VAT would not have been charged. So would VAT not be required if brought back to an EEC country by an EEC member country citizen.

If not why would boats built in Britain, taken out of the country when new without paying VAT be required to pay VAT if sold and brought back to Britain

 

[macd]

Im missing something.

If the boat was built in Euyrop Ecanomic Community. Its not subject to VAT when imported back from America.

But if boat is Swiss then it was exported from the EEC.

If it was exported from EEC as a new boat. VAT would not have been charged. So would VAT not be required if brought back to an EEC country by an EEC member country citizen.

If not why would boats built in Britain, taken out of the country when new without paying VAT be required to pay VAT if sold and brought back to Britain

This is all quite wrong, so yes, you are missing something. A boat can be exported from EU then re-imported time after time and VAT will be due on each occasion. VAT is not a tax on yachts (or on any other 'things'): it's a tax on VAT-able 'events', of which permanent importation is one.

There are certain exceptions to this: an EU citizen resident overseas who returns to permanently reside in the EU may bring in certain household goods (of which a liveaboard boat might be one) without paying VAT. But this would not apply in the case the OP describes.

 

[Tranona]

Im missing something.

If the boat was built in Euyrop Ecanomic Community. Its not subject to VAT when imported back from America.

But if boat is Swiss then it was exported from the EEC.

If it was exported from EEC as a new boat. VAT would not have been charged. So would VAT not be required if brought back to an EEC country by an EEC member country citizen.

If not why would boats built in Britain, taken out of the country when new without paying VAT be required to pay VAT if sold and brought back to Britain

Wrong on all counts. What determines VAT is the nature of the transaction. Importing a boat into the EU, irrespective of where it was built, is usually a chargeable event. There are some exemptions such as returning residents or under the return of goods rules.

The registration or ownership of the boat is also irrelevant except that non residents can apply for temporary importation for example for a holiday. However, the boat cannot be sold in the EU without paying tax and complying with the RCD (or be exempt from compliance).

AN EU resident can indeed buy a boat without paying VAT if it is for use outside the EU. However there are very strict controls over such arrangements and the VAT liability remains with the seller until the correct evidence is provided showing the boat has permanently left the EU. If the owner then brings it back, VAT is payable on its market value at the time. If the VAT has been paid, the owner who took it outside the EU can bring it back in under the returned goods rules. If it is sold outside the EU the new owner is liable for VAT if he brings the boat back in.

The only way the boat in question could be brought in permanently without paying VAT is if the owner is classified as a returning resident or is taking up permanent residence in the EU. Again there are very strict rules and conditions for this, but if the owner meets these conditions the boat can then be sold after 6 months. Customs will issue a certificate saying the boat was imported under these rules and there is no VAT liability.

You can read all about it in HMRC VAT Notice No8 and there is a useful document explaining the main issues relating to VAT and boats on the RYA site.

 

[sideshowbob]

Switzerland isnt in the EU and charging VAT doesnt apply!

 

[macd]

Switzerland isnt in the EU and charging VAT doesnt apply!

Kindly explain what Switzerland has to do with it.
The boat is in Virginia, which is not part of Switzerland.
The OP proposes bringing it back to the UK, which is also not part of Switzerland.
The OP lives in Hampshire which, the last time I checked, was not famed for its magnificent views of the Bernese Oberland.

As has been abundantly pointed out, where the boat happens to be flagged at the moment is of no consequence whatever.

 

[douglas_family]

Another issue to consider is on board electrics which may need to be overhauled for UK.

 

[sideshowbob]

I was just offering the point that if the boat was swiss it would be unlikely to be vat paid already, surely that would be the point to establish first?

Kindly explain what Switzerland has to do with it.
The boat is in Virginia, which is not part of Switzerland.
The OP proposes bringing it back to the UK, which is also not part of Switzerland.
The OP lives in Hampshire which, the last time I checked, was not famed for its magnificent views of the Bernese Oberland.

As has been abundantly pointed out, where the boat happens to be flagged at the moment is of no consequence whatever.

 

[Tranona]

I was just offering the point that if the boat was swiss it would be unlikely to be vat paid already, surely that would be the point to establish first?

It is still irrelevant. See my long post above. Even if VAT has been paid sometime in the past the boat will still be liable if it enters the EU. Some minor exceptions under the temporary importation, returned goods or returning residents rules but based on the information given none of these would not apply in this situation.

The "nationality" of the boat (by its registration), or that of the owner is again irrelevant in most cases. If the boat is being imported into the EU it is potentially liable to VAT.

 

[Tradewinds]

Question for Tranona

Can you clarify one thing for an old befuddled brain?

British boat built c1980, VAT paid leaves UK shores with current owner and is away cruising overseas for more than 3 years and during that time does not visit an EU affiliated country (eg Azores, Martinique - you get the drift I'm sure).

After more than 3 years the boat returns to UK still with the original owner - ie nothing has changed.

Is VAT now due on arrival?

Sorry if you've covered it before.

 

[sideshowbob]

So even a boat that is VAT paid still has to have vat charged again with a new owner?

It is still irrelevant. See my long post above. Even if VAT has been paid sometime in the past the boat will still be liable if it enters the EU. Some minor exceptions under the temporary importation, returned goods or returning residents rules but based on the information given none of these would not apply in this situation.

The "nationality" of the boat (by its registration), or that of the owner is again irrelevant in most cases. If the boat is being imported into the EU it is potentially liable to VAT.

