Croatia EU Accession VAT - Information Pool

[Windlass100]

Anyone interested in maintaining a thread to pool information on potential VAT (PDV) charge on Foreign Flagged yachts based in Croatia? Croatia may join the EU in 2011 or 2012 and non EU VAT paid yachts will require to become VAT paid if they are to remain in Croatian waters (or alternatively flee down the coast en masse to Montenegro, Albania or Turkey!).

So far I have not been able to find out the intentions of the Croatian Government. HMRC have stated that individual accession countries can create their own rulings on this. Croatian VAT is currently 23%.

On EU accession in 2003 Cyprus and Malta set special "deemed VAT paid" rates of 0% and 5% respectively, for "boats in Residence" prior to EU accession date. (Malta extended this rate beyond this?). Are there any national organizations who can lobby the Croatian Government for similiar concession for the numerous boatowners who have supported Croatian Marine Tourism for many years (forlorn hope)?

No doubt affected boat owners of various nationalities will be able to add to this blog over the next coming months when more information comes to hand.

 

[Lensvelt]

The European Parliament has given Croatia the green light

The European Parliament has given Croatia the green light to join the EU. Finally. That if the EU is still a club that Croatia wants to join. What would that mean for VAT payment on boats in Croatia?

 

[RupertW]

Not sure that there'll be enough news to keep the thread going for two years but I'm very interested in the options.

Our boat is typical ex-charter 12 years old, Croatian flagged until e bought it last year and were obliged to reflag it British, which I'm sure will restart any clock.

We actually want to pay the VAT and soon ,just to get the uncertainty out if the way while we still have some cash, and also so we can cruise to EU countries without wondering what they will do when they see the ships papers. As I said in another thread we bought the boat in a shocking condition which will take years to requip and fix but that cost us much less to buy than a normal ex-charter boat of the same age and model. Being valued in a couple of years time may cost us a lot if we continue to improve it.

Don't want to get into Greek or Italian bureaucracy either but there may be no alternative except to wait for Croatian accession.

 

[Seven Spades]

Why are boats being singled out, do all Croatian jewellery, cars,TV's, HI-Fi,Cameras have to become VAT paid. Or it another soak the "Rich" with their luxury yachts.?

 

[BrianH]

On EU accession in 2003 Cyprus and Malta set special "deemed VAT paid" rates of 0% and 5% respectively, for "boats in Residence" prior to EU accession date. (Malta extended this rate beyond this?).

Karl-Heinz Beständig, editor of the '888 Hafen' handbooks issues a regular newsletter (in German) and has addressed this subject. He reported early this year that the Croatian finance ministry has already made a statement on VAT payments for EU-registered boats, ruling out the Malta solution and that all owners will be taxed at 23% of the 2013 value.

This is also what happened when Slovenia acceded in 2004, which caused quite an exodus to Croatia at the time. Those tax asylum-seekers better start their engines for a further emigration.

 

[Baggywrinkle]

Karl-Heinz Beständig, editor of the '888 Hafen' handbooks issues a regular newsletter (in German) and has addressed this subject. He reported early this year that the Croatian finance ministry has already made a statement on VAT payments for EU-registered boats, ruling out the Malta solution and that all owners will be taxed at 23% of the 2013 value.

This is also what happened when Slovenia acceded in 2004, which caused quite an exodus to Croatia at the time. Those tax asylum-seekers better start their engines for a further emigration.

Italy, here I come.......

 

[Baggywrinkle]

Why are boats being singled out, do all Croatian jewellery, cars,TV's, HI-Fi,Cameras have to become VAT paid. Or it another soak the "Rich" with their luxury yachts.?

The reason boats are a special case is as follows:

You can buy cars, TVs, HiFis etc. in Croatia as an EU citizen and claim back the VAT when you export the goods (take them across the border back to EU land). Unfortunately because this is normally done by road there is someone waiting to nab you on the EU side to pay the EU VAT or Import duty.

With a boat you can buy in Croatia VAT free and export the boat. You don't then however necessarily need to cross an EU border and import, you can turn round and go back into Croatia and enjoy a VAT free boat, kept in Croatia as you are not a Croatian subject.

It's a moot point if you can have VAT free jewelery, cars, TVs etc in Croatia as an EU citizen.

Of course all Croatians have already paid croatian VAT on their possessions so will be unaffected.

 

[BrianH]

Italy, here I come.......

Whoa, see this thread in the Liveaboard forum here.

I haven't worked out any exact costs of this new, Italian, daily, boat tax, but an Italian friend in my marina, who has a boat the same length as mine (9.4m), wrote to me that had our boats been 60cm longer to fit into the minimum taxable band, we would have effectively doubled our mooring costs for the year.

So I doubt that we will see the floating, VAT tax asylum-seekers that flock back and forth and up and down the Adriatic as each country accedes to the EU, will be returning to Italy. The Guardi di Finanza will just devour them for breakfast.

 

[mocruising]

I thought the date was set for 2013.

 

[BrianH]

I thought the date was set for 2013.

Correct. The accession agreement was signed two days ago. I quoted a report in another thread here.

