Another VAT question sorry!

[Tiptop]

I've been reading ALL the previous posts on VAT (may have missed a few) and I think I get it but felt I should ask anyway to check I'm correct . I'm also a little confused by an article I read elsewhere regarding Spain and its treatment of VAT and matriculation.
I'm a Swiss resident so live outside the EU and wish to buy a boat ex VAT from the UK. I understand from previous post that the flag doesn't matter but my thinking is to register the boat in Switzerland so pay 8% VAT and some import tax maybe (not sure about the import tax yet as the boat will be going to Mallorca to start off with) So as long as I exit the EU once every 18 months there will be no other payments.
I have now read an article on www.taxmarine.com/wp-content/uploads/2012/10/Buying-a-yacht-in-Spain.pdf which says a non EU resident can buy a boat over 8m length and be exempt though 'matricula turistica' from both the matriculation and VAT as long as the boat isn't used in Spanish waters for more that 6 months in any given year.

Does anyone have experience of the 'matricula turistica' scheme? Do I need to purchase the boat in Spain to benefit from it? Have I got other/better options then the two i'm considering?

Thanks in advance!

 

[duncan99210]

Be aware that although you are not an EU citizen, Switzerland is part of the EFTA. This means that many of the get out causes for non-EU citizens regarding VAT will not apply. However, if the boat is Swiss registered and you've paid Swiss VAT on it, then it enjoys free movement within the EU, due to Swiss membership of EFTA.
The Spanish matriculation tax is based on the owner not spending more than 183 days per calander year in Spain. So, with a VAT paid boat provided you're not in Spain for too long there is no need to pay to tax.
The above is, of course, as I understand it. Others who have dealt more deeply with this issue will be along shortly to confirm or deny it!
Oh, and welcome to the forum!

 

[Tranona]

Not sure how authoritative that website is. It states that VAT is 16%, whereas the standard rate is is actually 21% (and reduced rate 10%). Boats are standard rate.

It would make sense to take professional advice in Spain, perhaps from a big broker or a boatbuilder who will no doubt be familiar with such a scheme if it exists.

 

[Malo37]

As I understand it VAT liability is predicated on the location of the boat, not the location of the owner or its 'registration'.
.

 

[Tranona]

As I understand it VAT liability is predicated on the location of the boat, not the location of the owner or its 'registration'.
.

Not quite. VAT is payable in general in the state where the transaction (a chargeable event) takes place. So, I paid VAT in the UK on my new boat even though it was still in the factory in Germany because the transaction was with a UK company in the UK. However boats are different in that it could be payable in the state where it is first put into use. You are right though that country of registration is normally irrelevant.

The OPs situation is very different as he is looking to use a Spanish exemption if it exists.

 

[jfm]

I've been reading ALL the previous posts on VAT (may have missed a few) and I think I get it but felt I should ask anyway to check I'm correct . I'm also a little confused by an article I read elsewhere regarding Spain and its treatment of VAT and matriculation.
I'm a Swiss resident so live outside the EU and wish to buy a boat ex VAT from the UK. I understand from previous post that the flag doesn't matter but my thinking is to register the boat in Switzerland so pay 8% VAT and some import tax maybe (not sure about the import tax yet as the boat will be going to Mallorca to start off with) So as long as I exit the EU once every 18 months there will be no other payments.
I have now read an article on www.taxmarine.com/wp-content/uploads/2012/10/Buying-a-yacht-in-Spain.pdf which says a non EU resident can buy a boat over 8m length and be exempt though 'matricula turistica' from both the matriculation and VAT as long as the boat isn't used in Spanish waters for more that 6 months in any given year.

Does anyone have experience of the 'matricula turistica' scheme? Do I need to purchase the boat in Spain to benefit from it? Have I got other/better options then the two i'm considering?

Thanks in advance!

There are lots of different things going on here. I'm assuming you mean a new boat not secondhand, though what follows applies to 2nd hand boats in some limited circumstances that I wont list out here. Devil is in the detail so what follows is a slight summary and I've had to make a few assumptions:

1. As CH resident you can buy a UK sourced new boat (or any sourced boat), take delivery outside EU (channel islands say, or in international waters) and then you can reimport the boat into EU for 18 months for your personal use only without paying VAT. Just before the 18 months limit, you have to take boat outside EU for a night, then you can bring it back into EU and the 18 month clock starts again. Special rules apply if you want to sell the boat during the 18 months inside the EU. To do any or all of this the boat MUST be non EU flagged - flagging IS important in this scenario. Most CH owners seem to flag in Switzerland. If you don't take the boat physically into CH you wont pay the CH 8% in this scenario. The paperwork you have to fill in to get this 18 month "Temporary Importation" relief varies by country of first EU import: very light in France, somewhat heavier in UK, for example. This is a very widely used arrangement.

