Brexit - latest on VAT Paid Status in the event of a 'no deal' Brexit

[Hurricane]

There is quite a lot of stuff written here that is just assumption and guesswork. Even the links in OP are based on law not yet written, vague comment from EC which isn't law, and as the RYA writer admits," assumptions". A lot of this assuming seems to have been done by people who aren't familiar in enough detail with the law as is, so the assumptions aren't great. Sorry to rant and I don't have time for a long post.

But let's not forget upsides, which is relevant to the uk vs med thread. Post brexit, it is very likely that for a UK based boater things work like this:

1. you can buy a new boat to keep in uk for £1m + UK 20% vat. £1.2m cash cost. All good, apart from weather.
2. Or buy exact same boat but take delivery in Gibraltar. Then sail it to a marina in Spain or France or Italy and keep it there. Cost of boat is now only £1m. You have to sail it out of EU for one marina night every 18mths. Quite easily if you're in Spain near Gibraltar or Morocco. If you're in SofF and choose Tunisia, its 450 miles via nice Sardinia and a bottle of wine with Mapism .

I'm not a bexiteer but this is an awesome advantage for uk based private (non charter, etc) med boaters potentially. It works whether the boat is a uk built or other country built boat. And it works for new boats, plus used boats that are not VAT paid.

So does the answer to the uk/med debate change if uk is 20% more expensive when buying the actual boat?

I know that some Spanish organisations are trying to work a system where sailing the boat outside EU waters is enough to reset the 18 month TI.
Maybe a process of confirming that the boat is in international waters (12 mile limit??) - perhaps a photo of a plotter and a declaration would reset the 18 months.

I don't think this is necessary for me but if a process like this could be used, it would make your case above even more attractive.

 

[Portofino]

I know that some Spanish organisations are trying to work a system where sailing the boat outside EU waters is enough to reset the 18 month TI.
Maybe a process of confirming that the boat is in international waters (12 mile limit??) - perhaps a photo of a plotter and a declaration would reset the 18 months.

I don't think this is necessary for me but if a process like this could be used, it would make your case above even more attractive.

A couple of years ago the Italians interpreted a piece of EU law and fought successfully With a Brussels to apply it on that 12 mile ( or what ever ? ) limit .
It’s was there boat builders in the post financial crash trying everything to kickstart there boat building industry.
IT gov supported it .
I have the article in Barche mag in Antibes .I keep meaning to chuck on JFMs boat for his attention.
Basically from memory they will accept a AIS trace as proof it left Italian waters for VAT purposes when NEW .

The question which was not clear is the same one you pose if I have understood your post correctly.

Will authorities accept AIS or any suitable technology as proof of leaving EU waters if it’s not a new one off ?

Currently if I understand JFMs method you have to berth in a none EU port like Tunisia , keep the records etc buy a bit of fuel a newspaper and such like before returning , repeat every 18 months to keep it on TI status .

 

[adey]

A couple of years ago the Italians interpreted a piece of EU law and fought successfully With a Brussels to apply it on that 12 mile ( or what ever ? ) limit .

A friend of mine was crew on a new Benetti superyacht last year that i'm pretty sure did just that for the handover.

 

[jrudge]

If you say that this alone is enough, I take your word for it, but I'm a tad surprised.
I mean, does this strategy work also if the owner is a Brit citizen who buys the boat as a private individual?

It will in the future as we will be non EU. At present, no it doesn't.

 

[jrudge]

A couple of years ago the Italians interpreted a piece of EU law and fought successfully With a Brussels to apply it on that 12 mile ( or what ever ? ) limit .
It’s was there boat builders in the post financial crash trying everything to kickstart there boat building industry.
IT gov supported it .
I have the article in Barche mag in Antibes .I keep meaning to chuck on JFMs boat for his attention.
Basically from memory they will accept a AIS trace as proof it left Italian waters for VAT purposes when NEW .

The question which was not clear is the same one you pose if I have understood your post correctly.

Will authorities accept AIS or any suitable technology as proof of leaving EU waters if it’s not a new one off ?

