Croatia EU VAT - New Advice!?

[Deleted User YDKXO]

It's all a bit chaotic but my intention is to sit tight and wait it out - my paperwork is in order and I have a valid vignette to see me through to next year. My opinion is that the 8 year rule will be enforced, the people who have already registered and paid 5% did it in good faith and hopefully won't suffer any further penalty.

Thanks Baggywrinkle that seems to confirm what Maritimus is saying and is a bonus for we owners with 8yr old+ boats. However, I am puzzled by your last comment. Why should anyone who has already paid the 5% VAT suffer any penalty? Indeed if there are owners of 8yr old+ boats who have already paid their 5% VAT, surely they should be asking for a refund? I'm not surprised that the EU is looking into the 5% VAT scheme generally because I am aware of at least one manufacturer who has been using this scheme as a way of promoting new boat sales. I'm not sure what the EU can do about it though

 

[Baggywrinkle]

Thanks Baggywrinkle that seems to confirm what Maritimus is saying and is a bonus for we owners with 8yr old+ boats. However, I am puzzled by your last comment. Why should anyone who has already paid the 5% VAT suffer any penalty? Indeed if there are owners of 8yr old+ boats who have already paid their 5% VAT, surely they should be asking for a refund? I'm not surprised that the EU is looking into the 5% VAT scheme generally because I am aware of at least one manufacturer who has been using this scheme as a way of promoting new boat sales. I'm not sure what the EU can do about it though

The theory goes that Croatia may be seen as hosting a tax evasion scheme and as the law is a somewhat blunt instrument it may well affect all owners of boats younger than 8 years who have used it. Croatia is already bound by EU treaties on trade even before full membership AFAIK. I can't see it affecting boats over 8 years as in theory there is no tax to evade.

 

[Deleted User YDKXO]

I can't see it affecting boats over 8 years as in theory there is no tax to evade.

I don't see that. Just as the 5% regime is potentially an opportunity for owners of brand new boats to achieve VAT paid status on the cheap, so the 0% regime is an opportunity for all owners of 8yr old+ non VAT paid boats to achieve VAT status at virtually no cost. There are many existing non VAT paid boats in the W Med which ostensibly operate as charter boats and therefore have either reclaimed VAT or not paid at all and for whom the Croatian VAT process represents an opportunity to become VAT paid and therefore enhance their value. If I was an owner of a non VAT paid 8yr old+ boat in the W Med, I would certainly be considering moving the boat to Croatia to take advantage of this. As I understand it, all you need to do is obtain a customs declaration. Is there any condition for getting this customs declaration that requires owners to prove their boat had been located in Croatia for a minimum amount of time? I can well understand if the EU takes an interest in the whole Croatian scheme as IMHO it seems on the face of it to be extraordinarily generous and yes, potentially, an opportunity for tax avoidance

 

[Baggywrinkle]

It seems unlikely that item 7 in your list will be enforced as after July vessels that are VAT paid should be allowed free movement anywhere within the EU!

That's true after July, but it looks like the Croatians will issue some form of paperwork to prove VAT paid status which means inspecting the import documentation. While they have been lax in the past when people stay over 18 months and have just allowed exit and re-entry, they are supposedly unlikely to overlook a stay longer than 18 months in the run up to 1st July. If found, they can then charge the full 25% VAT as the boat would be deemed to have over-stayed its temorary import. After the 1st July there is apparently going to be a 60 to 90 day period for owners to get their paperwork sorted out with the Croatian authorities, obviously this also involves looking at the temporary import documentation. I don't think it's a problem, but while they might have been lax in the past, the German sentiment seems to be that this will no longer be the case.

