Buying Eu vat paid boat in the Canary Isles

[madmolly]

I am looking at buying a boat in the Canary Islands, through a local broker, the boat is registered in Spain EU vat paid. I plan to transfer it to the British register before 31st December 2020 (pre Brexit) and move the boat to mainland Europe. Will it loose it‘s EU Vat status due to purchasing the boat in the Canaries?
Many thanks.

 

[RupertW]

I am looking at buying a boat in the Canary Islands, through a local broker, the boat is registered in Spain EU vat paid. I plan to transfer it to the British register before 31st December 2020 (pre Brexit) and move the boat to mainland Europe. Will it loose it‘s EU Vat status due to purchasing the boat in the Canaries?
Many thanks.

How long has it been in the Canaries? More than 3 years and I would assume it had lost its status but I’d be interested in the definitive answer as our boat is there.

 

[Graham376]

AFAIK, Canaries are outside Customs Union and VAT area so for RGR to be given, it would have to be the owner who exported it, bringing it back to mainland Europe. It will lose it's EU VAT paid status as soon as you buy it.

 

[madmolly]

The boat has only been in the Canary Islands for less than a year and is still registered in Spain. Not sure if any of this makes a difference?

 

[Graham376]

The boat has only been in the Canary Islands for less than a year and is still registered in Spain. Not sure if any of this makes a difference?

If the boat changes hands outside the EU customs area, it becomes an import by the new owner. If the paperwork/bill of sale were to show the transfer takes place in EU waters then it would keep it's status. but not sure how the cancellation of Spanish registration would take place.

 

[Chris_Robb]

If the boat changes hands outside the EU customs area, it becomes an import by the new owner. If the paperwork/bill of sale were to show the transfer takes place in EU waters then it would keep it's status. but not sure how the cancellation of Spanish registration would take place.

Madmolly, have a look at the latest RYA news letter. It gives a detailed explanation of Customs territories. Vat areas and how they interact - without reading again, the Canaries is part of the Customs Union but not the Vat area. So this is complicated enough even if you had owned it for some time, let alone with a sale involved.

I have no idea how you remove the Spanish Reg., but the broker should know. Perhaps the Current owner should re-import it with a contract of sale taking place within the EU after it has arrived. He will have an exemption (3 years) so entry for him will not be an issue.

Retaining UK Vat as well as EU Vat will be difficult - but I would imaging retaining EU Vat will be easy. But do pay attention to the rules on the exemption - it must be the same person that exports it returning.

Do read the RYAs latest 30/10 doc - though I am worried by information I have just received from the department dealing with this that implies export (when in the EU) from the UK will occur on 31st Dec 2017, retrospectively from the date of the end of transition. Which would preclude UK Vat status. The date 2017 does not seem to have any understandable basis and we have written in asking for a clear explanation - and showing the issues that it will cause in retrospect. namely that any yacht purchased after 31st December 2017, will have been exported on that date by the old owner, therefore you could not claim RGR. I think someone must have been on the sauce to pick that date - it has no basis that I can think of at all...

You may have to settle for EU Vat only.

 

[Graham376]

the Canaries is part of the Customs Union but not the Vat area .............. any yacht purchased after 31st December 2017, will have been exported on that date by the old owner, therefore you could not claim RGR. I think someone must have been on the sauce to pick that date - it has no basis that I can think of at all...

Are you sure Canaries are within the Customs Union, everything I read says - The Canary Islands, including Fuerteventura, are politically within the European Union, however, they are outside the European Union customs territory and VAT area.

Surely, the 2017 date flies in the face of EU and UK VAT law, which still applies until 31/12. No chargeable event has been or will be created when buying a boat within the territory before that date. Would be reasonable I suppose to say the current owner will have exported it on 31/12 if not in UK but the previous owner? That's madness.

 

[Chris_Robb]

Read the latest RYA announcement , it deal with this in detail.

2017 is crazy

 

[madmolly]

If the boat changes hands outside the EU customs area, it becomes an import by the new owner. If the paperwork/bill of sale were to show the transfer takes place in EU waters then it would keep it's status. but not sure how the cancellation of Spanish registration would take place.

Yes it is quite clear that the boat would loose it's EU VAT Status and it would seem it is the owners responsibility to deregister it from the Spanish flag.

I have read all the RYA latest notice etc, also all the latest on the BREXIT fiasco here - Brexit - what happens next? | Current Affairs | Knowledge & Advice | RYA - Royal Yachting Association. Anyone with a UK registered boat overseas should read this. You will have to make a choice if your boat retains UK or EU Vat Status....

