Buying yacht in USA, anyone know VAT rules

[peterborthwick]

thanks to you knowledgable people for your responses. much appreciated.

so if i can summarise: as british citizens we are entitled to buy a US boat. we would then have to register it in a state of our choice (for a yearly fee) which would entitle us to keep and use it there (and mosy other places in the US, Caribean and Canada?) so long as we complied with our personal visa requirements..

or we could register it as british so long as we didn't return to the EU (permanently?)

we could probably only sell it in the US?..

None of the above bothers me much.

Does anybody know how long we could VISIT EU countries with this set up? ..and whether at the end of this timespan, we could simply move on to another EU country (all providing that our personal visa requirements are satisfied of course)

 

[Tranona]

thanks to you knowledgable people for your responses. much appreciated.

so if i can summarise: as british citizens we are entitled to buy a US boat. we would then have to register it in a state of our choice (for a yearly fee) which would entitle us to keep and use it there (and mosy other places in the US, Caribean and Canada?) so long as we complied with our personal visa requirements..

or we could register it as british so long as we didn't return to the EU (permanently?)

we could probably only sell it in the US?..

None of the above bothers me much.

Does anybody know how long we could VISIT EU countries with this set up? ..and whether at the end of this timespan, we could simply move on to another EU country (all providing that our personal visa requirements are satisfied of course)

Deal with the last bit first. If you are EU resident you can't bring it into the EU at all to use. The temporary importation rules apply only to bone fide non EU resident visitors and there are limits on how it can be used and limits on time (normally 18 months). As soon as you enter the EU you will be liable to pay VAT and meet the requirements of the RCD (usually expensive or even impossible with a used US built boat).

If you want to read up the rules there is a useful summary on the RYA site or the full text is in HMRC VAT Notice No8. You will find there are some exemptions, but they are very specific and from what you have said so far are unlikely to be available to you.

As to where you can use the boat, you will need to check with the US authorities as to whether you can use it in their waters, but you should be able to sail to most other countries (outside the EU) as a visitor if it is British registered. You can find the requirements for British registration on the MCA site. If you are UK resident you can register on the SSR which has minimal formalities and is acceptable to foreign authorities.

When you come to sell, you may well find it difficult because there is a limited market for boats that cannot be sold in major markets like the EU or, say Australia. You will be looking for buyers who like yourself are happy to buy a boat that can only be used in limited places.

 

[TQA]

thanks to you knowledgable people for your responses. much appreciated.

so if i can summarise: as british citizens we are entitled to buy a US boat. we would then have to register it in a state of our choice (for a yearly fee) which would entitle us to keep and use it there (and mosy other places in the US, Caribean and Canada?) so long as we complied with our personal visa requirements..

or we could register it as british so long as we didn't return to the EU (permanently?)

we could probably only sell it in the US?..

None of the above bothers me much.

Does anybody know how long we could VISIT EU countries with this set up? ..and whether at the end of this timespan, we could simply move on to another EU country (all providing that our personal visa requirements are satisfied of course)

To STATE register in the USA as a UK citizen you will have to have a US postal address and the rules are squirrely here depending on the state BUT you will have to pay sales tax one off varies by state [about 6% in Texas] AND a bi annual registration fee. [$110 to $150 Texas]

BUT and it is a BIG BUT lots of countries do not recognise State Registration.

My understanding of USA Federal [ CG } registration is that this is NOT available to non US citizens.

USVI registration does not incur sales tax but I am not sure if it is recognized world wide. I was told it was but that was by a local lawyer trying to sell me his services and register my boat.

 

[Ariadne]

What is it with the RCD that makes it so expensive to bring a boat into Europe?

I had a friend who bought a new Gemini Cat a few years ago, the USGC recognised it as being fit for ocean crossings (which it certainly was) and the RCD stated it was Cat D!! Cost him fortune with bureaucracy and surveyors to get it sorted. Now my understanding is that the USGC specs are generally better than their EU equivalents. So why do we have to get so uptight about the RCD and make it almost unworkable on the import of vessels from abroad when EU standards aren't that great!

The VAT thing is a lottery, I would think that if you were Part1 or SSR, then VAT would solely be the domain of the HMRC. As for VAT on your 1st port of call in Europe then I would think that's a bit iffy as well if you are UK flagged. What is stopping you getting a certified valuation at the point of purchase and sorting it with HMRC before arrival in Europe?