 

[Baggywrinkle]

I don't see that. Just as the 5% regime is potentially an opportunity for owners of brand new boats to achieve VAT paid status on the cheap, so the 0% regime is an opportunity for all owners of 8yr old+ non VAT paid boats to achieve VAT status at virtually no cost. There are many existing non VAT paid boats in the W Med which ostensibly operate as charter boats and therefore have either reclaimed VAT or not paid at all and for whom the Croatian VAT process represents an opportunity to become VAT paid and therefore enhance their value. If I was an owner of a non VAT paid 8yr old+ boat in the W Med, I would certainly be considering moving the boat to Croatia to take advantage of this. As I understand it, all you need to do is obtain a customs declaration. Is there any condition for getting this customs declaration that requires owners to prove their boat had been located in Croatia for a minimum amount of time? I can well understand if the EU takes an interest in the whole Croatian scheme as IMHO it seems on the face of it to be extraordinarily generous and yes, potentially, an opportunity for tax avoidance

The difference is that the 5% scheme is Croatia pulling a fast one with their own laws in the run up to accession and, in theory, removing an EU revenue stream in the process. The 8 year rule is an EU rule which every new country should abide by as it is part of the EU VAT Directive regarding accession. I'm only reporting what was in the German press ....

Auch sonst droht noch Ungemach, denn im Juli will sich die EU-Umsatzsteuer-Kommission ausführlicher damit beschäftigen, wie Kroatien die Nachversteuerung bislang abwickelt. Laut Karl-Heinz Beständig wird kolportiert, den Mitgliedern missfiele vor allem, dass die Kroaten zulassen, dass einige findige Bootshändler die Nachversteuerung für eine Lücke nutzten: Sie boten auf den Bootsmessen an, neue Schiffe mit nur 5 Prozent Mehrwertsteuer nach Kroatien auszuliefern. Dies könnte die EU als Steuerflucht ansehen und möglicherweise später Eigner bei Kontrollen zu einer Nachzahlung verurteilen. Aber auch der reduzierte Steuersatz von 5 Prozent wäre nicht gerade mit Begeisterung zur Kenntnis genommen worden. Würde sich der Staatenbund dagegen mehrheitlich sperren, könnten sogar für alle Eigner Nachzahlungen drohen – ein bürokratischer Alptraum.

Roughly translated ...

Adversity still threatens, because in July the EU-VAT-Commission wants more details on how the subsequent taxation in Croatia has been handled. According to Karl-Heinz Beständig it is rumored, that members abused the rules and the Croats allowed some enterprising dealers to take advantage of the subsequent taxation loophole: at the boat shows they offered to ship new yachts with only 5% VAT to Croatia. This could be regarded as tax evasion and possibly later result in owners having to make a subsequent payment to the EU. Also the reduced tax rate of 5% has not exactly been received with much enthusiasm. If the EU decides to completely block the scheme, it could even threaten payments for all owners - a bureaucratic nightmare.

Source: http://www.yacht.de/reise/news/wieder-aerger-um-die-nachversteuerung/a79207.html

 

[Mad Pad]

Just had a quick look at this thread,(I won't bore you all with the stories of my Guernsey registered UK VAT paid yacht.......eventually we did a change of UK port to London as Guernsey seems to set off the alarms everywhere)and you don't need to go all the way to Turkey to be outside the EU.Bosnia,Montenegro and Albania are still years away from joining...and tax free fuel in Montenegro if you check out.

 

[hornblower]

Item 7

Yachts that have paid the VAT have also had to pay the 1.7% import duty and so there can be no issue about importing after the VAT is paid - and the 18month rule will no longer apply as a properly imported, duty paid, vessel. The latest rules are that you do not have to re-flag. But, if you do not take Croatian registry then you have to wait until July before the vessel can go to sea.

That's true after July, but it looks like the Croatians will issue some form of paperwork to prove VAT paid status which means inspecting the import documentation. While they have been lax in the past when people stay over 18 months and have just allowed exit and re-entry, they are supposedly unlikely to overlook a stay longer than 18 months in the run up to 1st July. If found, they can then charge the full 25% VAT as the boat would be deemed to have over-stayed its temorary import. After the 1st July there is apparently going to be a 60 to 90 day period for owners to get their paperwork sorted out with the Croatian authorities, obviously this also involves looking at the temporary import documentation. I don't think it's a problem, but while they might have been lax in the past, the German sentiment seems to be that this will no longer be the case.