If your boat is in the Canaries on the 31/12/20 this is the statement from the RYA -

- Boat lying in a territory of an EU27 country which is part of the customs territory of the EU but excluded for VAT purposes at 11pm UTC on 31 December 2020
If, at the end of the transition period, a boat is lying in a territory of an EU country which is part of the Customs Territory of the EU but which is not part of the EU for VAT purposes (e.g. Canary Islands, Guadeloupe, Martinique, French Guiana, Réunion, Åland Islands, Mayotte, Saint-Martin – French part), its Union status (if it was held in that territory) will be retained......

The nearest EU VAT area port to the Canary Islands would be Funchal, unfortunately it is closed due to Covid19 for all foreign yachts (a two day transit is permissible with prior permission) and if you could have a berth there on 31/12/20 at best EU VAT would be retained.

Bit of a drift on the thread there.....

 

[davethedog]

So, what if you had a UK vat paid vessel and UK regisrerd and flagged in the canaries on 31 Dec 2020...would it retain UK vat status in line with the statement?

 

[Chris_Robb]

So, what if you had a UK vat paid vessel and UK regisrerd and flagged in the canaries on 31 Dec 2020...would it retain UK vat status in line with the statement?

Provided that you were the owner when you exported the yacht to the canaries you should be ok.

Many things are not known yet and the law had not been sealed let alone delivered...

 

[Graham376]

As things stand at the moment then I think yes.

I'm trying to understand the implications of what we're now being told about UK HMRC rules. If I understand it correctly, (please correct me if I'm wrong) they are now saying a boat will be treated as exported at the date it left the UK, NOT when we leave the customs union so, have those of us who left the UK some years ago already lost UK VAT status? Have any boats which changed ownership in EU waters since they left the UK lost their status?

 

[nortada]

As things stand at the moment then I think yes.

I'm trying to understand the implications of what we're now being told about UK HMRC rules. If I understand it correctly, (please correct me if I'm wrong) they are now saying a boat will be treated as exported at the date it left the UK, NOT when we leave the customs union so, have those of us who left the UK some years ago already lost UK VAT status? Have any boats which changed ownership in EU waters since they left the UK lost their status?

For the majority us there is little or nothing we can do change our situation so as there are so many conflicting statements, I really do think this has to be a case of wait and see.

An added complication, whatever the new rules are, it will possibly come down to local interpretation on the day.

 

[madmolly]

Does anyone know how it will be for a UK resident buying an EU VAT paid boat after Brexit, will it be allowed on the UK register? I don’t think the EU have a problem keeping the boat in the EU, but how would you register it?

 

[Graham376]

Does anyone know how it will be for a UK resident buying an EU VAT paid boat after Brexit, will it be allowed on the UK register? I don’t think the EU have a problem keeping the boat in the EU, but how would you register it?

Small Ships Register UK | MCA Cardiff Registry and Renewal

 

[madmolly]

Small Ships Register UK | MCA Cardiff Registry and Renewal

Am I correct in saying that it is only necessary that the owner/owners are normally resident in the UK, nothing to do with VAT or where the yacht is physically situated?

 

[Chris_Robb]

You are correct. VAT is about Free circulation and location and nothing to do with who owns it! Forget the flag (not something Trump said !)

 

[Chris_Robb]

As things stand at the moment then I think yes.

I'm trying to understand the implications of what we're now being told about UK HMRC rules. If I understand it correctly, (please correct me if I'm wrong) they are now saying a boat will be treated as exported at the date it left the UK, NOT when we leave the customs union so, have those of us who left the UK some years ago already lost UK VAT status? Have any boats which changed ownership in EU waters since they left the UK lost their status?

Graham - having spent most of the year understanding VAT and Vat law - I thought that we had all settled down to a good outcome.

So what are the HMRC saying - it appears thet are putting confusing smoke screens out there.
General agreement that HMRC has said that 31st January 2022 is the last dau to bring a yacht back from the EU, - ie 1 year ingratiatingly added to the 3 years - so making the date of export around the end of 2017.
No see this email from the brexit section.

Dear Mr Robb.

Further to your email below, we can advise:



At the end of the Transition Period (“TP)”, Returned Goods Relief (“RGR”) will be available for goods returning to the UK, provided that RGR conditions are met. The rules will continue to apply to a range of goods including pleasure crafts. Guidance on RGR is available online via the link: ‘https://www.gov.uk/guidance/pay-less-import-duty-and-vat-when-re-importing-goods-to-the-uk-and-eu.’ This guidance will be updated before the end of the TP.