2. The Spanish 'matricula turistica' is wholly irrelevant to you if you do #1 above. It relates only to relief from Spanish Mat tax, not VAT. If you live in spain you have to pay VAT and Mat tax on a new boat, but if you live in EU but outside Spain and buy a boat in Spain you will pay VAT but you might avoid Mat tax under the 'matricula turistica' program. It is wholly irrelevant to you, because if you use the TI method to avoid EU VAT, as you are fully entitled to, then you wont be liable to Mat tax and you don't need to look at schemes to avoid it. you wont have any 6 month rule on keeping your boat in Spain either (that's ood). you just have to take the boat to Gib, Morocco etc, very 18 months, and keep proof with documents. This all assumes you are a CH resident throughout

 

[BrianH]

I'm a Swiss resident so live outside the EU and wish to buy a boat ex VAT from the UK. I understand from previous post that the flag doesn't matter but my thinking is to register the boat in Switzerland so pay 8% VAT and some import tax maybe (not sure about the import tax yet as the boat will be going to Mallorca to start off with) So as long as I exit the EU once every 18 months there will be no other payments.

Please ignore if not relevant but you write that you are "Swiss resident", which may not mean you are a Swiss national. Only a Swiss citizen can have their vessel recorded on the Basel register.

Also, unless the yacht is new, when a copy of the type approval and/or construction certificate can be supplied, for a second-hand boat, a survey by a Swiss surveyor, with all the attendant costs including their expenses of travel and accomodation, is involved for registration.

 

[ShinyShoe]

You could just pay the VAT in the UK and stop evading taxation, like the rest of us have to?

 

[lpdsn]

You could just pay the VAT in the UK and stop evading taxation, like the rest of us have to?

Why the UK? Vat is only 20%. By your logic he'd still be evading taxation by not paying it in some other country with a higher rate.

 

[ShinyShoe]

He's buying the boat in the UK... ...once you start trying to work out if you can pay the VAT in another country and leave every 18 months or 6 months specifically for the purposes of avoiding taxation the purpose is to avoid taxation not because he wants to know if he can pay his taxation to another country.

 

[superheat6k]

I feel that you should have to either pay VAT or of course sail it to the Country of registration. Best of luck with that !

 

[Tranona]

He's buying the boat in the UK... ...once you start trying to work out if you can pay the VAT in another country and leave every 18 months or 6 months specifically for the purposes of avoiding taxation the purpose is to avoid taxation not because he wants to know if he can pay his taxation to another country.

The OP is perfectly entitled to buy a new boat in the UK and use it within the EU without paying VAT if he is a non EU resident provided he follows the rules and is prepared to meet the conditions of temporary importation. See post #6 for the explanation.

 

[lpdsn]

He's buying the boat in the UK... ...once you start trying to work out if you can pay the VAT in another country and leave every 18 months or 6 months specifically for the purposes of avoiding taxation the purpose is to avoid taxation not because he wants to know if he can pay his taxation to another country.

Avoid and evade are completly different things. Anyway, sounds to me like he's trying to avoid Swiss VAT not UK VAT.

 

[Tiptop]

Thanks for your detailed reply jfm. In my post I was making some assumptions myself as I am starting my research into a boat purchase and looking for the most efficient/cost effective way to buy one and where to do so . The boat may be brought new but will more than likely be second hand. Most of the boats i'm finding that are of interest are priced as 'tax not paid'. As I live in Switzerland as a resident not a citizen as Barnac1e has pointed out and we pay 8% Vat so this was my first thought of how to reduce the cost price. The 'matricula turistica' just added to the confusion of where to buy the boat as it will reside in Spain to start of with but not indefinitely . I have now found a boat in Bodrum 'tax not paid' registered with a US flag that fits the bill. Barnac1e has pointed out I cant register the boat in Switzerland through residency. Am I able to keep the US registration and follow the 18 month 'Temporary Importation 'rule in the EU and if so are there any implications of having the US registration or am I better having the boat registered else where?

 

[jfm]

With 2nd hand boats there is 2x devil in detail. It is likely not certain that a bodrum boat is simply not vat paid because outside EU, and that is helpful in this scenario. So long as you keep non eu flag then you can sail it to EU and apply for TI in the first country you enter. I don't know how complex the procedures in Greece or Italy are, sorry. Cyprus probably ok, France is a dream (including Corsica). I dunno how long legs your boat has though.

US flag works for VAT and the 18 months but is generally regarded as a very cumbersome flag. With the exception of the beautiful Limitless, which has its own section of Delaware code to ease its passage, I don't think any US superyacht on the planet is US flagged. It is used though by US folks for small boats. For you, Jersey/Guernsey might be much easier and will incur no tax cost as a result of the registration per se. Cayman is also excellent and very internet friendly, but they are fussy about boat quality (sorry, I have no idea what you're buying)

Ref the comment above on tax evasion/avoidance, sheesh, it makes me sigh to see such daily mail driven views. Do people really think folks who don't live in UK should pay loads of UK tax just because they bought something made in UK? Really? How would you feel if you lived in UK and had to pay Chinese tax on all the Chinese stuff you buy in UK? Uk is 1st or 2nd biggest car maker on Europe - do you think non UK residents should pay UK VAT on all the Hondas, Toyotas, Nissans and JLRs we manufacture? Have you any idea what imposing that tax would do to our economy? I'm not at all condoning tax evasion but charging tax on people who don't have a nexus in your country is just absurd. Overseas people just won't buy your stuff or come to your country any more

 

[Tiptop]

With 2nd hand boats there is 2x devil in detail. It is likely not certain that a bodrum boat is simply not vat paid because outside EU, and that is helpful in this scenario. So long as you keep non eu flag then you can sail it to EU and apply for TI in the first country you enter. I don't know how complex the procedures in Greece or Italy are, sorry. Cyprus probably ok, France is a dream (including Corsica). I dunno how long legs your boat has though.