 

[peterborthwick]

thanks Tranona - i will certainly check out the RYA / HMRC VAT notice 8 for further info..

I'd echo Ariadne by asking WHAT is it that makes RCD compliance so difficult or expensive for a US boat?

..and another spanner in the works .. I have heard of someone living on a houseboat in London who successfully appealed against the requirement for him to pay VAT since it was his SOLE residence / HOME (no VAT is payable on a bricks and mortar house) - would this not apply to a full time liveaboard cruiser??

 

[wilkinsonsails]

If you live on the boat outside the E U for 12 months plus ,then you can bring the boat into UK at a personal possession VAT free.
We were not away long enough ,so paid the VAT in the Azores.I can recommend Mid Atlantic Yacht Services,for great service making it all very easy .
Cindy

 

[peterborthwick]

If you live on the boat outside the E U for 12 months plus ,then you can bring the boat into UK at a personal possession VAT free.
We were not away long enough ,so paid the VAT in the Azores.I can recommend Mid Atlantic Yacht Services,for great service making it all very easy .
Cindy

Thanks Cindy. Yeah, i've just read that via the RYA site. This is very likely to be the case for us, so i can stop panicking

I'm assumming that we can still fly home for a 'holiday' in the uk during the 12 months continuous residency outside the UK?

..and having brought the boat into the UK as a 'personal possession', i can then also take it to any other EU country without anybody demanding VAT?

 

[peterborthwick]

ok, started panicking again ..whilst it looks as if VAT may not be a problem, will the boat need to be RCD compliant for me to bring it into the UK (or other EU country?) as my personal possession???

 

[Tranona]

ok, started panicking again ..whilst it looks as if VAT may not be a problem, will the boat need to be RCD compliant for me to bring it into the UK (or other EU country?) as my personal possession???

No. You (if you qualify) you get a certificate from HMRC saying that it is not subject to VAT and as you are not "placing it on the market" it is not subject to the RCD.

HOWEVER, and I cannot stress this enough, being non-resident is not simply being away from the UK for 12 months. You have to go through a process with HMRC to become formally non resident and for most people who are established in the UK this is not easy unless they are moving their permanent residence to another state.

Before you get too excited about this possibility suggest you contact HMRC and seek advice on what you need to do to become non resident.

 

[Salty John]

....and as you are not "placing it on the market" it is not subject to the RCD.

I'm not sure this is correct. I think the term is 'putting into service in the EU' or something similar, implying that you need RCD compliance to use the boat not just to offer it for sale.

I agree with you regarding 'non-resident' status.

For a UK citizen, buying a boat in the USA and using it to cruise anywhere but the EU is simple - bringing it into the EU is where the problems begin.

 

[Tranona]

What is it with the RCD that makes it so expensive to bring a boat into Europe?

I had a friend who bought a new Gemini Cat a few years ago, the USGC recognised it as being fit for ocean crossings (which it certainly was) and the RCD stated it was Cat D!! Cost him fortune with bureaucracy and surveyors to get it sorted. Now my understanding is that the USGC specs are generally better than their EU equivalents. So why do we have to get so uptight about the RCD and make it almost unworkable on the import of vessels from abroad when EU standards aren't that great!

The VAT thing is a lottery, I would think that if you were Part1 or SSR, then VAT would solely be the domain of the HMRC. As for VAT on your 1st port of call in Europe then I would think that's a bit iffy as well if you are UK flagged. What is stopping you getting a certified valuation at the point of purchase and sorting it with HMRC before arrival in Europe?

You seem confused about the role of the RCD, VAT and registration.

First RCD. Just like USCG requirements it is a national (although EU wide) trading standard. Just happens the two are not the same, but nothing new in that - National standards for all sorts of products are different from country to country. The RCD is intended to remove the differences within the EU by the use of a common standard, so any boat sold in the EU has to meet that standard, just as any boat being sold in the US has to meet USCG standards.

There is nothing difficult about building a boat to meet the RCD - many non EU builders do it, but they are different from boats built to USCG. However, builders only do it if the cost of compliance is covered by the level of business they get. The problem arises with existing boats that were not built to the RCD standards, which have to go through a post construction process. The sticking points are usually the lack of design data, particularly on stability required to determine the category, various detail design and equipment requirements (usually not too onerous) and compliance of certain equipment (electronics and particularly engines and generators) with latest CE certification. For some boats this is easy Island Packets and Hunter Legends for example are already built to RCD, so are easier to modify to meet requirements.

