Buying a non vat paid boat in Europe

[walterdubb]

I would appreciate some advice on buying a non vat paid boat. Am I right in thinking that as an EU citizen the boat is liable for VAT immediately on arrival in an EU country, or is there a period of grace for say a boat heading for Las Palmas to join the ARC?

 

[duncan99210]

Someone will be along shortly with another opinion but as I understand VAT, once the boat enters the EU in the owenership of an Eu citizen it becomes liable to VAT at the first port of call within the EU. No grace period available to you. Now, sit back and let some one who knows more about the topic what the regulations actually are.

 

[Koeketiene]

I would appreciate some advice on buying a non vat paid boat. Am I right in thinking that as an EU citizen the boat is liable for VAT immediately on arrival in an EU country, or is there a period of grace for say a boat heading for Las Palmas to join the ARC?

According to my best information it depends - in which country will you register the boat?
1. Boat registered in a non-EU country. The boat can be in the EU continuously for up to 18 months before VAT is due.
2. Boat registered in an EU country. VAT is due as soon as it enters the EU. Boat will - depending on age - have to be CE compliant too.

Experts will no doubt be along shortly.

 

[RupertW]

According to my best information it depends - in which country will you register the boat?
1. Boat registered in a non-EU country. The boat can be in the EU continuously for up to 18 months before VAT is due.
2. Boat registered in an EU country. VAT is due as soon as it enters the EU. Boat will - depending on age - have to be CE compliant too.

Experts will no doubt be along shortly.

That's pretty much my understanding and I've an SSR registered boat in Croatia that I'd like to pay the VAT on ASAP but can't until we sail it elsewhere.

All the indications are that people can travel through a lot of the med without being asked until they try to settle down for a year somewhere.

 

[Tranona]

According to my best information it depends - in which country will you register the boat?
1. Boat registered in a non-EU country. The boat can be in the EU continuously for up to 18 months before VAT is due.
2. Boat registered in an EU country. VAT is due as soon as it enters the EU. Boat will - depending on age - have to be CE compliant too.

Experts will no doubt be along shortly.

Nothing to do with registration, it is the residence of the owner that is the key croterion. The "18 months" is only for non residents who are genuine visitors.

If a boat is brought into the EU by a resident it is liable to VAT. Again registration is unimportant.

For full details see HMRC VAT Notice No 8 or for a more friendly version of the rules, the RYA website.

 

[Tranona]

I would appreciate some advice on buying a non vat paid boat. Am I right in thinking that as an EU citizen the boat is liable for VAT immediately on arrival in an EU country, or is there a period of grace for say a boat heading for Las Palmas to join the ARC?

There is a mechanism for individuals to buy a boat in the EU and then export it without paying VAT. Your builder or dealer will know the rules and will arrange it for you. There are inevitably restrictions, but you need to discuss with your supplier to ensure will comply as they are responsible for paying the VAT if you do not. You may therefore be required to pay a deposit with them equal to the VAT.

 

[Koeketiene]

Nothing to do with registration, it is the residence of the owner that is the key croterion. The "18 months" is only for non residents who are genuine visitors.

If a boat is brought into the EU by a resident it is liable to VAT. Again registration is unimportant.

Au contraire - registration is everything.
In the vast majority of cases, where a private individual can register a vessel will depend on his residency.
Even the SSR requires that you are 'ordinarily established' in the UK.

 

[Tranona]

Au contraire - registration is everything.
In the vast majority of cases, where a private individual can register a vessel will depend on his residency.
Even the SSR requires that you are 'ordinarily established' in the UK.

'Fraid not. Look at the VAT notice that I referenced and tell me if you can see "registration" menbtioned anywhere. It is completelky irrelevant. Liability for VAT depends solely on whether the transaction is a "chargeable event". There is no legal requirement in many countries (such as the UK) to register a yacht anyway. VAT is a tax on transactions, not assets.

You are correct in saying that registration may require a residency, but not always - even in the UK where non residents (and non-citizens) can register on Part 1. Residents who are non-citizens can register on SSR. However none of this has any effect on liability to pay VAT.

 

[nauticalnomad]

'Fraid not. Look at the VAT notice that I referenced and tell me if you can see "registration" menbtioned anywhere. It is completelky irrelevant. Liability for VAT depends solely on whether the transaction is a "chargeable event". There is no legal requirement in many countries (such as the UK) to register a yacht anyway. VAT is a tax on transactions, not assets.

You are correct in saying that registration may require a residency, but not always - even in the UK where non residents (and non-citizens) can register on Part 1. Residents who are non-citizens can register on SSR. However none of this has any effect on liability to pay VAT.

what if as soon as you purchase it you advertise it for sale again at a higher price, could you not pass the vat onto be paid by the next owner etc?

 

[B&M]

To my knowledge although the Canary Islands have the euro as their legal tender and they are part of the European Union Customs Union. They are however outside the Schengen area and the VAT area.

 

[al.carpenter]

I would appreciate some advice on buying a non vat paid boat. Am I right in thinking that as an EU citizen the boat is liable for VAT immediately on arrival in an EU country, or is there a period of grace for say a boat heading for Las Palmas to join the ARC?

