Buying a Yacht in the Mediterranean

[Tranona]

I don't doubt you but I'm really curious about this. I had a look here https://www.gov.uk/government/publi...ur-pleasure-craft-to-and-from-the-uk#section5 but couldn't see anything about selling while on temporary importation. I don't suppose you have a link to the relevant UK regulation.

5.6, 5.10 and 5.12 cover what happens if the vessel no longer qualifies for relief. It must either be removed of the appropriate duties and taxes paid.

It is logical as TA is a relief which has conditions attached, so if the conditions no longer apply it becomes an import.

 

[Irish Rover]

5.6, 5.10 and 5.12 cover what happens if the vessel no longer qualifies for relief. It must either be removed of the appropriate duties and taxes paid.

It is logical as TA is a relief which has conditions attached, so if the conditions no longer apply it becomes an import.

I don’t read any of these as being relevant to the issue of selling a boat while on temporary import. Truthfully I find it difficult to believe this issue would not be explicitly covered if the situation is as clear as you suggested in earlier posts.

 

[nauticote]

Many thanks all, in particular Irish Rover and Tranona. Very interesting stuff and have learnt so much, so fast, from this discussion.

One other thing I should mention besides my Irish and British passports, and Hong Kong residence is that I was born in Singapore although I dont have a Singapore nor Hong Kong passport (my dad was in the merchant navy so lots of seas salt flowing through my veins). I guess 2019/beyond with Brexit may have an impact for British passport holders, and having both non-EU and EU passports may benefit my situation and plans for the Med.

Hope to see you guys on the Med seas some days.....a good square meal and drinks on me!

Cheers and fair winds to you all.

Steve

 

[macd]

I don’t read any of these as being relevant to the issue of selling a boat while on temporary import. Truthfully I find it difficult to believe this issue would not be explicitly covered if the situation is as clear as you suggested in earlier posts.

Really, Rover? 5.12 expressly states a vessel is not eligible for TI if is imported for sale. Whatever the owner's intentions at the time of entering the EU, surely the fact of sale disqualifies the boat from any concessions under TI, making VAT retrospectively due?

And, logically: if an EU boat is sold outside the EU, it is defined as having been exported. Ergo, if a non-EU boat is sold inside the EU, it's imported = VAT due. (In a related field, preventing this is precisely what carnets are about.)

 

[Irish Rover]

Really, Rover? 5.12 expressly states a vessel is not eligible for TI if is imported for sale. Whatever the owner's intentions at the time of entering the EU, surely the fact of sale disqualifies the boat from any concessions under TI, making VAT retrospectively due?

And, logically: if an EU boat is sold outside the EU, it is defined as having been exported. Ergo, if a non-EU boat is sold inside the EU, it's imported = VAT due. (In a related field, preventing this is precisely what carnets are about.)

Yes really. To me it makes no sense that the mere fact of sale would make the boat liable for EU VAT. if that was the intention it would have been a simple and logical step to add something along the lines of “or if a boat on Temporary Admission is sold it’s TA status is immediately revoked”. HMRC don’t usually write their rules in a way that requires the type of speculation being engaged in here. I accept I may be wrong but if VAT becomes payable on sale it must be under a regulation other than those mentioned by Tranona.

 

[macd]

I quite agree that it would be simpler if expressly stated, but by any reasonable definition, bringing a vessel into the EU and selling it whilst there is importation. It doesn't require spelling out. And importation means that VAT becomes due. (Equally it may mean that if that sale is to a non-EU resident who plans to take the vessel out of the EU in the near future, such as yourself, then relief might be claimed. 'Claimed', mind, not assumed with a nod and a wink.)

 

[Irish Rover]

I quite agree that it would be simpler if expressly stated, but by any reasonable definition, bringing a vessel into the EU and selling it whilst there is importation. It doesn't require spelling out. And importation means that VAT becomes due. (Equally it may mean that if that sale is to a non-EU resident who plans to take the vessel out of the EU in the near future, such as yourself, then relief might be claimed. 'Claimed', mind, not assumed with a nod and a wink.)

