5% VAT paid on boat purchase Croatia. am I liable?

[speedfiend]

Dear All, I am in the middle of purchasing a boat in Croatia and just found out the current owner paid 5% VAT on the purchase just before Croatia joined the EU 5years ago.
He is selling it VAT paid.
If I buy it from him, will I have a liability to further EU VAT if I move the boat out of Croatian waters?
Can the Croatian authorities come after me for more VAT
Any help would be greatly appreciated.
Regards
S

 

[jfm]

Dear All, I am in the middle of purchasing a boat in Croatia and just found out the current owner paid 5% VAT on the purchase just before Croatia joined the EU 5years ago.
He is selling it VAT paid.
If I buy it from him, will I have a liability to further EU VAT if I move the boat out of Croatian waters?
Can the Croatian authorities come after me for more VAT
Any help would be greatly appreciated.
Regards
S

You'll be ok. If you want a technical answer the 5% is a trick the Croatians did to collect money for cheap VAT paid status in the run up to their accession to the EU. Assuming the 5% was paid and documented correctly (and THAT is something you need to consider) there is no further VAT to pay in Croatia - Croatian law is v clear on that. Technically, there is a risk that other EU countries could argue that the purported VAT paid in Croatia isn't VAT within the EU meaning and thus try to charge their own VAT, but I'd say don't worry about that because ALL the experience of countries joining EU (including Malta which did the same, for example) indicates this will not happen.

So you will be ok, PROVIDED the Croatia 5% VAT was properly paid and documented (that means the boat needed to be HR flagged, among other things)

 

[Tranona]

Dear All, I am in the middle of purchasing a boat in Croatia and just found out the current owner paid 5% VAT on the purchase just before Croatia joined the EU 5years ago.
He is selling it VAT paid.
If I buy it from him, will I have a liability to further EU VAT if I move the boat out of Croatian waters?
Can the Croatian authorities come after me for more VAT
Any help would be greatly appreciated.
Regards
S

Just one minor additional point, Croatia joined the EU last year, not 5 years ago. Long thread on Scuttlebutt on the subject which you might find useful in understanding the process owners had to go through to get the concessionary rate.

 

[Deleted User YDKXO]

Many owners including myself took the opportunity of paying VAT at 5% on our boats in Croatia last year so you have nothing to worry about. I have since sold that boat in Italy as VAT paid and the buyer (actually a dealer as I traded it in) accepted it as such. But, as jfm says, you must ensure that you get all the paperwork associated with the VAT payment. As before, my advice would be to ask Sinisa at Maritimus to check that the paperwork is correct. Obviously the ramifications for not getting all the correct paperwork are potentially very serious as you could end up having to pay the full 25% VAT in Croatia or the full rate elsewhere if you haven't got all your ducks in a row

 

[speedfiend]

Hi Chaps,
Thanks for that . Mike I feel a lot more comfortable knowing you did the same thing .
You also cruised extensively and had no problems when papers were inspected by EU officials ?
I have contacted Sinisa but he can't do Tonnage Surveys so have appointed an English surveyor who can.
I'm in a race against time to get the deal completed before the month end as I'm borrowing the money and the lenders are obviously bring very strict on the paperwork .
I have booked my annual leave got next month do fingers crossed!
S

 

[Deleted User YDKXO]

Hi Chaps,
Thanks for that . Mike I feel a lot more comfortable knowing you did the same thing .
You also cruised extensively and had no problems when papers were inspected by EU officials ?
I have contacted Sinisa but he can't do Tonnage Surveys so have appointed an English surveyor who can.
I'm in a race against time to get the deal completed before the month end as I'm borrowing the money and the lenders are obviously bring very strict on the paperwork .
I have booked my annual leave got next month do fingers crossed!
S

speedfiend, I know Sinisa couldn't help with the tonnage survey but, if I was you, I really would ask the seller to email you all of the VAT documentation and then send it to Sinisa for him to say whether or not the paperwork is sufficient to prove VAT status. He managed the VAT payment for my previous boat and hundreds of others so the man knows what he is talking about. I've just had a look at the VAT documentation I had for my previous boat and it consists of 8 pages, all written in the Croatian language so there's no way of telling which pages are vital and which aren't. You do not want some hotshot Croatian customs official impounding your boat in the future because your documents are missing one vital page or they haven't got the right stamp on them or whatever.
No I did not cruise extensively with my previous boat after the VAT payment. The VAT issue came up in Croatia last year and like a lot of people I only completed the long winded process of paying the VAT a few days before the May 31st deadline. After that we cruised about 4-5 weeks around Croatia over last summer before we sold the boat earlier this year. During that 4-5 weeks I was not challenged by any official to produce the documentation. We were boarded in 2011 in Croatia by a Police boat and they were only interested in our passports and whether we had the Croatia cruising vignette. Having said this, there have been stories this year of Croatian customs officials questioning the validity of VAT documentation of boats entering Croatia from another country and I read on another thread that some boaters have been asked for something called a T2L customs document. Either way it is very much in your own interest to check that the VAT documentation being presented with this boat is a) genuine and b) complete

 