Your example of a Gemini cat is misleading. It could probably meet Cat A or B but it can easily meet Cat D because the requirements for that are minimal and can be self certified. That is always an option to certify at a lower level because there is no need to show that the design meets the higher category (although equipment would still have to meet CE requirements).

VAT and registration are completely unconnected. VAT is a tax on transactions and liability is determined solely by the nature of the transaction. The rules for this are in HMRC VAT Notice No8, where you will find definitions for transactions that are deemed "chargeable events" and importing an asset into the EU is a chargeable event. It could not be anything else, otherwise a boat bought outside the EU, but used in the EU would not otherwise be taxed in the same way as boat bought within the EU. It is quite clear in the legislation that reponsibility for collecting the tax lies with the state where the boat first enters the EU. Just as an example, I bought my boat in Greece, although I am resident in the UK. I paid VAT in Greece, because that is where the transaction took place. The receipt I have will show to authorities in any other state that they have no interest in VAT on the boat.

Registration performs two functions. First it determines the state of registration of the boat. Second, in some cases, as in the UK Part 1 register, it is also a register of title. Eligibility for registration is unconnected with tax or certification, although some registers do set design and equipment requirements as a condition of registration.

 

[jonic]

Unless in the EU prior to 1998 and you can prove it, it will need to be RCD compliant if you return as a resident. However I doubt you will be classed as non resident in the first place.

Re the transference of residency relief you will need written clarification from HMRC that they will apply this relief in YOUR case, before you go.

The relief is there for genuine cases and HMRC have tightened up on those using reliefs for avoidance of VAT or import duty. It can be done, but speak to the HMRC Personal Transport Unit in Dover first and get them to approve your plan before you commit to anything.


Bringing in boats from the USA without paying VAT or becoming RCD compliant is usually not doable or financially viable in this day and age.

 

[peterborthwick]

thanks everyone for your wisdom. i'm beginning to get the picture..

so do people run into the same problems when taking an EU boat to the US? Would American taxes be due and would an EU boat have to comply with USCG regs to be used there?

 

[TQA]

thanks everyone for your wisdom. i'm beginning to get the picture..

so do people run into the same problems when taking an EU boat to the US? Would American taxes be due and would an EU boat have to comply with USCG regs to be used there?

Nope MUCH simpler in the USA.

Get a cruising permit. Stay up to a year. Leave for 15 days Bahamas or Mexico will do. Return Get another 1 year permit. As far as I know repeat ad infinitum.

I know of a Brit couple who keep their boat in Florida and sail to the Bahamas every winter. Still UK flagged.

Cruising licenses exempt pleasure boats of certain countries from having to undergo formal entry and clearance procedures such as filing manifests and obtaining permits to proceed as well as from the payment of tonnage tax and entry and clearance fees at all but the first port of entry. These licenses can be obtained from the U.S. Customs and Border Protection (CBP) Port Director at the first port of arrival in the United States. Cruising licenses are normally valid for up to a year.

Resident aliens may apply for successive cruising licenses if their foreign-flag vessel was made in the U.S. or if duty has been paid on its importation provided that the vessel is documented under the laws of one of the countries listed in 19 CFR 4.94(b). Under CBP policy, non-U.S. residents are not eligible for successive cruising licenses. A new license will not be issued unless the following two conditions have been met: (1) at least 15 days have elapsed since the previous license either expired or was surrendered, and (2) the vessel arrives in the U.S. from a foreign port or place. (Customs Directive 3130-006A) CBP will want to see foreign clearance paperwork as evidence that you are arriving from a foreign location.

Non-residents are cautioned to plan carefully so that the mandatory 15-day period does not fall in the middle of a planned stay in U.S. waters. It may make sense to surrender your cruising license to a CBP Officer when you leave U.S. waters and then obtain a new one when you re-enter the U.S. Traveling outside of U.S. waters while your cruising license is still in effect does NOT fulfill the 15-day requirement.

 

[macd]

re RCD:
1. this is not an EU measure but an EEA one.