 

[Baggywrinkle]

Yachts that have paid the VAT have also had to pay the 1.7% import duty and so there can be no issue about importing after the VAT is paid - and the 18month rule will no longer apply as a properly imported, duty paid, vessel. The latest rules are that you do not have to re-flag. But, if you do not take Croatian registry then you have to wait until July before the vessel can go to sea.

Sorry, I think we were talking at cross purposes, I didn't make it clear I was referring to boats older than 8 years, which will be operating as normal under current rules until the 1st July when they have a 60-90 day window to sort out their VAT/Import status. These are the ones who will need to have the correct paperwork for the 18 month rule, plus a EUR1 if available to avoid the 1,7%. Boats that have been through the 5% scheme, as you say will no longer be affected by 18 month temp. import.

 

[hornblower]

Oh - sorrry for that, probably my misreading of your posts.

On another note - does anyone know yet whether the vignetta scheme will still be in force after July??

Sorry, I think we were talking at cross purposes, I didn't make it clear I was referring to boats older than 8 years, which will be operating as normal under current rules until the 1st July when they have a 60-90 day window to sort out their VAT/Import status. These are the ones who will need to have the correct paperwork for the 18 month rule, plus a EUR1 if available to avoid the 1,7%. Boats that have been through the 5% scheme, as you say will no longer be affected by 18 month temp. import.

 

[dumass88]

I have been reading through your posts and had a question if anyone can help? Please forgive me if I have missed the answer in this forum. I purchased a boat from Hanse in the UK and had it delivered to Sovenia and then handed over in Croatian waters as this is where I keep it. This was a year ago and now I am trying to sort out the VAT as Croatia are entering the EU. The boat has a mortgage with a UK lender who want the boat registered in the UK. I went to Croatia the other week to try and sort this out and they insisted the boat was de-registered in the UK and registered in Croatia. The mortgage company will not allow this and having spoken to the UK customs they can not charge us VAT if the boat is not physically in their waters. I heard a rumor that Croatia was relaxing the rule that boats do not need to be Croatian registered to take advantage of the 5% VAT. Does anyone know more about this or know anyone whether it is a company or individual who deals with this?

I would greatly appreciate any help as I am running out of time.

Thanks

 

[dumass88]

Hi, I am having issues with my boat in Croatia which has been there a year now and not VAT paid. The boat is registered in the UK due to the mortgage on it but the Croatian government has said it has to be registered with them if I am to take advantage of the 5% VAT. This is not possible due to the mortgage so does anyone know if this is possible to do or will I be stuck with 25% VAT when they officially join the EU? Any advice would be much appreciated.

 

[Danny_Labrador]

Hi, I am having issues with my boat in Croatia which has been there a year now and not VAT paid. The boat is registered in the UK due to the mortgage on it but the Croatian government has said it has to be registered with them if I am to take advantage of the 5% VAT. This is not possible due to the mortgage so does anyone know if this is possible to do or will I be stuck with 25% VAT when they officially join the EU? Any advice would be much appreciated.

Hi, Welcome to the Forum - I have sent you a Private Message - have a look at the top of the screen (top left) to see how to access.

Danny

 

[mikegos39]

VAT re flagging

Hi, Welcome to the Forum - I have sent you a Private Message - have a look at the top of the screen (top left) to see how to access.

Danny

I have recently heard that reflagging has been dropped and it is possible to pay the 5% vat and stay on your own flag. I strongly recommend you take on an agent to deal with this as it is very involved. Best wishes Mike

 

[Danny_Labrador]

I have recently heard that reflagging has been dropped and it is possible to pay the 5% vat and stay on your own flag. I strongly recommend you take on an agent to deal with this as it is very involved. Best wishes Mike

Think that you might have got the wrong respondent?

 

[d4raffy]

I have been reading through your posts and had a question if anyone can help? Please forgive me if I have missed the answer in this forum. I purchased a boat from Hanse in the UK and had it delivered to Sovenia and then handed over in Croatian waters as this is where I keep it. This was a year ago and now I am trying to sort out the VAT as Croatia are entering the EU. The boat has a mortgage with a UK lender who want the boat registered in the UK. I went to Croatia the other week to try and sort this out and they insisted the boat was de-registered in the UK and registered in Croatia. The mortgage company will not allow this and having spoken to the UK customs they can not charge us VAT if the boat is not physically in their waters. I heard a rumor that Croatia was relaxing the rule that boats do not need to be Croatian registered to take advantage of the 5% VAT. Does anyone know more about this or know anyone whether it is a company or individual who deals with this?