Currently if I understand JFMs method you have to berth in a none EU port like Tunisia , keep the records etc buy a bit of fuel a newspaper and such like before returning , repeat every 18 months to keep it on TI status .

Remember this is almost all self regulating until one of 2 things happen

a. you sell it and need to show proof it has been out within the time limit
b. you get stopped and need to show paperwork to prove the same thing

So the answer is you will never know if it is ok until it is too late.

I have been peripherally involved with a non EU boat in the past and also involved in its temporary export. As a seller / buyer you are going to need proof of export every 18 months , and without it either vat is due or a buyer wont touch it - if the chain is broken then he is liable to pay vat at a later date as it is immediately due at 18 months and a day ( unless you put it in bond which can be done but involves foreign customs and hassle).

You MAY find some authorities will accept this, but it is not normal convention and I don't think you will find many buyers who will. A mooring receipt and a nice set of customs stamps is pretty solid evidence of export.

We were boarded specifically for a VAT inspection in Bonafacio ( as was the whole quay of decent sized boats) and they wanted proof of foreign ownership and proof it had left the EU in the past 18 months. This took about 90 seconds they smiled and left.

 

[jfm]

If you say that this alone is enough, I take your word for it, but I'm a tad surprised.
I mean, does this strategy work also if the owner is a Brit citizen who buys the boat as a private individual?

Yes. Well to be precise, the law does not yet say this. I'm just describing how I expect the law to work after brexit, to throw a point in the med/uk debate. Currently, med boaters who are EU dwellers are pretty much treated the same, and we can look across to our American co-boaters in same anchorage who have the same boat for £1m not £1.2m and we seem not unhappy. After brexit, i wonder if it will be quite annoying for fr, It, D, Scandi boaters looking across to uk boaters in the same anchorage, with the brits in £1m boats identical to the ones that EU dwellers paid 1.2m for.

 

[jfm]

I know that some Spanish organisations are trying to work a system where sailing the boat outside EU waters is enough to reset the 18 month TI.
Maybe a process of confirming that the boat is in international waters (12 mile limit??) - perhaps a photo of a plotter and a declaration would reset the 18 months.

I don't think this is necessary for me but if a process like this could be used, it would make your case above even more attractive.

A couple of years ago the Italians interpreted a piece of EU law and fought successfully With a Brussels to apply it on that 12 mile ( or what ever ? ) limit .
It’s was there boat builders in the post financial crash trying everything to kickstart there boat building industry.
IT gov supported it .
I have the article in Barche mag in Antibes .I keep meaning to chuck on JFMs boat for his attention.
Basically from memory they will accept a AIS trace as proof it left Italian waters for VAT purposes when NEW .

The question which was not clear is the same one you pose if I have understood your post correctly.

Will authorities accept AIS or any suitable technology as proof of leaving EU waters if it’s not a new one off ?

Currently if I understand JFMs method you have to berth in a none EU port like Tunisia , keep the records etc buy a bit of fuel a newspaper and such like before returning , repeat every 18 months to keep it on TI status .

This is a total sideshow to the point I was making. This is all about how you prove that you left EU at the 18 month point, and I wasn't trying to make a post about what does and doesn't constitute proof.

Just briefly on the proof point, it is a local country thing so there is no right answer. There is a widely espoused practice where tax officials insist on a marina receipt and will not accept a plotter screenshot. My own view is that if you take a notary and a lawyer and for good measure a doctor to write 3 witness statements as to the boat's position i.e. 12+ miles, that would work, but no one seems to have tested it. Anyway,as I say, this is a total sideshow to the much more important point I'm making.

 

[benjenbav]

This is a total sideshow to the point I was making. This is all about how you prove that you left EU at the 18 month point, and I wasn't trying to make a post about what does and doesn't constitute proof.

Just briefly on the proof point, it is a local country thing so there is no right answer. There is a widely espoused practice where tax officials insist on a marina receipt and will not accept a plotter screenshot. My own view is that if you take a notary and a lawyer and for good measure a doctor to write 3 witness statements as to the boat's position i.e. 12+ miles, that would work, but no one seems to have tested it. Anyway,as I say, this is a total sideshow to the much more important point I'm making.