2. Many US boats built since the 90s are RCD compliant (Hunter, as mentioned above, not to mention heaps of US-built Bennies, Catalinas and others). In this respect the simplest thing for the OP to do is ask the vendor/broker whether or not any vessel he's interesting in is RCD plated.

3. Since the OP is talking of leaving Europe before long, far be it from me to suggest that RCD is an irrelevance unless he envisages trying to sell the boat in the EEA somewhere down the line. As far as I can tell, for all practical purposes, no-one checks and no-one who goes anywhere near the sea gives a stuff.

 

[Tranona]

re RCD:

2. Many US boats built since the 90s are RCD compliant (Hunter, as mentioned above, not to mention heaps of US-built Bennies, Catalinas and others). In this respect the simplest thing for the OP to do is ask the vendor/broker whether or not any vessel he's interesting in is RCD plated.

That is not strictly correct. Boats built for the US market do not get a CE mark, partly because they do not comply fully and partly for commercial reasons - builders want to control where their boats are sold and not supplying a CE mark is a way of curbing grey market activities. However it is easier to make such a boat RCD compliant, provided the builder will supply all the necessary data.

In reality the attraction of US sourced sailboats is not in designs that are readily available in the EU, but in the types of boat that are not - often older, bluewater designs which are low value in the US but difficult to find in the EU. This sort of boat is not easy to get through the RCD, particularly if it has an old engine of a type not sold in EU or if no design data is available.

As to whether it makes any difference to the salability in the EU, that depends. Trading Standards have the power to demand compliance - however, it is unclear what sanctions they can impose on an individual rather than a trader. The real issue comes when you try to sell and there may well be resistance amongst buyers to a boat of any value that does not have a full set of paperwork.

 

[Tranona]

I'm not sure this is correct. I think the term is 'putting into service in the EU' or something similar, implying that you need RCD compliance to use the boat not just to offer it for sale.

Suspect this is a grey area. My observation is based on a couple of boats that I have seen brought in under returning resident that had the necessary HMRC paperwork but not a certificate of conformity. I have not seen anything in Trading Standards that specifically deals with this, nor does there seem any mechanism for enforcing it - for example there is no registration requirement as there would be, say, with a motor vehicle.

I don't know, as there are probably no records kept, that many boats enter the UK under this exemption.

 

[peterborthwick]

So, as UK citizens:

we can't STATE register unless we have a US postal address AND we would have to pay sales tax at around 6% AND a bi-annual registration fee AND more if we move it to another sate with a higher sales tax (very likely) - Not an attractive proposition!!

we can't USCG (Federal) register it as we are not US citizens

we can UK part III / SSR register it for 25 pounds, meaning we would pay no sales tax in the US, ..and could use it everywhere except the EU

if we sail it back to the EU, we must pay VAT (on the purchase price / not a subsiquent valuation) at the first port of entry.

unless we sell it, it does not have to comply with the RCD legislation??

if we did sell it in the EU we could catergorise it as Cat. D (self Cert.), if various design info. was not available. We would have to make sure the equipment complied with CE though.

..And as a UK registered boat, we can't sail it back to the US and sell it to a US Citizen (the most likely person to want it) without them importing it back into the USA and paying VAT again??

...looks as if we couldn't easilly sell it to anybody anywhere in the future?

 

[peterborthwick]

to clarify things a bit further, the boats I am likely to be considering will have probably been built in the US around the 1970's and would most likely have remained there for most of their lives.

it is unlikely to have visited the EEA prior to june 1998

 

[TQA]

..And as a UK registered boat, we can't sail it back to the US and sell it to a US Citizen (the most likely person to want it) without them importing it back into the USA and paying VAT again??

Now my info on this is dated but some years ago it was ok to do this. In Florida you as the NON US seller would pay 1% of its value when you stated advertising it. The buyer pays any sales tax. No VAT involved.

UK BOUND ? Are you by any chance going to be away from the UK long enough to be EX PAT for tax purposes with a NON EU domicile and or be a liveaboard.

If so and again my info is a little dated but as far as I know you can 'import' the boat as 'goods and chattels' no VAT is payable and RCD does not apply.

I think there is a time limit i.e. you can not sell it right away. RYA doc on the topic I think.

This is my situation and while I am not planning to head back across the pond to wet and cold Britain in my ex US flagged and US built New Bombay Trading Company Explorer I researched it and I believe I dont pay VAT and am not required to be RCD compliant.