I would greatly appreciate any help as I am running out of time.

Thanks

Talk to Sinisa - www.maritimus-consultant.hr - he is on this thread. He has imported several boats and can advise on remaining UK registered.

translated text from SeaHelp - http://www.sea-help.eu/SeaMagazine/de/54659

Ship register no registration required

An entry in the Croatian Register of Shipping is not mandatory under the bill from 01.07.2013. Nevertheless, it may be advisable for reasons of cost, under certain circumstances, to submit to the registration. What documents are required and how the process is planned, has not yet been announced.

An entry in the Croatian Register of Shipping is for those owners who are currently participating in the Croatian claim and offer import with 5% import VAT and 1.7% tariff you ship to Croatia, also not mandatory. However, it must be considered that for imported boats / yachts for the EU registration is no longer valid . Thus, these boats / yachts can not be used to Croatia's EU accession. From 01.07.2013 Croatia belongs to the EU area and the EU has re-registration validity. The owner should provide for comprehensive insurance with your consult and make sure that there is coverage for the period (without a valid registration).

 

[d4raffy]

As below - So for those imported and paid - now not on a Croatian Flag - is it worth buying a new Vignette now - that lasts into next year ?

From SeaHelp - The Croatian vignette (Permit) is not EU compliant and is replaced by a new tariff scheme, which applies to boats that do not run under Croatian flag. These new fees are certainly much higher than the current Croatian vignette fee, as is widely expected. In any case, the fees should be adjusted, applicable to vessels under Croatian flag. Since it is generally expected that Croatia will introduce for those owners who do not own a vignette, an appropriate transition period, SeaHelp advises all affected owners who have not reflagged to extend the vignette in June. However, since there is still no legislation, there is no legal entitlement to a transitional period.

Anybody got any opinions on this ???? - cant believe nobody has, or is not in a similar situation -

 

[d4raffy]

Vignette

Got this from over on the Cruisers Forum ...
http://www.cruisersforum.com/forums...ermit-and-sojourn-tax-101103.html#post1241757

"
But right now there is a new Maritime law in a procedure in Croatian parlament, which covers those changes. It's in "urgent" procedure, so my guess is, that it will be adopted before end of April.*
http://www.vlada.hr/hr/naslovnica/s...rvatske/77_5/(view_online)/1#document-preview
In short... article 12 states, that the goverment of Croatia with the special act will regulate the entrance of foreign yacht, and the paying of the dues in acording of the basic principles of EU.

BUT !!! In provisional article 141 it states, that the Goverment has 1 year time, to prepare the new special act !!
...................

Some new information:

Today the spokesman of Croatian transport ministry has sent me the proposal of the future special act, which will regulate the entrance of foreign yachts in Croatia. This is still not adopted in the legislation, so there could be some changes!

What will change?

1. There will be no vignette after 1.1.2014. After that date the yachts will still have to pay some dues (probably the same as Croatian flagged). But the new dues will be paid only for the year in which they are paid, not for the next 12 months!
2. Crew list will be stamped only on entrance and departure from Croatia. In the proposal there is no mention about writing the changes if there is a crew change in Croatia.
3. There will be no more limits, how many persons can change on boat in one year.
4. Sojourn tax stays as it is. (The Croatian yachts also has to pay this)
5. But there is one important addition. If you are not the owner of the yacht ( or close relative of the owner) you have to have special power (the content of the power is well defined in the new act), but it must be translated to Croatian buy a court appointed translator.
"

 

[philipc37]

i have a boat in Croatia (hr) on the Island of Murter. It is a bav 37 sport D4 of 2008. We started the procedure in februari this year together with a company in Sibenik hr, called Jadrantrade. After 6 weeks i received all documents under Hr registration. We picked them up last week in original documents. So our boat is now under hr flag.
I Belgian friend of me (i m also Belgian) has a Azimut 43 of 12 years. He also started the procedure , and he "wanted" to pay about 14000 euro. But the company Jadrantrade adviced to wait till 01/07 , because hiss boat is older then 8 y. After 01/07 he has only to pay a small amount to get a document that tax is payed. But. You need still a document .