Easier just to sail to Tunis, pick a fight with a cop and get the paperwork issued on discharge from gaol...

 

[Portofino]

It will in the future as we will be non EU. At present, no it doesn't.

There will be loads of reciprocal agreements or deals done more so out of necessity if we leave without a any prearrangements .
Remember the score is 3.2M to 1.2 M of Eu citizens living in the U.K. vs U.K. living in the Eu .

There aren’t many boat owners roaming around in the Eu from say Argentina or many Argentinians residing in the U.K. , if so thoses , both sets are treated by both parties as 3 P and Brexit is unlikely to alter those arrangements.

Post Brexit the Eu will be keen to keep individual citizens daily life as much as poss as was .
Not to be confused with trade etc .

So I can’t see them letting Brits buy boats in the Med under TA ( which ever method of re- applying 12 miles or N Africa ) VAT free ........ for long .
Before that loophole is closed , buried in a reciprocal citizens exchange .
After all the Eu coffers will already be short so they will want to stem any haemorrhage from this Brit VAT free boat lark in the Med .

Idea is not to big up the advantages of other states leaving .
Our Gov will deal the technical correct 3P entitlement to VAT free boating away for something else .
All imho

 

[Portofino]

This is a total sideshow to the point I was making. This is all about how you prove that you left EU at the 18 month point, and I wasn't trying to make a post about what does and doesn't constitute proof.

Yeh we know that .
My point and I think Hurricanes and others is if Eu officials accept the tech route for export then it opens up the huge potential future haemorrhage of VAT from Brit boaters .Wayfaires and all .

I mean I fancy a bit of tuna fishing today .Lets go 15 miles out .
Darling ( speaking to wife ) turn on your phone press the Eu territory app .
Job done .
Or trip to Corisica .
By removing the ball ache N Africa trip authorities accepting a roll out of the Italian new build territorial rule then why not ?
But as I said I can’t see them allowing this if the flood gates open .

 

[Deleted User YDKXO]

2. Or buy exact same boat but take delivery in Gibraltar. Then sail it to a marina in Spain or France or Italy and keep it there. Cost of boat is now only £1m. You have to sail it out of EU for one marina night every 18mths. Quite easily if you're in Spain near Gibraltar or Morocco. If you're in SofF and choose Tunisia, its 450 miles via nice Sardinia and a bottle of wine with Mapism .

Correct me if I'm wrong but I understood that this kind of wheeze is possible now although I can see that being a 3rd country citizen after Brexit might make it easier

 

[jfm]

Correct me if I'm wrong but I understood that this kind of wheeze is possible now although I can see that being a 3rd country citizen after Brexit might make it easier

no it's not possible now (generally). To use a boat vat free in eu now, under the 18mth TI rule, the user has to be a non eu person themselves, which a uk person obviously isn't.

 

[jfm]

My point and I think Hurricanes and others is if Eu officials accept the tech route for export then it opens up the huge potential future haemorrhage of VAT from Brit boaters .Wayfaires and all .

No, that clearly isn't the point you or Hurricane were making. No worries, but it is hard work following your "logic".

 

[jfm]

Easier just to sail to Tunis, pick a fight with a cop and get the paperwork issued on discharge from gaol...

Yeah you're right. The doctor might be easy but the 2 legal eagles could make a night in Tunis cells attractive in comparison. Also, the owner doesn't have to make the trip; his representative can do it. So just send the 3 in my dramatis personae on their own, and let them fight it out.

 

[Deleted User YDKXO]

no it's not possible now (generally). To use a boat vat free in eu now, under the 18mth TI rule, the user has to be a non eu person themselves, which a uk person obviously isn't.

And if the boat is owned in a non EU company? I find it hard to believe that all those superyachts in the Med owned by EU residents are VAT paid!

 

[Portofino]

You can set up a resident Co on the Cayman Islands ( Georgetown ) and be exempted from disclosing the list of directors to the public , or not even keeping the list at the nominated Co Hq on the island .