The general rules for RGR will be that the goods must have been exported from the UK and return within 3 years of export. Additionally, for VAT RGR to apply, the exporter and importer must be the same person and any VAT due must have been previously paid



In consultation with the pleasure craft industry the Government has introduced a year of grace for items that were sent from the UK to the EU before EU Exit (2017). Given that there was no RGR within EU, this means that the period of time in the EU27 is immaterial if the items are located in the EU at the end of the transition period and return during 2021. This grace period is in addition to the existing rules on special circumstances. This grace period is in addition to the existing rules on Special Circumstances, that you refer to in your email.

The types of discretion used under special circumstances is shown on the GOVFG>UK webpage ‘https://www.gov.uk/guidance/pay-less-import-duty-and-vat-when-re-importing-goods-to-the-uk-and-eu’ under time limits for returning goods and includes professional and personal effects returning with returning UK or EU expatriates.


I hope this is helps.

Kind regards.


Stakeholder Engagement Team

Customs and Border Design




So was there email any help? If only they would see that all this changing of dates is irrelevant - just stick to 31st Dec 2020 and everything is fair - keep the RGR at 3 years and the Waiver - problems has just disappeared! Why are they doing this - what Pleasure craft industry did they consult - not us, but the main builders etc who dont even understand what happens after the boat has left the building floor! what a sad sad Joke and there is poor old Boris dealing with an utterly incompetent Civil Service - perhaps we should begin to understand where Dom is coming from....

Of course awaiting answers.......

 

[Chris_Robb]

Graham - having spent most of the year understanding VAT and Vat law - I thought that we had all settled down to a good outcome.

So what are the HMRC saying - it appears thet are putting confusing smoke screens out there.
General agreement that HMRC has said that 31st January 2022 is the last dau to bring a yacht back from the EU, - ie 1 year ingratiatingly added to the 3 years - so making the date of export around the end of 2017.
No see this email from the brexit section.

Dear Mr Robb.

Further to your email below, we can advise:



At the end of the Transition Period (“TP)”, Returned Goods Relief (“RGR”) will be available for goods returning to the UK, provided that RGR conditions are met. The rules will continue to apply to a range of goods including pleasure crafts. Guidance on RGR is available online via the link: ‘https://www.gov.uk/guidance/pay-less-import-duty-and-vat-when-re-importing-goods-to-the-uk-and-eu.’ This guidance will be updated before the end of the TP.



The general rules for RGR will be that the goods must have been exported from the UK and return within 3 years of export. Additionally, for VAT RGR to apply, the exporter and importer must be the same person and any VAT due must have been previously paid



In consultation with the pleasure craft industry the Government has introduced a year of grace for items that were sent from the UK to the EU before EU Exit (2017). Given that there was no RGR within EU, this means that the period of time in the EU27 is immaterial if the items are located in the EU at the end of the transition period and return during 2021. This grace period is in addition to the existing rules on special circumstances. This grace period is in addition to the existing rules on Special Circumstances, that you refer to in your email.

The types of discretion used under special circumstances is shown on the GOVFG>UK webpage ‘https://www.gov.uk/guidance/pay-less-import-duty-and-vat-when-re-importing-goods-to-the-uk-and-eu’ under time limits for returning goods and includes professional and personal effects returning with returning UK or EU expatriates.


I hope this is helps.

Kind regards.


Stakeholder Engagement Team

Customs and Border Design




So was there email any help? If only they would see that all this changing of dates is irrelevant - just stick to 31st Dec 2020 and everything is fair - keep the RGR at 3 years and the Waiver - problems has just disappeared! Why are they doing this - what Pleasure craft industry did they consult - not us, but the main builders etc who dont even understand what happens after the boat has left the building floor! what a sad sad Joke and there is poor old Boris dealing with an utterly incompetent Civil Service - perhaps we should begin to understand where Dom is coming from....

Of course awaiting answers.......

And my reply:

Dear Stakeholder Engagement team.

I have read your reply and there remains uncertainty particularly around your statement:

In consultation with the pleasure craft industry the Government has introduced a year of grace for items that were sent from the UK to the EU before EU Exit (2017). Given that there was no RGR within EU, this means that the period of time in the EU27 is immaterial if the items are located in the EU at the end of the transition period and return during 2021. This grace period is in addition to the existing rules on special circumstances. This grace period is in addition to the existing rules on Special Circumstances, that you refer to in your email.

Firstly, would you please explain Before EU Exit in 2017? I understand that we formally left the EU on the 31st January 2020. Following the 31st January 2020, a period of Transition was agreed with all parties (that includes the yacht owners) which would end on 31st December 2020. It is essential that we understand the meaning and purpose of this date before we can even to begin to understand the consequences.