[BartW]

Having said this, there have been stories this year of Croatian customs officials questioning the validity of VAT documentation of boats entering Croatia from another country and I read on another thread that some boaters have been asked for something called a T2L customs document.

yes thats me,
coming from Italy going in to Croatia the customs only did a brief check of my papers, (there was a junior guy on the counter)
when leaving Croatia again to Montengro, I had the senior guy inspecting my papers; Boat registration, Crew and guest list, Insurance, and he asked if I had proove of VAT payment.
I explained him about the boat being bought in a company and comercial registration, and over 20y old, but he insisted on a document that showed VAT payed or some document that prooved that I'm free from VAT.
Then he showed me some internal guideline: (I got a copy )


NOTICE FOR VESSEL OWNERS ON REGULATING THE VESSEL STATUS
...
2. Pleasure vessels entering the republic of Croatia after 1 july 2013, posessed or owned by a EU resident, and bearing the EU flag
...
the owner or captain of the vessel is obligated, at the request of a customs official, present evidence that customs duty and or VAT has been paid in one of the member states of the vessel
...


after a friendly discussion, they finally let me go and told that when entering next Croatia I need to show some VAT document
now,
my boat has been owned by a a few Italian company's previously, and then sold to my Belgium company, ex VAT.
In Italy VAT has been paid but also recovered in the VAT declarations of the owning co's.
unfortunately I have no orriginal invoices from previous owners.

We have generated some "official" paperwork, as I did a monthly VAT declaration in my co; when I pruchased the boat, and declared 21% on the purchase figure,
(on the same declaration I dit a deduction of this VAT amount, but that doesn't show on the paperwork that we made)
all papers are official, from my book keeping, and from that Belgium VAT declaration, june 2011, absolutely no sheeting,
and lots of stamps on these papers from my bookkeeping co ;-)

I hope that these officials will accept this, is they don't understand this anyway,
as much as they don't understand that you can't have "real" proove of VAT payed as long as the boat is owned by a european company, and comercially registered.

or am I missing something?
this is very important for us, this same customs office I have to pass many times this season !
any advice on this would be really apreciated!

appol. to OP, this is little Off topic for your case, but perhaps interesting in the theme of VAT related questions, Croatia inspections ...
Its the first time ever I'm asked for proove of VAT payment on a boat,
and I think that this is only in Croatia a hot topic, as they just had this special arrangement (5%)

 

[Deleted User YDKXO]

Thanks Bart. Obviously I didn't want to refer to anybody by name directly

 

[speedfiend]

And so the saga goes on!
The bill of sale is missing and the lenders will not accept the current vat invoice so will only lend less vat, if the bill of sale can be located .....watch this space!

 

[Deleted User YDKXO]

And so the saga goes on!
The bill of sale is missing and the lenders will not accept the current vat invoice so will only lend less vat, if the bill of sale can be located .....watch this space!

What do you mean by VAT invoice? Proof of 5% VAT payment in Croatia is in the form of a Customs certificate

 

[speedfiend]

Ok. The lenders wanted a vat invoice. I will speak to them Monday. Thanks Mike.

 

[Deleted User YDKXO]

Ok. The lenders wanted a vat invoice. I will speak to them Monday. Thanks Mike.

They obviously haven't got a clue as to what the Croatian VAT documentation looks like

 

[speedfiend]

No they haven't .
I was happy with all the documentation , but the lenders weren't and are going to pull the plug on the deal.
Originally the vessel was sold to the current owner by the then Croatian princess dealer.
They no longer exist and never issued a bill of sale to the owner.
I will contact princess Monday to see if the factory keep a copy of the original. The only trouble being the factory would have sold it to the dealer. I have seen the customs certificate for the 5% vat which is a sepia coloured tatty piece of hand written paper!

 

[Deleted User YDKXO]

No they haven't .
I was happy with all the documentation , but the lenders weren't and are going to pull the plug on the deal.
Originally the vessel was sold to the current owner by the then Croatian princess dealer.
They no longer exist and never issued a bill of sale to the owner.
I will contact princess Monday to see if the factory keep a copy of the original. The only trouble being the factory would have sold it to the dealer. I have seen the customs certificate for the 5% vat which is a sepia coloured tatty piece of hand written paper!

The invoice from the factory to the dealer won't be much good because the key document(s) are the invoice and/or bill of sale between dealer and current owner. Surely the current owner has these very important documents? Btw sometimes owners are reluctant to release these documents because they are viewed as confidential and because they might be embarassed for you to know just how much money they've lost on the boat! Either way you've got to make it absolutely clear that you have to have these documents or the sale falls through.
Yup the Croatian VAT certificate is an unimpressive document, hand generated by a Croatian pen pusher, but it is a vital document. It sounds like you need somebody to deal with your lender on your behalf to convince them that what you are presenting is the correct documentation. If you dont want to deal with Sinisa you could ask the UK company Ward & McKenzie http://www.ward-mckenzie.co.uk to deal with your lender. They were another company who put several boats through the Croatian 5% VAT procedure

 

[speedfiend]

Brilliant thanks mike.
Will see what happens now.