Hi all. This is mind blowing... I might be asking for some stick here... but I am the only one chocked by the question on a forum about how to cheat on us all and avoid paying a tax that all should have to pay somewhere when a transaction is done? When you buy something, you have the price of the good plus the tax that is applied to this good, that is a contribution for being part of a community and used for paying this community needs such as hospitals, roads, infrastructures, civil servants etc.... If you cannot afford the purchase in full (object and tax), do not buy it... (or cheat but then, at least, do not advertise... what if we all did what you are trying to do??????) No wonder we are in the ****....

when I open my mail I even get adverts about how to avoid taxes as an expat....Are we walking on the head?

 

[Tranona]

what if as soon as you purchase it you advertise it for sale again at a higher price, could you not pass the vat onto be paid by the next owner etc?

Not sure what you are asking here. If you import a boat privately you pay VAT on its agreed value (which could be the price you paid for it elsewhere). If you sell it subsequently the price you ask and get is irrelevant as a private citizen. You are responsible for the VAT on entry - you cannot "pass on" the tax liability to another person.

 

[Tranona]

Hi all. This is mind blowing... I might be asking for some stick here... but I am the only one chocked by the question on a forum about how to cheat on us all and avoid paying a tax that all should have to pay somewhere when a transaction is done? When you buy something, you have the price of the good plus the tax that is applied to this good, that is a contribution for being part of a community and used for paying this community needs such as hospitals, roads, infrastructures, civil servants etc.... If you cannot afford the purchase in full (object and tax), do not buy it... (or cheat but then, at least, do not advertise... what if we all did what you are trying to do??????) No wonder we are in the ****....

when I open my mail I even get adverts about how to avoid taxes as an expat....Are we walking on the head?

Come on! What the OP is asking about is perfectly legal if he complies with the rules (which are very restrictive). VAT is a tax for transactions within the EU. If the boat is intended for use outside the EU, why should it be taxed? The important thing is that the system to make sure the rules are applied is watertight, and it is. If the OP subsequently brings the boat back into the EU he will pay VAT at that point.

 

[walterdubb]

Thank you all for your replies. I am a UK resident. The boat I am interested in is in the Channel Islands and not VAT paid. If I buy it I wish to base it in the Caribbean but need to call at EU ports on the way to the Canaries. Maybe I need a friend with an address in the Channel Islands??

 

[duncan99210]

I suggest that you need to talk to a tax accountant who specialises in VAT, so that you can avoid an unpleasant visit from the customs as you head south. He will be able to advise you as to your liability for VAT on the boat when it enters EU waters. There may be a work round that will enable you to escape paying VAT but you need an expert to be sure.

 

[temptress]

I would appreciate some advice on buying a non vat paid boat. Am I right in thinking that as an EU citizen the boat is liable for VAT immediately on arrival in an EU country, or is there a period of grace for say a boat heading for Las Palmas to join the ARC?

The guidance is very BALCK and WHITE and can be found on the HMRC website. If you are resident in the EU then VAT is payable on the BOAT AT THE FIRST PORT OF CALL IN THE EU at the rate applicable in that county. If you are non-resident then you get a grace period unless you sell the boat then VAT is payable.

Also ask the RYA legal team - they can provide guidance to what the rules are.

Now there are ways to Avoid tax - Legal and there are ways to Evade tax - Illegal. If you wish to pursue the former get some professional advice which you will most likely have to pay for, the latter is up to you but you risk jail.

I am non-resident in the EU but I keep my boat in the EU and it is VAT paid.

 

[Jeannius]

I would appreciate some advice on buying a non vat paid boat. Am I right in thinking that as an EU citizen the boat is liable for VAT immediately on arrival in an EU country, or is there a period of grace for say a boat heading for Las Palmas to join the ARC?

Here's a link to the HMRC page describing the Sailaway Scheme... http://customs.hmrc.gov.uk/channels...ntent&id=HMCE_CL_000153&propertyType=document

You used to be able to use this scheme in a very straightforward manner as a UK Resident but new restrictions apply since 1st January. You can still use it but it is now more complicated. Read carefully so you don't make any mistakes!!!!

 

[walterdubb]

Thanks JEANNIUS (Well named). I've read through the scheme but it seems to refer to new boats only. No mention of it applying to used boats that I can see. I think a call to HMRC is our next step

 

[Tranona]

Here's a link to the HMRC page describing the Sailaway Scheme... http://customs.hmrc.gov.uk/channels...ntent&id=HMCE_CL_000153&propertyType=document

You used to be able to use this scheme in a very straightforward manner as a UK Resident but new restrictions apply since 1st January. You can still use it but it is now more complicated. Read carefully so you don't make any mistakes!!!!

This would not be relevant for the OP as the boat he wants to buy is already outside the EU. The question is whether he can buy it and stop at EU ports on the way to the Canaries. In theory, no as soon as he enters the EU it is liable for VAT, and being an EU resident he cannot apply for temporary importation.

Perhaps (and I am speculating a bit here) if it stays in CI ownership (not just registration) it can get temporary importation, but professional advice is needed before taking that approach.

BTW, none of this would be of any interest to HMRC unless the boat came to the UK.

 

[chinita]

Accepting that VAT is a Transaction Tax, I wonder who decides in HMRC the amount upon which VAT has to be paid and upon what criteria. Boats do not depreciate in a straight line and some boats may be sold for significantly more that their original marketed price when new.

If I bought a 1985 boat in the CI, (price new in 1985 £30k ex VAT) for £35k ex VAT do I pay VAT on £30k or £35k?

Can't really be based on the Bill of Sale; the last MCA Bill of Sale I have says that I paid '£1 and other considerations'.

What if the boat was gifted, or I won it at poker and there was no transaction of cash?