 

[Baggywrinkle]

Whoa, see this thread in the Liveaboard forum here.

I haven't worked out any exact costs of this new, Italian, daily, boat tax, but an Italian friend in my marina, who has a boat the same length as mine (9.4m), wrote to me that had our boats been 60cm longer to fit into the minimum taxable band, we would have effectively doubled our mooring costs for the year.

So I doubt that we will see the floating, VAT tax asylum-seekers that flock back and forth and up and down the Adriatic as each country accedes to the EU, will be returning to Italy. The Guardi di Finanza will just devour them for breakfast.

Oh well .. so much for that plan. I'll stay put then.

 

[haydude]

Are there any national organizations who can lobby the Croatian Government for similiar concession for the numerous boatowners who have supported Croatian Marine Tourism for many years (forlorn hope)?

No doubt affected boat owners of various nationalities will be able to add to this blog over the next coming months when more information comes to hand.

I think that those who avoided tax to date should finally pay up as everyone else!
People have had enough of those who avoid tax to the expense of others!

 

[RichardS]

I think that those who avoided tax to date should finally pay up as everyone else!
People have had enough of those who avoid tax to the expense of others!

Whoops, that should kick things off nicely!

Richard

 

[Baggywrinkle]

I think that those who avoided tax to date should finally pay up as everyone else!
People have had enough of those who avoid tax to the expense of others!

My asset is not in the EU, I would be stupid to pay EU VAT on it.

If I do and it remains outside the EU, I have no guarantee when I eventually do bring it into the EU that I wont have to pay VAT again.

Why should I do that? Similarly why should I pay Croatian VAT if I am not a Croatian citizen and I don't have too? They are happy for my boat to remain in Croatia, un-taxed, and take my sojourn tax, navigation and marina fees every year.

I will pay VAT when it becomes due at whatever rate is in force in the territory where the boat is located. I see nothing wrong with that.

 

[awol]

My asset is not in the EU, I would be stupid to pay EU VAT on it.

If I do and it remains outside the EU, I have no guarantee when I eventually do bring it into the EU that I wont have to pay VAT again.

Why should I do that? Similarly why should I pay Croatian VAT if I am not a Croatian citizen and I don't have too? They are happy for my boat to remain in Croatia, un-taxed, and take my sojourn tax, navigation and marina fees every year.

I will pay VAT when it becomes due at whatever rate is in force in the territory where the boat is located. I see nothing wrong with that.

"The lady doth protest too much, methinks."

 

[RupertW]

"The lady doth protest too much, methinks."

And as I mentioned higher up in the thread I actually want to pay the VAT now but there is no way for me to do that without sailing back to the UK - which I won't be doing until I do the really big refurb of the boat.

My alternative is diving into Italian or Greek bureaucracy to try to pay it there - and could still end up being fiddled out of proper proof. That's a few days sail anyway for countries I don't currently want to be based in.

There's no dodge going on - just buying a second hand boat and being unable to pay UK vat as it's not applicable without quite a few weeks sailing.

 

[Tranona]

Agree. It is just a way of raising revenue. It is not VAT. It is just an excuse. VAT is a tax on transactions, not on assets, so they will have to construct an argument that defines what the transaction is. At present bring a boat into the EU is a transaction for VAT purposes. So they could argue that on the day of accession when Croatia becomes the EU, any boat owned by a non Croatia resident has to be imported - even though it may be physically in Croatia, bought there and paid for!

Or maybe the EU won't exist by then and it will become a "might have been"!

 

[BrianH]

From a different posting I see that the editor of "888" (now promoted from "777") seems to have secured definitive info from Ministry of Finance that a 23% VAT (pdv) rate will be applied to the 2013 value of the boat.

I think the latest publication has expanded beyond the original number of harbours.

"888 Häfen und Buchten
Nachtrag 2011/2
Redaktionsschluss: 15.07.2011
Copyright und verantwortlich für den Inhalt
Karl-Heinz Beständig, Marienstr 7, 96332 Pressig"​

However watch for a mass exodus of the big expensive yachts from the likes of NCP Sibenik and Frapa at the end of next season. Montenegro have done their market research well! M'thinks there will be an awful lot of empty berths at the end of 2012. It will give the marina owners an excuse to put the prices up again to cover their losses.

I'm wondering just where they intend to go. Porto Montenegro marina doesn't look too large to me. Albania? Hmm, I don't think so.

That leaves Turkey and somewhere in North Africa. A long journey for that weekend afloat.

 

[Baggywrinkle]

I can see Delaware getting alot of business from this, and all the other Ports of Convenience.

Those who can afford it will register a company in some offshore haven and transfer the ownership of the boat to the new company. Job done, no VAT ... boat doesn't even have to move.

My boat isn't worth enough to justify that, but it's put all the upgrades and improvements off until post 01.06.2013.

 

[goboatingnow]

If you put a boat in and Croatia to escape Eu VAT then thats fine, if it enters the EU then it is more then appropriate that you pay the VAT. Otherwise flee little tax asylum seekers flee.