Buying a French registered boat (VAT paid questions)

[martin]

Hi All,

I am looking at a boat which was originally sold by Princess France to a lease company, so no original VAT certificate available (I believe this is the norm). The current owner is also French and the boat is French registered.

The broker is selling it on behalf of the current French owner as VAT paid. Which has probably been unchallenged, as its on a French flag and never left France.

However, if I buy it, change it to British registration and keep it in the EU (possibly Spain) for the foreseeable. What documents do i need satisfy an inspection ?

I have read most of the VAT posts on this subject but cant seem to get clarity on this..Any help would be appreciated.

 

[jfm]

My best guess is that you won't get clarity as the documentation on these French/Italian leasing scheme boats can often be messy or incomplete. Worse still, when you go to another country (Spain in your case) the authorities there may not love the other country's documentation and you risk a challenge that the boat is not accepted as VAT paid.

Even if you bite the bullet and accept the boat, when you come to sell it you will face the same issues.

You will no doubt have the broker telling you that it's ok - I suggest you totally ignore the broker's claims and take zero comfort from what they have to say - they basically know nothing about VAT law.

I took such a leased boat in part -ex a few years ago and the paperwork just wasn't good.

I hope it turns out better than I'm suggesting but personally I would avoid the whole thing, or make sure to pay a VAT-not-paid price.

 

[benjenbav]

Might it be interesting to invite the broker to buy the boat from their client and resell it at the current price on a b2c basis, TVA inclusive.

Surely if the end-buyer covered the broker’s finance cost the broker would be happy to stand by their assertion that TVA was paid on the original supply?

 

[Hurricane]

I understand that the Maltese leasing scheme is similar. I also understand that the Maltese authorities issue a VAT statement/certificate when the vessel is sold from the leasing company to the first non-lease owner. In your opening statement, you say "sold by Princess France to a lease company, so no original VAT certificate available (I believe this is the norm)" But the VAT certification that you need will be the second (probably) time that the boat was sold (i.e. at the time the first non-lease owner took possession). So, it might be worth asking again - or, at least asking for a copy of ALL the documentation. And if that second (first non lease owner) sale doesn't have any VAT certification, I think I would then tell the broker that there is no evidence of VAT and make a lower offer that will allow you to pay the VAT yourself locally in the EU.

 

[martin]

My best guess is that you won't get clarity as the documentation on these French/Italian leasing scheme boats can often be messy or incomplete. Worse still, when you go to another country (Spain in your case) the authorities there may not love the other country's documentation and you risk a challenge that the boat is not accepted as VAT paid.

Even if you bite the bullet and accept the boat, when you come to sell it you will face the same issues.

You will no doubt have the broker telling you that it's ok - I suggest you totally ignore the broker's claims and take zero comfort from what they have to say - they basically know nothing about VAT law.

I took such a leased boat in part -ex a few years ago and the paperwork just wasn't good.

I hope it turns out better than I'm suggesting but personally I would avoid the whole thing, or make sure to pay a VAT-not-paid price.

I had a feeling that this might be the case. Thanks for the info, awlays good to get an owners perspective!

 

[martin]

I understand that the Maltese leasing scheme is similar. I also understand that the Maltese authorities issue a VAT statement/certificate when the vessel is sold from the leasing company to the first non-lease owner. In your opening statement, you say "sold by Princess France to a lease company, so no original VAT certificate available (I believe this is the norm)" But the VAT certification that you need will be the second (probably) time that the boat was sold (i.e. at the time the first non-lease owner took possession). So, it might be worth asking again - or, at least asking for a copy of ALL the documentation. And if that second (first non lease owner) sale doesn't have any VAT certification, I think I would then tell the broker that there is no evidence of VAT and make a lower offer that will allow you to pay the VAT yourself locally in the EU.

Thanks you H. The second owner doesnt have the VAT invoice as far as we know. So its time to do some digging and see if we can get something from the lease company CGI. Either that or walk away... I have already had several nightmare attempts at purchases this year and am sticking strictly to the available documentation from now on.

