Croatia EU VAT - New Advice!?

[Baggywrinkle]

My boat is Part1 U.K. registered and I will need to cancel this in order to enter my boat on the Croatian register (Croatian flagged) to benefit from the lowered VAT rates.

I imagine there are other boat owners who will be faced with the same dilemma.

I have just had e-mail confirmation from the ships registry in Cardiff that if the boat is re-registered in the U.K. within 12 months of the cancellation then no new tonnage survey will be required.

My Question ...

I have a Part 1 registered yacht which is currently based in Croatia.
The Croatian Government are in the process of offering favourable conditions for VAT payment before Croatia joins the EU in July.
They require however that foreign yachts become Croatian flagged in order to qualify for the favourable VAT rate, this means I must cancel my U.K. registration in order to qualify.

I don't want my yacht to remain Croatian flagged after Croatia joins the E.U. - I would rather it remained U.K. flagged as I am a U.K. citizen.

If I cancel my Part 1 registration now and then re-apply in July 2013, do I need the yacht to be re-measured etc. or can the old registration simply be re-activated? I don't intend to make any alterations to the yacht in this time.

I look forward to your reply.

Answer from the U.K. Ships Register ....

Thank you for your enquiry

If you re-register within 12 months of closure you will not need a new survey

I may keep my red duster after all

 

[BrianH]

My boat is Part1 U.K. registered and I will need to cancel this in order to enter my boat on the Croatian register (Croatian flagged) to benefit from the lowered VAT rates.

Please correct me if I am wrong but I was under the impression your build date (pre-2005) gave you a 'Deemed VAT-Paid' status on Croatian EU accession. There should be no need to don a temporary Flag of Convenience, especially as registration procedure is bound to end up as Big Bucks. And may well have such interim, convenience measures proscribed in the terms of registration.

 

[Baggywrinkle]

Please correct me if I am wrong but I was under the impression your build date (pre-2005) gave you a 'Deemed VAT-Paid' status on Croatian EU accession. There should be no need to don a temporary Flag of Convenience, especially as registration procedure is bound to end up as Big Bucks. And may well have such interim, convenience measures proscribed in the terms of registration.

Just keeping my options open, I'm still not certain how the 2005 'Deemed VAT-Paid' status will be applied or what I need then as proof of EU VAT paid status.

As I understand it, for other countries there was a given date and if you could prove the boat was in the country on or before the date in question then VAT was deemed paid. I suspect the Croatians want to use their registry records as proof of the boats location in Croatia before accession, and may then use the builders certificate as proof of age ... to be honest I don't yet know.

As a result, I'm gathering information to prepare for a number of different scenarios.

It would be wonderful if the pre-2005 rule was universally applied and I could leave my boat U.K. registered and then let Croatia join the EU with nothing to pay to anyone (I have documentation proving the boat was originally imported to Croatia in 2002 from the original Leasing company) - to be honest this scenario sounds too good to be true, but here's hoping.

 

[Tranona]

Will depend on how they word the rules. In the UK you just have to meet the two criteria of age and proof of location. However it is largely irrelevant as nobody checks. In other states the authorities issued certificates on the basis of the evidence. Suspect Croatia will be more formal particularly in view of the number of non VAT paid but EU Owned boats around.

 

[BrianH]

Just keeping my options open, I'm still not certain how the 2005 'Deemed VAT-Paid' status will be applied or what I need then as proof of EU VAT paid status.

The authorities should abide by their previously promulgated conditions that on the accession date of 1st July, 2013, any EU registered (or, in the case of unregistered, owned by an EU citizen), pre-2005 constructed, non-VAT paid, yachts in Croatia will not be assessed and charged VAT - 5% for Croatian-registered, 25% for other EU-registered.