You say that it is "immaterial if the goods are in the located in the EU at the end of Transition (31st December 2020) and return to the UK during 2021".

Secondly, the use of the word “immaterial” is difficult to understand. The dictionary definition is “unimportant under the circumstances; irrelevant”. This is extremely confusing. Does it means (including the extra year) that a period of 4 years is form 2017 to 2021, implying that the date of leaving was sometime during 2017,[2017+4 = 2021]. Could you please explain why the date of leaving - thus I presume the date "exported" is not 31st December 2020 which we all agree is the end of the transition period when we were told by the government that no changes would happen till the end of transition. So where does this date of 2017 come from?

You state “This grace period is in addition to the existing rules on Special Circumstances”. For the sake of clarity, Please confirm that you refer to the “Waiver” on extending the 3 years’ time limit for exemption. Your guidance should be more explicitly worded to make clear that it applies to yachts belonging not only to ex-patriates, but also to all returning UK Citizens, who may be recreational part time ex-patriates, for want of a better description. Please also confirm that in principle that there is no time limit, for example the writer’s yacht left the UK in 2010, and may return to the UK around 2025.

Payment of VAT to a EU27 country (i.e. not the UK)

Confirmation is required on the position of UK Owned yachts, which were bought with VAT being paid to a EU27 Country, either new or second hand, that the VAT Paid by them – indirectly on a second hand yacht – will be honoured by the UK, and that it will be treated as if it had been paid to the UK. Failure to do this would go against the Laws on which VAT has been based for 30 years, and would go against our principles of Equity and Law.



See next page for questionnaire on real life situations.

 

[Chris_Robb]

and now for the rest of the Letter - 10,000 character limit.
EU Nationals resident and working long term in the UK

There are a considerable number of other EU Countries living and working in the UK. Where they had originally bought a yacht in the remaining EU27, can you confirm that they will be treated in the same way as a UK citizen?

Consultations.

I note that you consulted with the Pleasure Craft Industry. It is a great pity that you did not widen your consolations to the actual people who would be affected. Consultation with bodies such as the RYA, who have complained they were left in the dark on discussions, and The Cruising Association, who were not consulted, with a membership of some 6000, most of whom have based their yachts in continental Europe, have significantly more knowledge of the day to day problems and of the consequences of such a plan than the supply side of the industry.

Scale of the issue.

You should note that the scale of the effect on UK Nationals may be quite considerable. We know that in Greece alone that in 2019, 4,500 yachts actively sailed (stats from Greek government E-TEPAI (cruising tax)) - with a large number ashore, not sailed. A similar number may be found in the other Mediterranean states and the Baltic countries. A conservative estimate might be around 30 thousand yachts.

Consequences.

By unexplainably backdating the day of leaving and therefore the critical "exported" date, you are effectively imposing retrospective legislation on a large numbers of Yacht owners, who have legitimately paid VAT in the EU 28, which according to the laws and directives of the EU and the UK was mandatory.

Example: A yacht leave the UK in 2010, and sails exclusively within the EU Customs Territories. On the 20th March 2018, the yacht was sold to another British citizen/resident - correctly as EU Vat paid. He sails home during 2021, and applies for RGR, he will not be able to apply for RGR as he was not the original exporter. This would appear to apply to other yachts bought in the Mainland EU who paid VAT to an EU country.

I have attached a matrix of the many different circumstances that will occur after 20 December 2020 which illustrate the consequences of your retrospective legislation. Please would you include a response of Yes or No to every circumstance? We will then understand the consequential effects and cost of the 2017 date on UK boat owners.

A further consequence of 2017 date, is the significant legal costs resulting from justifiably aggrieved citizens, AND the cost of defending those. Do not ignore the enormous overhead of handling the significant number of complaints and appeals, which will impact on the nosiness of HMCR.

Solution.

If this date of Export for yachts not in the UK Customs Territory, was, as it should be, the 31st December 2020, being the end of our participation of the legally binding EU Customs Territories, then there would be no element of retrospective legislation at all, and equity and the rule of law would prevail.

We urge HMRC to urgently consider this proposal as it would require minimal changes to the legislation. It is a simple solution which means that most of our previous understanding will be as before, removing the need for complex retraining.

However the best solution would be a change in the law scrapping the time limit to Returning Yachts, and acknowledging the actual practises of HM Customs, which have been used for many years. This however, to avoid the law of unintended consequences, will take some careful planning, for which there is insufficient time available. – The clock is ticking….



I look forward to your early response and answers to the questionnaire.



Regards
Christopher Robb
MOB 0044 7790 614935
Home 0044 1428 656292

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