Another VAT question - "Export"

[Laser310]

I understand that if one buys a boat that is VAT paid - say in France, and "exports" the boat, it might be possible that the boat will retain its VAT paid status if it "imported" back to the EU within some period of time.

I have read 3 years.

What is the definition of "export" for this purpose?

I am assuming it would include buying the boat and then using a non-EU registration - UK or USA, for example, even if the boat remains in the EU.

How common is the practice of re-importing the boat to the EU, and recovering its VAT paid status? Does anyone here know of anyone who has successfully done this?

Another thing that seems fuzzy is the question of import duties. If the boat was built in France, and then "exported" to, say, the USA for registration, one might still need to pay an import duty on the boat to re-register it in France, or Spain, or another EU country, even if it never left the EU - right?

I am a UK/US dual national - my residence now is in the USA, I do not have a UK residence. I am trying to figure out where to register a boat to cruise European waters. My concerns are: getting insurance, and retaining VAT-Paid status.

It is possible, that I will try to get some sort of Spanish or Portuguese residency in the future

 

[Tranona]

It is called "Returned Goods Relief" and has been in EU (and UK) law since 1992 when the single market and common VAT was introduced. It works exactly as you describe. You can take your boat out of the customs area (Greece to Turkey or across to the Caribbean) and if you return notionally within 3 years you do not have to pay. Notionally because the law allows discretion on the 3 years - but the implementation is an individual state competence. Therefore it makes sense to clarify with your local customs the actual process for claiming the relief o return. The key thing about the rule is that the relief is only available to the person who took the boat out. If it is sold outside the custom area it loses status and the new owner cannot use RGR. Since Brexit the only change has been that the UK removed the 3 year requirement for leisure craft.

RGR is EU customs law and the key thing is that VAT status is a requirement for free movement of the boat within the EU. It is unconnected with flag of registration or citizenship/residence of owner. however some customs tend to conflate the 2 as they have difficulty in separating flag or ownership from VAT rules. so ensure you have all the paperwork to show that the boat is EU VAT paid. Note that it may acquire this status just by being in the EU on 31/12/2020 as well as by evidencing VAT payment.

Simple in principle, but can be problematic at a local level.

 

[Laser310]

But the key thing is registration - not physical location of the boat - is that right?

If i buy a boat VAT paid in France, and register it in the USA, without moving the boat from France- I would need to go through RGR if say the next week i wanted to register it in France - right?

the key thing is that VAT status is a requirement for free movement of the boat within the EU

I am not sure what you mean - many non VAT boats cruise the EU - subject to the 18 month (i think) rule

 

[dunedin]

But the key thing is registration - not physical location of the boat - is that right?

If i buy a boat VAT paid in France, and register it in the USA, without moving the boat from France- I would need to go through RGR if say the next week i wanted to register it in France - right?



I am not sure what you mean - many non VAT boats cruise the EU - subject to the 18 month (i think) rule

No. As Tranona said “ It is unconnected with flag of registration”.

The “exporting” of a boat referred to is generally leaving EU waters. And Returned Goods Relief (RGR) can generally be applied if return to Eu waters within 3 years - subject to a number of conditions.

There is a huge amount in this on various boating websites on this forum that might be worth reading.

 

[Fr J Hackett]

In practice how would anyone know that a boat had been out of the country?

 

[westernman]

In practice how would anyone know that a boat had been out of the country?

French semaphores keep watch and keep logs.
You would be surprised by how much French authorities know about you and your movements.

 

[Fr J Hackett]

French semaphores keep watch and keep logs.
You would be surprised by how much French authorities know about you and your movements.

So you keep your French registered boat in say Sweden for a few years and then bugger off to the pacific for a while how does anyone in France know you are not still in Europe.

 

[Laser310]

There is a huge amount in this on various boating websites on this forum that might be worth reading.

Yes - I know. But it is amazingly difficult to find the exact question.., and the information is also sometimes contradictory.

but anyway.., so if a French flagged, and French VAT paid boat spends the winter in the Caribbean, they have to apply for RGR?

Something tells me they are not doing this...

Or, Is there a minimum time before RGR is required?

What if they cross the Med to Israel for a week?

 

[Tranona]

But the key thing is registration - not physical location of the boat - is that right?

If i buy a boat VAT paid in France, and register it in the USA, without moving the boat from France- I would need to go through RGR if say the next week i wanted to register it in France - right?



I am not sure what you mean - many non VAT boats cruise the EU - subject to the 18 month (i think) rule

No, repeat no - registration is irrelevant.

Registration is an international requirement for complying with maritime law. Nothing to do with the EU. A boat is a "means of transport" as far as the EU is concerned and is covered by its VAT laws. Just think of all those big charter MOBOs in the Med that are registered in the Cayman Islands. some are not VAT paid so use the VAT TA rules to move in and out of the EU. Some are EU VAT paid and use RGR to move in and out. Simple examples without going into how the Russian oligarchs arrange their affairs.

Some of the confusion arises because many states (in fact almost all) require proof of VAT for registration. This however is to comply with their domestic law and nothing to do with either the EU or registration of flag state under maritime law. As i suggested some customs have difficulty with this concept - most recently Greece and Croatia and in both cases they were reported to the Commission for not complying with EU law in respect of VAT status and required to implement the law correctly. The CA were instrumental in these actions as reported on these forums last year.

 

[westernman]

So you keep your French registered boat in say Sweden for a few years and then bugger off to the pacific for a while how does anyone in France know you are not still in Europe.

If French registered, you will have to keep paying the DAFN ( Droit Annuel de Francisation et de Navigation).
If you stop, they will find you!

 

[AndersG]

Yes - I know. But it is amazingly difficult to find the exact question.., and the information is also sometimes contradictory.

but anyway.., so if a French flagged, and French VAT paid boat spends the winter in the Caribbean, they have to apply for RGR?

Something tells me they are not doing this...

Or, Is there a minimum time before RGR is required?

What if they cross the Med to Israel for a week?

You don't have to apply for RGR if you sail your own boat back in to the EU.

 

[Laser310]

You don't have to apply for RGR if you sail your own boat back in to the EU.

Okay - Thank you. That was causing part of my confusion.

Is that relief from needing to file for RGR limited by the 3 years mentioned above?

 

[Tranona]

Okay - Thank you. That was causing part of my confusion.

Is that relief from needing to file for RGR limited by the 3 years mentioned above?

Formally you have to apply for RGR when re- entering the EU, but checks are lax in most states. As i explained if the boat is not EU registered you are more likely to be stopped. So if your pattern of boating means you are going to leave and re-enter it makes sense to clear out through customs and check in on re-entry to avoid any possibility of having problems later because of your US registration. As with my example of charter boats, Spanish, French, Italian and Greek authorities deal with is regularly and all have their systems for regulating boat movements from a VAT point of view.

 

[Fr J Hackett]

If French registered, you will have to keep paying the DAFN ( Droit Annuel de Francisation et de Navigation).
If you stop, they will find you!

So you keep paying it