I think it highly unlikely that 'Deemed VAT-Paid' certification will be supplied to non-Croatian-registered yachts that do so qualify. That should pose no problem - it should be enough to keep copies of all the documentation that satisfied the finance investigators available on board, including marina invoices proving the yacht was in Croatia on that date, for that elusive proof that no one ever asks for - except perhaps a future, worrying potential buyer. Together with the respected UK MCA Part 1 registration document, no one, anywhere, is going to demand a 'VAT-Paid' piece of paper. I have never been asked nor do I know of anyone who has.

I could not conceive of exchanging such registration for a Croatian one, even as an expediency for a limited time, which somehow could turn around and bite you in bum.

 

[aurciuolo]

Croatian Flag

I'm Spanish, and I bought my boat a Polish person, and I have a notarized invoice from Poland included VAT.
My boat had Polish flag, but I changed to USA (Delaware) flag and she is in Croatia since 2 year.
How much should I pay to change the flag from USA to Croatian?
Thanks
Regards

There was too much text in my first post so this is the continuation


11. Do I pay charges on the purchase or present value of the boat? Who calculates the

value of the boat?

The duty basis is the present value of the boat (without taxes).

The value of the boat is calculated by the customs catalog, this is a catalog published by

SCHWACKE, a member of the Eurotaxglass Group.

Our forwarding agent will determine the value and calculate the final price which is to be paid.

(In case of self-contruction or if the boat is not listed in the catalog it can come to

discrepancies between the declared price and the price that is accepted by the customs duty).





12. Do I have to be personally present and in what phase?

You do not have to be personally present either at the obtaining of the personal identification

number (PIN), the customs clearance or the registration of the boat, but the person or persons

who represent you must have proper authorization (it would be best if it is the same entity).



13. Does the boat need to get to the border crossing?

If the boat is duly (and it is) declared by the marina it is already under customs supervision

and it is not necessary to come to the border (the customs duty will do the inspection in the

marina).



14. What is subject to registration?

Subject to registration are all boats longer than 2,50 meters or boats with a motor power over 5

kW.



15. How and where to register boats to the Croatian flag?

If you decide to register your boat to the Croatian flag the first step is to contact us.

The boat registration procedure is the following:

-obtaining the Croatian personal identification number (PIN) from the tax administration – it

is granted once and you can also use it for other activities in Croatia (for expamle when

buying a property, establishing a company). There is no cost for the entity that is requesting

the number, but a verification of the signature is need if you are not personally present.

-original ownership documents or a original extract from the boat registry are needed before

the registration of the boat and the customs clearance can be done whether with the original

registration document or with an original extract.

After that submit a copy of the Decleration of conformity of the boat (Declaration of

Conformity to 94/25/EC Directive), a copy of the certificate about the type examination of the

boat (EC Type Examination to 94/25/EC Directive) as well as a copy of the insurance policy

is needed.

We will prepare all other required documents (copy of the passport, accounting extract of the

marina, original inventory list).

-After the customs clearance a Croatian sailing permit from the Port Authority (for boats up to

12 m) or for boats longer than 12 m from the Croatian registry of boats is obtained.



16. How much does the fee for the registration of a boat in the Croatian registry cost? 1

In the overall list of costs the fee for the registration of the boat will be surely quoted, but this

fee is not yet defined. The costs of the registration depend on the lenghts of the boat. There are big differences between boats which have been produced in the EU and boats with a non-EU-origin. For example, the registration of boats from Asia or the USA are quite more expensive than the registration of boats with an EU origin. According to the latest information there will be a significant price reduction and we will inform you on time about this.



17. What are the other costs (except the costs of the forwarding agent)?

The highest expense are certainly the VAT, customs duties and the fee for the registration.

There are still some minor expenses and the fee for the boat inspection, which depends on the

lenght, but also on the equipment of the boat and the place where the inspection is done.



18. After how much time do I have to extend the registration document?

Pleasure boats up to 12 m get a permanent licence, while those over 12 m prove the ability for

sailing with the possession of the Certificate about the ability of the yacht for sailing, which is

issued by the Croatian Register of boats and which is renewed every 5 years (when the boat is

inspected again).