 

[macd]

Rivonia (the oracle) will no doubt be along in a while, but in the meantime you might want to check out VAT notice 236, and specifically item 6 in the Check List - Entitlement to relief from VAT:
http://customs.hmrc.gov.uk/channels...ntent&id=HMCE_CL_000226&propertyType=document

I suspect it's all a bit of a formality, anyway. Old boats aren't high on the Excise's radar.

 

[Rossynant]

British boat built c1980, VAT paid leaves UK shores with current owner and is away cruising overseas for more than 3 years and during that time does not visit an EU affiliated country (eg Azores, Martinique - you get the drift I'm sure).
After more than 3 years the boat returns to UK still with the original owner - ie nothing has changed.

Is VAT now due on arrival?

It is... For details of UK customs I cannot say, but as for EU generally whatever leaves the territory of EU Vat zone is exported, so when returning it is an "import". So must formally enter and declared and so on.
If it stayed outside for more than 3 years Vat is due. So you better enter officially some EU country in the meantime and keep the papers to prove it.

"VAT is due on the importation of any vessel from outside the EU. However, there are provisions for this VAT to be relieved when an EU VAT paid vessel returns to the EU.
If an EU VAT paid vessel leaves the EU, and whilst outside the EU it is sold, the new owner will, unless eligible for one of the reliefs described in this Notice, be liable to pay VAT if the vessel is brought back into the EU.

A boat previously VAT paid and exported from the EU may also qualify for relief on return if:
imported normally within 3 years of its export from the EU, and
imported by the person who exported it from the EU, and
it has undergone no more than running repairs outside the EU that did not increase its value. (now that's a killer )

For more information refer to Notice 236 Customs: Importing returned goods free of duty and tax.
If, after reading this notice, you are still in any doubt about whether customs charges are due, you should contact the VAT, Excise & Customs helpline on 0845 010 9000."

http://customs.hmrc.gov.uk/channels...HMCE_CL_000289&propertyType=document#P83_9970
In case someone did forget about 3-year deadline... http://customs.hmrc.gov.uk/channels...ntent&propertyType=document&id=HMCE_CL_000226

 

[Tranona]

Can you clarify one thing for an old befuddled brain?

British boat built c1980, VAT paid leaves UK shores with current owner and is away cruising overseas for more than 3 years and during that time does not visit an EU affiliated country (eg Azores, Martinique - you get the drift I'm sure).

After more than 3 years the boat returns to UK still with the original owner - ie nothing has changed.

Is VAT now due on arrival?

Sorry if you've covered it before.

Yes, in theory. Section 3.4 of VAT notice No8 covers this. Relief is available if the boat is re-imported within (normally) 3 years, by the person who exported it and provided it has only undergone normal running repairs.

This is the HMRC interpretation of the EU directive on the subject and the detailed rules are in Notice 236.

The problem is that VAT is a tax on transactions, not on assets. So the tax is levied not because it is a leisure boat but on the basis of the transaction it is involved in. Importing from outside the EU is classified as a "chargeable event" - logical because goods produced outside the EU have not had any VAT paid so the value added on import is the total value and VAT is due on the total amount. If it were not imported goods would have an unfair price advantage over EU goods in a consumer market.

The difficulty is in applying the transaction tax to assets. Sales within the EU between private individuals are not classed as chargeable events, so no VAT. Movements into the EU are classed as chargeable events and the responsibility of paying VAT is with the importer. A little sting in the tail is that customs can also have a charge against the asset if it is not paid.

The question for people importing, whether their own boat that has been outside the EU for more than the "normal" 3 years or whether it has been purchased outside the EU is the consequence of not paying VAT. First it is a criminal offence and secondly as noted the debt can stay with the boat, which may be an issue with a subsequent owner, so it is up to you to assess that risk! I don't know how strictly the bizarre returned goods rules are applied (and the inclusion of the word normally suggests discretion, but "smuggling" - ie illegally importing a boat purchased outside the EU is probably more risky. There is another level of risk if you then travel to other EU countries where the chances of inspection are much probably greater and discovery of a history outside the EU and no evidence of paying VAT might (and does) cause grief.

Hope I have explained it correctly - my reading of the rules and the additional explanation in the RYA/HMRC FAQ sheet.

 

[Tranona]

So even a boat that is VAT paid still has to have vat charged again with a new owner?

The term "VAT paid" and the other one in common use "VAT status" are not legal concepts but shorthand to indicate whether there is a potential VAT liability in a transaction involving that asset or not. As I explained earlier VAT is a tax on transactions, not on the asset involved in the transaction. So whether VAT is due depends entirely on the transaction.

VAT paid could mean it is a private person selling in which case it is not a chargeable event, or it could also mean that it is being sold by a VAT registered trader and the price asked includes VAT which the seller has to account for. Normally, however a trader might advertise an ex VAT price and then charge VAT on the price actually agreed.

So a boat coming in from outside the EU could be exempt if the person importing it qualified for one of the exemptions or it could be liable. Equally, if it were imported by a VAT registered business as a business asset, the VAT could be reclaimed and VAT would only be due on the next transaction - that is when it was sold in the EU.

 

[Tradewinds]

Thanks Tranona & Rossynant for that - very interesting and informative.

So all the French yachts (say) that have sailed over to Martinique (for instance) could be liable for VAT on return despite being in a country that is part of the European Union Customs Union because Martinique is actually outside the EU VAT area.

In other words, being based in an overseas EU member state territory does not count for exemption time-wise if they are not included in the EU VAT area (unlike the Azores/mainland Portugal for instance).