Best regards Phlip

Bav 37 called Cinq

 

[Deleted User YDKXO]

I Belgian friend of me (i m also Belgian) has a Azimut 43 of 12 years. He also started the procedure , and he "wanted" to pay about 14000 euro. But the company Jadrantrade adviced to wait till 01/07 , because hiss boat is older then 8 y. After 01/07 he has only to pay a small amount to get a document that tax is payed. But. You need still a document .

There is contradictory advice going around about this (Article 138). I have been told that the boat has to have been under continuous ownership and berthed in Croatia for all of its life to qualify for this. The trouble is that because you can't attempt to register your boat under this proposal until after 01/07, you're going to be too late to pay VAT at 5% if your boat is deemed not to qualify, in which case I guess you are liable for VAT at the full rate. Personally, although my boat is more than 8yrs old, I'm not taking the risk and this week I'm going through the 5% VAT process. I'm taking the view that being VAT paid does increase the value of my boat as it can then be sold anywhere in the EU and being able to show that I have paid the 5% VAT rather than taking advantage of the Article 138 0% VAT rate will be more acceptable to potential buyers. This is entirely my personal opinion and other opinions could be equally valid. The trouble is that there doesn't seem to be any firm guidance from the Croatian govt on this issue

 

[Baggywrinkle]

Looks like older boats are off the hook .... but just from VAT, there will most likely be a 1,7% import duty for boats less than 12m without a EUR1.

http://www.sea-help.eu/SeaMagazine/de/54668

Roughly translated .....

Official: No import sales tax for older boats in Croatia

Owners whose boats are older than eight years and lying in Croatia can stop holding their breath: As the Finance Ministry announced at the request of SeaHelp, the leading breakdown service in the Adriatic, that these yachts are fully exempt from import VAT, regardless of whether they originate in the EU or are registered in the EU. In doing this the State of Croatia has further demonstrated a tourist friendly attitude in the run-up to EU accession. SeaHelp takes this extremely generous interpretation of the "EU VAT Directive" as a clear commitment from Croatia to water sports and the boat owners whose yachts are stationed in the country and sees this scheme as a logical continuation of a policy that meets the needs of foreign owners in Croatia .

In the letter to SeaHelp from the Ministry of Finance, it effectively states: "... in reference to the fact that Croatia is a tourist country, we are of the opinion that the importation without payment of import VAT should be possible for watercraft located in Croatia having VAT Free status under the temporary importation of vessels, while registered under flags of foreign countries, and in addition where the date of first use of the vessel is more than eight years before Croatia's EU accession date" In plain English that can be simplified to. Boats that are over eight years old are exempt from import VAT, regardless of whether they are EU products for tax purposes, or the boats are registered in the EU. No-one could have predicted such a far-reaching scheme in advance.

For owners whose boats are located in Croatia and were first registered before 1.7.2005, it means that they need to obtain a customs declaration from the Croatian authorities after 1.7.2013. You then pay 1.7% of the current value for boats under 12 meters in length. Larger boats are fully exempt from tax. With this Customs declaration it is explicitly certified that no import VAT is due.

SeaHelp expects that this bill from the Ministry of Finance, which is now binding and available in writing for the first time (official statement 050-01/13-01/176), will be written into law in June. Concerning the procedure after 1 July 2013, we haven't heard the final word yet, but SeaHelp can offer help to any affected skipper: If the customs declaration has any bureaucratic hurdles, the breakdown service will inform Skippers as we did with the 5% taxation scheme.

Would be nice to see a second source for this info .... Sinisa?

Found a second source ... text is almost identical though.

http://www.offshore-boote.com/pages/posts/verzollungspflicht-in-kroatien-71.php