19. What about the (old) insurance policy that I paid for?

According the the available information, the insurance policy is valid if the previous owner

(and that is you) agrees with this.



20. Do I keep upon the registration the name of my boat?

Boats with a lenght up to 12 meters must have a mark (combination of numbers and letters

from the port of registry) and can also have a name (which is set by the owner).

However, yachts (longer than 12 m) must have a name – and it has to unique in whole Croatia.



21. The owner of the boat is not a natural person, but a legal person. In which way the

boat can be used in personal (recreational) purposes?

It is fact that the reduction of the tax rate to 5% applies to recreational boats (for boats of

economic activity this is not so important, because the VAT is used as tax prepayment).



It is, however, currently not clarified whether and how legal persons will be able to register a

boat for personal use. (Most probably it will be necessary to make a ownership change i.e.

the legal person will make out an invoice to the natural person and based on this the boat

will be registered in Croatia on that natural person).



22. How long does the whole procedure take?

It is necessary to do a lot of things: to obtain the PIN,to preliminary inspect the boat to check

the serial numbers of the hull and engine, to obtain the “certificate of technical

acceptability”, to perform the import declare and pay all fees, to delete the boat in the

mother registry, to translate all documents into Croatian by a certified translator, to submit

the request for the registration of the boat...



For yachts (longer than 12 m) the clearance procedure is roughly the same as for boats

up to 12 m, but the registration is more complex and time-consuming.



23. What is the difference in the registration of boats up to 12 m and those over 12

meters?

The registration of boats up to 12 m carries out the port authority and for boats over 12 m the

Croatian Registry of boats.



In both cases the customs declaration, the listing from the registry (deletion), the certificate of

technical acceptability, the authorization and the request for the first registration need to be

enclosed and the boat has to be inspected.

For yachts longer than 12 m the application for the naming of the boat has to be

submit, the licence for the radio station on the boat (Ship`s Radio Licence) and the

certificate about the yacht calibration had to be obtained.



24. How much time do I have to make a decision?

Theoretically you still have six months, but it should be started as soon as possible because it

is a long-term procedure. Also, there will be a lot of requests and the Croatian beureaucracy is

known for its slowness even when there is not much to do.

It would be desirable to announce the readiness to perform the import declare for the boat

already in December.

If you are NOT interested in this topic, please send us a brief notice so we will not

needlessly incommode you in the future with information and clarifications.



At the end of this letter we would like to mention that we will certainly charge you also the

costs of our service which will include our engagement and the engagement of the forwarding

agent with the added taxes which may need to be paid. I repeat, once it is clear what the

legislator has passed, we will make a calculation and inform our interested clients.

 

[d4raffy]

From the initial flurry of excitement - everything seems to have paused and gone quiet from Croatia. It seems there is still much of the detail missing with the 15th Jan as the new date to look forward to.

Just how many charges will someone incur thru this process ?
VAT 5%, croatian import tax ?%, croatian government admin charge?, croatian legal charge?, croatian boat registry charge?, croatian marine agent charge?, Marina or English agent charge?

Has anybody started this process or had any form of price breakdown / quote for this yet ??

Anybody been to the London Boat Show - any more info on hand there ?

 

[BrianH]

I'm Spanish, and I bought my boat a Polish person, and I have a notarized invoice from Poland included VAT.
My boat had Polish flag, but I changed to USA (Delaware) flag and she is in Croatia since 2 year.
How much should I pay to change the flag from USA to Croatian?
Thanks
Regards

Welcome to the forum.