 

[Hurricane]

AFAIK VAT would have been charged (monthly) on the lease payments.
Using this approach, I understand that a VAT discount is available on the lease payments.
At the end of the lease, I believe that the boat is usually sold to the leasee for a lower value which attracts VAT at the full rate.
So, you probably need to see the transaction between the lease company and the leasee who (probably) bought the boat.

In any case, IMO, I would be asking the broker for proof that VAT has been paid. Without that proof, the broker can't claim that it is a VAT paid boat.

 

[DAW]

AFAIK VAT would have been charged (monthly) on the lease payments.
Using this approach, I understand that a VAT discount is available on the lease payments.
At the end of the lease, I believe that the boat is usually sold to the leasee for a lower value which attracts VAT at the full rate.
So, you probably need to see the transaction between the lease company and the leasee who (probably) bought the boat.

In any case, IMO, I would be asking the broker for proof that VAT has been paid. Without that proof, the broker can't claim that it is a VAT paid boat.

Most of these leasing schemes seek to take advantage of the lower rates of VAT applicable to monthly lease payments in certain jurisdictions to reduce the effective rate of VAT paid on the purchase. The lessee normally purchases the vessel at the end of the lease at some pre-agreed nominal amount on which VAT is charged at the full rate. They also take delivery of the vessel in EU waters, giving the vessel EU VAT paid status. The acceptability of these schemes varies, but with Princess and CGI (part of Société General) involved it should have been one of the legitimate ones.

The first person registering the boat as a pleasure vessel in private ownership on the French register would normally need to provide evidence of its VAT paid status to the French authorities.

The original lessee should have been provided with statements showing the VAT paid throughout the duration of the lease. Some countries will also issue VAT certificates. However, I‘ve heard that the French authorities will also sometimes accept just the VAT invoice for the final payment if it is from a reputable finance company. It’s possible that the office where the registration was done may have kept the VAT invoice in their files and not returned it with the registration papers. A French owner may not have been overly concerned about this as subsequent transfers to a new owner can be made on the French register without providing new documentation for the vessel.

Whatever the situation here, it seems unlikely that it can have been registered on the French register without evidence of VAT paid status having been provided at some point. It’s the brokers job to work with the seller to get you the explanations and the documentation you need, and you shouldn’t move forward without it.

 

[Zing]

Bloody bureaucracy! How much happier we would be if life were made simpler.

 

[DAW]

Just as a follow-up to my post above to show how this can work in practice …

One of the boats I purchased in France had been sold by Sunseeker to a first owner based in Luxembourg under a leasing scheme provided by an Italian subsidiary of BNP Paribas. The vessel had been registered on Part I of the British Registry and kept in French waters throughout the duration of the lease and also subsequently. It was purchased from the leasing company at the end of the lease and VAT was paid in France on the final instalment payment of €10,000.

The owner was able to provide an original copy of the VAT invoice and other supporting documentation for the leasing arrangement. Sunseeker France (acting as broker for the seller) had also obtained certified copies of the VAT invoice and a confirmation of payment of tax in France (duly stamped by the French tax authorities) directly from BNP Paribas SpA before commencing marketing of the vessel as EU VAT paid.

These arrangements can be acceptable, but both seller and broker need to do their part to obtain and provide the buyer with complete documentation.

 

[Hurricane]

The point here is that there is a leasing company involved in the initial purchase.
AFAIK, the trick when buying a new boat privately using a leasing scheme is to own the company that leases the boat to yourself.
That way, any leasing charges are being paid to yourself.
So, second owners should be careful.
Obtaining the documentation is a MUST.
As DAW says above there will be invoices for each payment of the lease.
These payments will be subject to VAT (at a discounted rate) but the invoices SHOULD exist.
Also an invoice for the final payment (with full VAT) should also exist.

But the big message here is that with no proof, you should consider that VAT hasn't been paid - it is up to the vendor/broker to provide that proof.