US flag works for VAT and the 18 months but is generally regarded as a very cumbersome flag. With the exception of the beautiful Limitless, which has its own section of Delaware code to ease its passage, I don't think any US superyacht on the planet is US flagged. It is used though by US folks for small boats. For you, Jersey/Guernsey might be much easier and will incur no tax cost as a result of the registration per se. Cayman is also excellent and very internet friendly, but they are fussy about boat quality (sorry, I have no idea what you're buying)

Ref the comment above on tax evasion/avoidance, sheesh, it makes me sigh to see such daily mail driven views. Do people really think folks who don't live in UK should pay loads of UK tax just because they bought something made in UK? Really? How would you feel if you lived in UK and had to pay Chinese tax on all the Chinese stuff you buy in UK? Uk is 1st or 2nd biggest car maker on Europe - do you think non UK residents should pay UK VAT on all the Hondas, Toyotas, Nissans and JLRs we manufacture? Have you any idea what imposing that tax would do to our economy? I'm not at all condoning tax evasion but charging tax on people who don't have a nexus in your country is just absurd. Overseas people just won't buy your stuff or come to your country any more

 

[Tiptop]

Thanks again. The boat is actually made in Germany I was just using the UK as an example in my first post as I thought dealing with a UK broker/dealer would be easier although it is a very British brand (Moody). Having said that English as ever seems to be the International language every where you go so i'm getting on fine with my globe trotting research. The broker in Bodrum has mentioned flagging the boat in the Netherlands but still not having to paying VAT . He is coming back to me with some more details in an email. Have you come across this before?

 

[jfm]

Yes, lots. There are several leasing based VAT avoidance schemes based on Netherlands flagging. My view is don't touch them with a bargepole. They are crummy. Many many brokers will tell you otherwise, but brokers do not know tax law deeply. Just steer well clear of them. You might notice that superyachts don't use Dutch leasing/Dutch flagging, and of course their owners are the ones who can buy high end legal advice at €1000/hour++, which advice will tell you not to use Dutch leasing. The scheme is much more commonly found in the 50-60-70 foot bracket where people buy schemes off the shelf and take "advice" from brokers. Anyway, you don't need any of this because you are a CH resident

 

[BrianH]

Yes, lots. There are several leasing based VAT avoidance schemes based on Netherlands flagging. My view is don't touch them with a bargepole. They are crummy. Many many brokers will tell you otherwise, but brokers do not know tax law deeply. Just steer well clear of them. You might notice that superyachts don't use Dutch leasing/Dutch flagging, and of course their owners are the ones who can buy high end legal advice at €1000/hour++, which advice will tell you not to use Dutch leasing. The scheme is much more commonly found in the 50-60-70 foot bracket where people buy schemes off the shelf and take "advice" from brokers. Anyway, you don't need any of this because you are a CH resident

But he still needs to register somewhere and CH is not an option.

Belgium was in fashion, especially with the French looking to avoid their country's equipment regulations, but has recently indicated it will no longer be the European flag of convenience and will be imposing some sort of restrictions for non-Belgians.

There are a number of possibilities, the UK Part I with a UK corporate representative being one - as with other UK off-shore dependencies - but they can cost. As another CH resident I followed that route (despite later gaining Swiss naturalisation), easier (or at least cheaper) with the nationality, but after the referendum, less attractive. It all depends on the OP's own nationality and preferences, I suppose.

 

[Tranona]

But he still needs to register somewhere and CH is not an option.

Belgium was in fashion, especially with the French looking to avoid their country's equipment regulations, but has recently indicated it will no longer be the European flag of convenience and will be imposing some sort of restrictions for non-Belgians.

There are a number of possibilities, the UK Part I with a UK corporate representative being one - as with other UK off-shore dependencies - but they can cost. As another CH resident I followed that route (despite later gaining Swiss naturalisation), easier (or at least cheaper) with the nationality, but after the referendum, less attractive. It all depends on the OP's own nationality and preferences, I suppose.

To take advantage of the Temporary Import rule that jfm suggests the boat has to be registered outside the EU (as well as being owned by a non EU resident). Hence the suggestion of Channel Islands or Cayman Islands.

Of course wait a few years and who knows what will be possible for UK owned and registered boats! Must have a word with Boris.