Full costs are still unclear, at least to me, due to not all fees and taxes being publicised. However, we can make certain assumptions based on the basic registration costs, which are dependent on length of boat and if foreign or Croatian built. The following are for foreign-built (or previously foreign-registered) boats:

7m - 12m = 20'000 kuna (ca. €2'640)
12m - 15m = 30'000 kuna (ca. €3'960)
Over 15m = 50'000 kuna (ca. €6'600)
​

In addition, there will be other administrative fees and taxes. There is also likely to be the need for a technical conformance certificate that will probably need a survey by a Croatian-registered surveyor.

You will also need documentation to prove ownership and payment of import tax, plus a formal statement of removal from the Delaware register.

 

[Baggywrinkle]

I have had a reply from a Croatian agent. He is still uncertain of all rules and costs but did say the following....

*
Still do not have confirmation but more less costs will be as follows:
*
Customs agent *************** 150 EUR
Valuation************ *************** 500 EUR
Registration service******* 200 EUR
*
1,7% Customs tax
5% VAT
*
Registration fees are in process to be reduced but I am expecting news end of this week.

 

[Baggywrinkle]

The authorities should abide by their previously promulgated conditions that on the accession date of 1st July, 2013, any EU registered (or, in the case of unregistered, owned by an EU citizen), pre-2005 constructed, non-VAT paid, yachts in Croatia will not be assessed and charged VAT - 5% for Croatian-registered, 25% for other EU-registered.

I think it highly unlikely that 'Deemed VAT-Paid' certification will be supplied to non-Croatian-registered yachts that do so qualify. That should pose no problem - it should be enough to keep copies of all the documentation that satisfied the finance investigators available on board, including marina invoices proving the yacht was in Croatia on that date, for that elusive proof that no one ever asks for - except perhaps a future, worrying potential buyer. Together with the respected UK MCA Part 1 registration document, no one, anywhere, is going to demand a 'VAT-Paid' piece of paper. I have never been asked nor do I know of anyone who has.

I could not conceive of exchanging such registration for a Croatian one, even as an expediency for a limited time, which somehow could turn around and bite you in bum.

Thanks for that. I assume the 2005 cutoff is then an EU rule that the Croatians have to abide by. I have the original Croatian import documentation from 2002 and the Croatian registry info showing it was run by a Charter company in Croatia until I bought it. I hope it's enough.

In theory then I could sit tight, UK registered and on the first of July the Croatians can't collect 25% because the EU says they can only go back 8 years. It would make sense, up until July they can't tax the boat as I'm not Croatian, after July they can, as an EU country, but can only go back 8 years.

Anyone know where I can find this written down anywhere? Or confirmed by a tax expert? For me it's a hell of a risk if the Croatian authorities decide to charge anyway.

Interestingly, my marina phoned and e-mailed yesterday asking for proof of build date, so I think they are creating a list of post 2005 boats.

 

[BrianH]

Thanks for that. I assume the 2005 cutoff is then an EU rule that the Croatians have to abide by. I have the original Croatian import documentation from 2002 and the Croatian registry info showing it was run by a Charter company in Croatia until I bought it. I hope it's enough.

In theory then I could sit tight, UK registered and on the first of July the Croatians can't collect 25% because the EU says they can only go back 8 years. It would make sense, up until July they can't tax the boat as I'm not Croatian, after July they can, as an EU country, but can only go back 8 years.

Anyone know where I can find this written down anywhere? Or confirmed by a tax expert? For me it's a hell of a risk if the Croatian authorities decide to charge anyway.

Interestingly, my marina phoned and e-mailed yesterday asking for proof of build date, so I think they are creating a list of post 2005 boats.

No, it is my understanding that the 2005 VAT cut-off year is a purely Croatian decision, which may, or may not, find universal acceptance. Most EU accession countries have used pre-1st January, 1985 for the build date but at the same time require the vessel to have been in the EU on the 31st December, 1992.

It is ridiculous (but typical for the region) that so much remains undecided or unpublicised at such a late date. I understand your worries but in your circumstances I still wouldn't be rushed into such possibly unnecessary, swingeing costs. All IMO, of course.

