Boats on which EU tax is not paid

[srah1953]

I see a lot of boats for sale on which EU VAT has not been paid. Does any one know what sort if VAT is payable if imported into EU? Is it based on original cost or second hand value, or at the whim of customs?
Many thanks

 

[Melody]

I see a lot of boats for sale on which EU VAT has not been paid. Does any one know what sort if VAT is payable if imported into EU? Is it based on original cost or second hand value, or at the whim of customs?
Many thanks

I don't know if you're talking about boats from outside the EU or boats within the EU that have no VAT paid? If the former, then I believe it is paid in the EU country in which you register the boat.

If it's a boat that is already registered in an EU country but that was bought net of VAT (a charter yacht, for instance) then I think you can choose to either pay in the country in which it is sold or the one in which it will be registered. Some countries have higher rates than others.

In either case it is based on the 'book' value of the boat as assessed by the Customs or tax people, whoever is responsible for collecting VAT in that country.

But I am no expert - the broker or a lawyer should be able to advise you.

 

[Baggywrinkle]

It is the standard VAT rate of the country where the vessel is imported. AFAIK around 19-25% depending on country. When I did mine it would have been based on the 'book price' which is like a dealers black book containing values for most common sailing yachts etc. but it got through on the 8 year rule.

I have a nasty feeling HM Customs assess the value and send you a bill.

 

[theoldsalt]

I bought my boat from Guernsey VAT unpaid so had to import the boat into the UK. I contacted HMRC (I can give you names and phone numbers if required) and we negotiated a value on which to apply the 20% tax. They did not require evidence of the price paid. I suggested a market value (much less than price paid), they accepted the figure and issued an invoice for the VAT. It was paid by bank transfer and HMRC issued me with a laminated receipt. All very straightforward and easy.

 

[Seven Spades]

I wonder how anyone would know if you didn't bother. I have never been asked to produce proof of VAT for any of the boats I have owned,

 

[superheat6k]

I am going through this process right now.

Customs Notice 8 is a bit lacking in the mechanics of how you pay the VAT.

Upon import to the UK and assuming are coming by sea you require to make two submissions - From C1331 Part 2 which is sent to the Dover Yacht unit of the UK Border Agency. You also need to make a phone notification of arrival and fly Q flag from the 12 mile limit. The number is listed in Customs notice 8.

The second form not otherwise mentioned is C384 upon which you enter the value of the vessel when you bought it. I was advised by the HMRC yacht unit to include a copy of the invoice or BOS. I did arrange to pay the Broker's fee normally paid by the vendor as a separate transaction as there is no added value to the boat or the import, so it is perfectly reasonable to do separate this.

VAT is levied upon the current rate at time of the import based upon the established value from the documentation provided. Subject to where it is coming from you may have to pay import duty as well. Channel Islands are zero rated for pleasure vessels for this aspect.

Be aware that if you mislead the HMRC the penalties can be severe, but I do feel a discount for being upfront would encourage more payers.

I did think about not declaring and could likely have gone for ever without a VAT invoice, but this way all is clean, clear and the VAT status in the EU is bulletproof once the VAT receipt is issued.

I am changing the boat's name, so I chose to do this at the time of purchase so this is clearly shown in both current and new names on the documents, so when time comes to sell all is clearly set out.

 

[Tranona]

I see a lot of boats for sale on which EU VAT has not been paid. Does any one know what sort if VAT is payable if imported into EU? Is it based on original cost or second hand value, or at the whim of customs?
Many thanks

It depends on the actual status and location of the boat. boats that are used commercially in a way in which VAT can be reclaimed are business assets and can be advertised as Ex VAT but if sold in the EU the vendor (who will be a VAT registered entity) is responsible for charging VAT on the sale price at the current rate. If the buyer is a private individual the VAT cannot be reclaimed unless the boat is exported out of the EU. If the buyer is a business the VAT may be reclaimable as an input dependent on the business.

If the boat is outside the EU or physically in the EU but held under the customs bond scheme then VAT is payable on either the transaction price or valuation immediately it enters the EU and normally in the state of first entry. Registration is irrelevant as it is the nature of the transaction that determines the VAT liability. In addition a boat from outside the EU may also be liable for import duty and comply with the RCD to get a CE mark. The last requirement is often a major barrier to importing a boat that was not built in the EEA or in the case of older boats in the EEA in the qualifying date in 1998.

These are general principles and there are potential reliefs from VAT depending on specific circumstances. The rules are covered in HMRC VAT notice No8 already referred to and a useful summary of the practical application can be found in a VAT FAQ sheet on the RYA website.