If a vessel is brought in under TA then that does not, in itself, constitute importation. It either qualifies for TA or it does not. If it was brought in for the purpose of sale it would not qualify for TA. However if it is brought in for bona fide reasons and qualifies for TA then selling it 12 months later does not retroactively cancel the TA status or retroactively alter it to importation. It's status may or may not change from the date of sale and it's revised status will depend on a number of factors such as any change of flag state and the residence status of the new owner. If it was a matter of relief being claimed, as you suggest, I would expect Notice 8 to spell out what reliefs are available and point us in their direction as they do in Article 5.12 in relation to yachts imported for the purpose of sale.

 

[Tranona]

Yes really. To me it makes no sense that the mere fact of sale would make the boat liable for EU VAT. if that was the intention it would have been a simple and logical step to add something along the lines of “or if a boat on Temporary Admission is sold it’s TA status is immediately revoked”. HMRC don’t usually write their rules in a way that requires the type of speculation being engaged in here. I accept I may be wrong but if VAT becomes payable on sale it must be under a regulation other than those mentioned by Tranona.

It is important to understand that TA rules are talking about "Reliefs" - in other words the circumstances in which the rules on importation are changed by exception. So if the if the boat/ person no longer qualifies for the relief claimed the boat must be removed from the EU or the rules on importation apply. The person claiming relief is therefore responsible for importing the boat if he wishes to sell it in the EU, although in practice it is the buyer that pays the tax by way of a higher price. The buyer should ask for the receipt from HMRC for VAT (and possibly duty) as this is the only evidence that the tax has been paid.

You may find it helpful to read the RYA/HMRC VAT FAQ document on the RYA website which explains in more detail how the rules are applied.

 

[Irish Rover]

It is important to understand that TA rules are talking about "Reliefs" - in other words the circumstances in which the rules on importation are changed by exception. So if the if the boat/ person no longer qualifies for the relief claimed the boat must be removed from the EU or the rules on importation apply. The person claiming relief is therefore responsible for importing the boat if he wishes to sell it in the EU, although in practice it is the buyer that pays the tax by way of a higher price. The buyer should ask for the receipt from HMRC for VAT (and possibly duty) as this is the only evidence that the tax has been paid.

You may find it helpful to read the RYA/HMRC VAT FAQ document on the RYA website which explains in more detail how the rules are applied.

I am not a member of the RYA and don't have access to the document in question but if you want to share I'll be glad to read it. In the meantime I think you are coming around to my way of thinking on the specific issue of what happens when a boat on TA is sold inside the EU insofar as you say " if the boat/ person no longer qualifies for the relief claimed the boat must be removed from the EU or the rules on importation apply". I agree 100% and so do the Greek customs authorities who give you 1 month to remove the boat. By extension if the boat/person [new owner] do qualify for TA then the boat can stay and no VAT liability arises. I disagree with one aspect of the Greek application of the scheme but that's a separate issue and I won't muddy the waters with it here.

 

[Tranona]

I am not a member of the RYA and don't have access to the document in question but if you want to share I'll be glad to read it. In the meantime I think you are coming around to my way of thinking on the specific issue of what happens when a boat on TA is sold inside the EU insofar as you say " if the boat/ person no longer qualifies for the relief claimed the boat must be removed from the EU or the rules on importation apply". I agree 100% and so do the Greek customs authorities who give you 1 month to remove the boat. By extension if the boat/person [new owner] do qualify for TA then the boat can stay and no VAT liability arises. I disagree with one aspect of the Greek application of the scheme but that's a separate issue and I won't muddy the waters with it here.

Where I think Greece differs from the UK is in allowing TA to be transferred to another owner without the boat leaving the EU and re-entering. Suspect HMRC would take a much harder line - indeed there have been reports in the past on this point where boats from abroad have ended up in limbo in the UK because the non resident owner cannot import either because they can't afford the costs or the boat does not comply with the RCD and is not in a condition to be removed.

You may recall in one of your earlier threads that jfm (who knows more about these issues than most) suggested that the safest way to transfer ownership of a non VAT paid boat is to take it offshore to complete the transaction or in different circumstances where the intention is to retain EU VAT paid status, bring the boat into the EU. The latter is common when selling VAT paid boats located in Turkey - sail it to Greece for the transaction.