 

[Baggywrinkle]

No, it is my understanding that the 2005 VAT cut-off year is a purely Croatian decision, which may, or may not, find universal acceptance. Most EU accession countries have used pre-1st January, 1985 for the build date but at the same time require the vessel to have been in the EU on the 31st December, 1992.

It is ridiculous (but typical for the region) that so much remains undecided or unpublicised at such a late date. I understand your worries but in your circumstances I still wouldn't be rushed into such possibly unnecessary, swingeing costs. All IMO, of course.

I'll keep digging then 'till I find an answer.....

 

[d4raffy]

Thanks for the updates guys ....

Baggywrinkle ... any chance you could share (PM) your agent details ? I have my marina offering the service + Seahelp but i'm thinking the agent charge will vary! They're all salivating at the chance of the fee's !

one fact that seems confusing is the 12m import tax rule ... seems to be quoted differently everywhere ... is it 1.7% for boats over or under 12m ?

" - oceanskies.com
In addition to reducing the VAT rate on yachts we understand that the Croatian government has also reduced applicable import duty as follows:

Yachts up to 12m in length – 1.7%
Yachts over 12m in length – 0%
"
.... any thoughts or clarity ?

Q: I understand Malta did something similar - did they enforce registration on the Maltese flag or just pay the VAT ?

Also .. i am sure when i looked at registering croatian many years ago ... there were some stupid rules like ... having a full size axe on board ? ... any other gotcha's ?

If i do this too .. i will be bouncing into Croatian and then back onto the UK duster.

 

[BrianH]

one fact that seems confusing is the 12m import tax rule ... seems to be quoted differently everywhere ... is it 1.7% for boats over or under 12m ?

" - oceanskies.com
In addition to reducing the VAT rate on yachts we understand that the Croatian government has also reduced applicable import duty as follows:

Yachts up to 12m in length – 1.7%
Yachts over 12m in length – 0%
"
.... any thoughts or clarity ?

There does seem to be not only a lack of relevant information but conflicts in the little that is available, viz., your example, which should be the converse of what you have quoted. That is, 12m and over will have an import duty of 1.7% - below 12m, 0%. Note that the reduction is only relevant for Croatian-registered yachts.

Another anomaly is the 12m registration limit, similar it would seem, to the Italian 10m limit, where the register is only open to yachts of that length and above. It would appear that sub-12m yachts can apply and be quasi-registered but no name will be accepted and entered into the formal register.

It really is beyond belief what a quagmire this subject is and how much it needs official clarification.

 

[Baggywrinkle]

Thanks for the updates guys ....

Baggywrinkle ... any chance you could share (PM) your agent details ? I have my marina offering the service + Seahelp but i'm thinking the agent charge will vary! They're all salivating at the chance of the fee's !

one fact that seems confusing is the 12m import tax rule ... seems to be quoted differently everywhere ... is it 1.7% for boats over or under 12m ?

" - oceanskies.com
In addition to reducing the VAT rate on yachts we understand that the Croatian government has also reduced applicable import duty as follows:

Yachts up to 12m in length – 1.7%
Yachts over 12m in length – 0%
"
.... any thoughts or clarity ?

Q: I understand Malta did something similar - did they enforce registration on the Maltese flag or just pay the VAT ?

Also .. i am sure when i looked at registering croatian many years ago ... there were some stupid rules like ... having a full size axe on board ? ... any other gotcha's ?

If i do this too .. i will be bouncing into Croatian and then back onto the UK duster.

It is confusing I've seen the import duty both ways round too. What my agent told me was that if I have a EUR 1 certificate (i.e. the boat originated in the EU) then I can avoid the duty all together because of the EU agreement on movement of goods within the EU. Croatia has signed up to this even before they become full members. It looks like this form can be obtained retrospectively from Customs in your country of residence.