 

[srah1953]

Thank you all very much

 

[{151760}]

I wonder how anyone would know if you didn't bother. I have never been asked to produce proof of VAT for any of the boats I have owned,

You might get away with it in the UK, but on a recent trip to Lezardrieux we were approached by the French Customs who, very politely and without boarding us, asked to see our documents. The only two they looked at were the SSR and the original sales receipt showing that VAT had been paid.

 

[theoldsalt]

I wonder how anyone would know if you didn't bother. I have never been asked to produce proof of VAT for any of the boats I have owned,

I suppose it depends what your life philosophy happens to be. Are you a person who thinks things are only illegal if you get caught and maybe a tax evader or an honest person who pays taxes that are due in order to contribute to the UK welfare.

Personally, I think I have a good concience and do my best to stay the right side of the law. Others may think I am a fool !

 

[haydude]

I see a lot of boats for sale on which EU VAT has not been paid. Does any one know what sort if VAT is payable if imported into EU? Is it based on original cost or second hand value, or at the whim of customs?
Many thanks

VAT is chargeable on the current value of the item. If the purchase transaction is recent then it can be referred to otherwise customs might apply an average market value.

 

[Spi D]

It depends on the actual status and location of the boat. boats that are used commercially in a way in which VAT can be reclaimed are business assets and can be advertised as Ex VAT but if sold in the EU the vendor (who will be a VAT registered entity) is responsible for charging VAT on the sale price at the current rate. If the buyer is a private individual the VAT cannot be reclaimed unless the boat is exported out of the EU. If the buyer is a business the VAT may be reclaimable as an input dependent on the business.

If the boat is outside the EU or physically in the EU but held under the customs bond scheme then VAT is payable on either the transaction price or valuation immediately it enters the EU and normally in the state of first entry. Registration is irrelevant as it is the nature of the transaction that determines the VAT liability. In addition a boat from outside the EU may also be liable for import duty and comply with the RCD to get a CE mark. The last requirement is often a major barrier to importing a boat that was not built in the EEA or in the case of older boats in the EEA in the qualifying date in 1998.

These are general principles and there are potential reliefs from VAT depending on specific circumstances. The rules are covered in HMRC VAT notice No8 already referred to and a useful summary of the practical application can be found in a VAT FAQ sheet on the RYA website.

+1 all the way.

Note that if import from non EEA countries an import duty is payable (and this is added before VAT so will push it upwards). The basis for VAT calculation is value of boat + shipping + duty + any fees, then VAT added.

 

[Bitterend]

I bought a UK registered, VAT exempt (thro' age) boat in Majorca and sailed it to England to do some work on it. On returning to the yard after a few days away a brown envelope awaited me. It was from HMRC with a notice saying they had no record of VAT being paid on my boat, that the boat wasn't to be moved without their permission and that I was to contact them. Two HMRC uniformed 'heavies' visited the boat, checked my UK Part 1 doc for first date of registration (VAT Exempt - built and bouht prior to 1985) and discounted a signed statement on headed paper from a Spanish marina manager saying the boat had been in his marina on..... 31 Dec 1992 citing anyone could write that and that they wanted 'absolute proof'. They went away dissatisfied threatening heavy fines etc, etc. I rummaged and rummaged and eventually found Spanish marina monthly berth invoices including electricity and water consumption which proved the boat had been in the EU. They returned, saw the evidence, took it away and eventually I received a grudging letter saying they were "satisfied for the time being" the boat was VAT exempt.
I asked why they were trolling boatyards and marinas and they said VAT payments from yachts was a high priority as leisure boats were regarded as a significant under-payment of VAT sector!!
Incidentally, there were about 50 boats in the yard and only 6 brown envelopes were deposited - go figure!!
The letter from HMRC was inspected by marine police / officials on several occasions throughout Europe.

 

[Seven Spades]

That makes no sense. HMRC does not know the name of every boat in the UK how could they. Boats change their name all the time and not all boats atre registered. Some other process has brought you to thier attention. Perhaps you put the boat on the SSR and they tip off HMRC or someone informed them. I don't believe in random checks everything is "intelligence" lead.

 

[laika]

What Tranona said, with the minor addition that when I looked at this (6 years ago, things may have changed) duty was only payable on boats less than 12m in length.

VAT rates obviously differ across europe, as do the reputations of the authorities for being "flexible" in accepting an owner's own estimate of the vessel's value so given that VAT is payable in the first EU country the boat arrives in my understanding from my own research was that choice of country of arrival can make quite a difference to the VAT bill. The Azores seemed a popular choice.