The danger in buying boats in this way is that different states take different attitudes and customs tend to adopt the attitude that it is up to you to prove that your boat does not have any VAT liability as even though it might be the responsibility of the seller to ensure that is the case, the debt attaches to the boat.

Not really a concern for you as you are taking the boat outside the EU so only have to consider the actions of the Greek authorities, but I would be less sanguine about cruising to other states in the EU with the paper trail you will have.

 

[Irish Rover]

Where I think Greece differs from the UK is in allowing TA to be transferred to another owner without the boat leaving the EU and re-entering. Suspect HMRC would take a much harder line - indeed there have been reports in the past on this point where boats from abroad have ended up in limbo in the UK because the non resident owner cannot import either because they can't afford the costs or the boat does not comply with the RCD and is not in a condition to be removed.

You may recall in one of your earlier threads that jfm (who knows more about these issues than most) suggested that the safest way to transfer ownership of a non VAT paid boat is to take it offshore to complete the transaction or in different circumstances where the intention is to retain EU VAT paid status, bring the boat into the EU. The latter is common when selling VAT paid boats located in Turkey - sail it to Greece for the transaction.

The danger in buying boats in this way is that different states take different attitudes and customs tend to adopt the attitude that it is up to you to prove that your boat does not have any VAT liability as even though it might be the responsibility of the seller to ensure that is the case, the debt attaches to the boat.

Not really a concern for you as you are taking the boat outside the EU so only have to consider the actions of the Greek authorities, but I would be less sanguine about cruising to other states in the EU with the paper trail you will have.

Please excuse me if what follows sounds harsh but I think there is a lot of chaff flying around here which has the potential to confuse and worry people. I was confused and worried myself by it only a few months ago. I have seen nothing official to establish there is any problem with a boat on TA being sold while in the EU and HMRC Notice 8, which deals with this issue, does not mention any such prohibition or problem. RCD compliance or selling an EU VAT paid boat outside the EU are totally separate issues and bulking them all in together only serves to confuse people. Talking about paper trails in this context also just serves to confuse and worry people and, in the absence of specifics, seems like scare mongering. If there is something definitive in the RYA faq on this subject maybe someone who is a member would share it with us. In the meantime I think it is unfair to scare off people who are in a position to avail of the savings to be had by buying a VAT not paid boat in the EU on the basis of suspicions about HMRC taking a hard line or talk about boats ending up in limbo without any supporting facts.

 

[nauticote]

Thanks again Skippers.

To clarify, assuming I have a non-VAT paid yacht in Greece with a Temporary Import permit issued by the Greek authorities, would there be any problem sailing to other EU countries like Italy or Croatia ? i.e. would they recognise the Greek TI ?

Cheers

Steve

 

[Irish Rover]

Thanks again Skippers.

To clarify, assuming I have a non-VAT paid yacht in Greece with a Temporary Import permit issued by the Greek authorities, would there be any problem sailing to other EU countries like Italy or Croatia ? i.e. would they recognise the Greek TI ?

Cheers

Steve

The relevant EU law says if your boat has been granted TI in Greece then, subject to the rules of course, it can remain in the EU for 18 months and "it can move from one Member State to another with no further customs formalities during the 18 month period allowed". I have no personal experience of doing this and others who have done so may be able to add more detailed advice of how individual countries like things to be done. You may want to read this simple explanatory doc from the European Commission and if you're really keen there's a link to the 751 page implementing regulation https://ec.europa.eu/taxation_custo...-asked-questions-about-rules-private-boats_en

 

[nauticote]

Excellent, thanks again Rover, that's exactly what I'm looking for. Think I'll give the encyclopedic version a miss.

 

[Fendant]

If you are using your Irish passport, make sure, that your Hongkong residence is stamped into the passport. Then you are fully qualified for TI.

I have no idea how this will be handled for British citizens after Brexit

 

[nauticote]

Thx Fendant, will do.

 

[tahona]

Thanks a lot, guys for all your responses in this thread! You helped me a lot with my boat purchase.