U.K. is here ..... http://www.londonchamber.co.uk/lcc_public/article.asp?aid=105

I don't know, I'm no expert, need to do more digging but this could save the 1.7% import duty for an outlay of tens of pounds for the application

Prices (UK) Here ... http://www.londonchamber.co.uk/DocImages/10730.pdf

I think Croatia wants to import and register so they can collect duty before they join the EU and then make additional money with import taxes and registration fees - they also know people will simply flee if they leave VAT at 25%.

They can't collect Croatian VAT on the boats belonging to EU citizens at the moment unless they are imported and registered in Croatia. That's why I had to export my boat, swap the Flag to U.K. and re-enter. If I'd left it Croatian registered I would have got a VAT bill on purchase.

It would be great if someone could come up with a guide to the process.

The agent I have been talking to is ....

http://www.adriatic-expert.hr/

He did my UK tonnage survey and a valuation, he seems to have his fingers in lots of pies. I visited his offices in Split before giving him the job, I failed to detect anything that set off the alarm bells. He was quick and efficient but I feel he didn't highlight anything in the survey I wouldn't have found myself. Overall OK, always answers e-mail promptly (sometimes late at night) and delivered on time.

 

[johnlynmcm]

Vat

Found this today....

http://www.mint.hr/UserDocsImages/130115-l_plovila-EN.pdf

Might be useful..

 

[BrianH]

Found this today....
http://www.mint.hr/UserDocsImages/130115-l_plovila-EN.pdf
Might be useful..

Thanks for that. It nudged my brain to correct something I wrote earlier:

Another anomaly is the 12m registration limit, similar it would seem, to the Italian 10m limit, where the register is only open to yachts of that length and above. It would appear that sub-12m yachts can apply and be quasi-registered but no name will be accepted and entered into the formal register.

I now remember that there are two registers, a boat register and a yacht register, with the 12m division being less than, and equal to/greater than. No unique name is needed for the former but is for the latter.

 

[Dave100456]

Thanks for the updates guys ....


If i do this too .. i will be bouncing into Croatian and then back onto the UK duster.

Have you explored the potential costs of de-registration or any conditions imposed by the authorities that may prohibit this? Just wondering if there's a clause that would enable clawing back of the 20% VAT you are saving?

Thanks for the updates & contributions on this issue.

 

[BrianH]

Have you explored the potential costs of de-registration or any conditions imposed by the authorities that may prohibit this? Just wondering if there's a clause that would enable clawing back of the 20% VAT you are saving?

Completely agree, this path could be fraught with unseen and potential difficulties, both from the original registration authorities and the Croatian one. It would be unlike the latter to leave such an obvious loophole open. If anyone knows how to squeeze the lemon until the pips squeak, they do. There just has to be a snag somewhere.

Having myself, as an expatriate, jumped through so many hoops with flags of convenience and researching legal solutions - eventually ending up with the MCA Part I at some cost and inconvenience, I would be very reluctant to relinquish it. Even Part III (SSR) appears to be more rigorously controlled recently for new applicants, judging by reports here.

 

[Baggywrinkle]

Completely agree, this path could be fraught with unseen and potential difficulties, both from the original registration authorities and the Croatian one. It would be unlike the latter to leave such an obvious loophole open. If anyone knows how to squeeze the lemon until the pips squeak, they do. There just has to be a snag somewhere.

Having myself, as an expatriate, jumped through so many hoops with flags of convenience and researching legal solutions - eventually ending up with the MCA Part I at some cost and inconvenience, I would be very reluctant to relinquish it. Even Part III (SSR) appears to be more rigorously controlled recently for new applicants, judging by reports here.

I've contacted the Ships Register in the U.K. as I am also part 1 registered. They informed me if I re-applied within 12 months and had made no modifications to the boat then the tonnage survey would not need to be repeated. Other than that, just re-submit all the paperwork and pay again

Thanks to John for the link, can't see any sign of the 8 year rule though .....