Or alternatively you can nominate a local individual for a fee of course .Some locals are nominated as owners ( outside Co,s structure ) 100 ,s of times its there lively hood .

So the Eu officials can’t trace the owner who as you infer might be a Eu citizen.Not a genuine 3P .

If they can trace you then - They say ,you are the owner of the company -- and by extension -- owner of the yacht.

They could work out by surveillance who’s are the main beneficiaries but so what ?
Jail you if caught http://www.superyachtnews.com/business/vat-catches-up-with-briatore

 

[Deleted User YDKXO]

They could work out by surveillance who’s are the main beneficiaries but so what ?
Jail you if caught http://www.superyachtnews.com/business/vat-catches-up-with-briatore

I've been stopped and inspected many times by officials during 16yrs in the Med and been asked for all sorts of documents but I've never been asked for proof of VAT payment. Does the panel think that we Brits will come under increased scrutiny on VAT after Brexit?

 

[Portofino]

I,am the same despite what it seems in here every other thread is about VAT and original bos , nobody’s ask to see any proof while the red ensign has merrily flapped away in the warm breeze .
Partial answer could be if there brain is registering mode in that they subconsciously apply there own rules ie if it’s reg,Ed it’s been VAT paid all that’s been sorted and you flash a nice laminated U.K. cert with a nice queens coat of arms look a like on .
We know it’s VAT meaningless but do they ?

As for them targeting red / blue ensigns depends what’s agreed after in a reciprocal nature sos not to interfere mostly with citizens day to day lives .
Reminds me of the Italian job opening scene after the muiria crash .
Cain character tells the mafia guy “ if you kill use every Italian restaurant from London to Glasgow will be smashed “
You see as said it’s 3.2 M of them to 1.2 M of us .
Then there’s the mayors local economic argument of biting the hand that’s feeds them .
Apparently I read 18 M Brits visit Spain annually, that’s on top of the 0.8 M permanently living there .

 

[jfm]

And if the boat is owned in a non EU company? I find it hard to believe that all those superyachts in the Med owned by EU residents are VAT paid!

More complex. The TIer has to be the user. If a company is the TIer then clearly the company itself can't be the user, only people can. Now by concession/custom/practice, if the user is a private individual who is the UBO of the non EU company that is the actual TIer then tax officials in relevant EU countries allow TI if that UBO is him/herself a non EU resident, which fixes the issue for non EU folk. But not EU folk, which is the answer to your Q
By the way, if a yacht is to be chartered then obviously the UBO isn't using it and in that case usually the yacht is imported by a company with an EU vat registration and the import vat is an in and out on the vat return i.e. no cash vat to pay. Of course the charter business is then vatable, which used to be at zero rate in France and Italy but not these days
Your last sentence is a non sequitur: EU owned super yachts are sometimes not vat paid, but not by virtue of TI.

 

[jfm]

You can set up a resident Co on the Cayman Islands ( Georgetown ) and be exempted from disclosing the list of directors to the public , or not even keeping the list at the nominated Co Hq on the island .

Or alternatively you can nominate a local individual for a fee of course .Some locals are nominated as owners ( outside Co,s structure ) 100 ,s of times its there lively hood .

So the Eu officials can’t trace the owner who as you infer might be a Eu citizen.Not a genuine 3P .

If they can trace you then - They say ,you are the owner of the company -- and by extension -- owner of the yacht.

They could work out by surveillance who’s are the main beneficiaries but so what ?
Jail you if caught http://www.superyachtnews.com/business/vat-catches-up-with-briatore

That's total garbage. "EU officials can't trace" is nonsense- they don't need to. When you bring a boat into EU wanting TI, you apply for it. Onus is on applicant/claimant to show whatever facts the officials want proof of, so "can't trace" gets you nowhere. Also you seem not to have heard of CRS, AEOI and FATCA, all of which Cayman has adopted. And finally Cayman just enacted its substance law in a bid to get Ecofin whitelist tax status. The dodgy stuff you hint at mainly exists in the imagination of daily mail journos these days (and the Times today).