Croatia NON - VAT boat purchase experience (Blog Style)

[Ramsey]

Dear all, I am starting this blog style thread to document my purchase experience for future generations I shall update it as we advance through the process but here is the initial data:
- Boat Based in Croatia (Kremik)
- Boat is Non VAT
- We are non EU residents ( we are in Switzerland).
- We are British nationals.

I shall post here as things progress.

 

[Irish Rover]

@Ramsey and I are messaging separately at the moment and I'm trying to assist him based on my experience of doing the same thing recently. I'll chip in when I have something to add.

 

[Baggywrinkle]

@Ramsey Any progress?

 

[Ramsey]

Hi all!, Exchange will take place in October so I will need to wait. in the meantime I had a nice exchange with Irish Rover (legend) who shared his experience in detail. one caveat is that he did this during the EU admission process for Croatia, so a few years back so a question remains as to:

option 1: leave Croatian territorial waters reflag and back in? (30nm or so)
option 2: all the way to Montenegro check in, reflag and back into Croatia? (far longer and inconvenient, as we need to be based in Slovenia for a refit)

closer to the date we will decided between polish flag with all benefits associated to it, or British ensign for which we would need a additional tonnage certificate. on this point, Baggy put me in touch with a local chap that does this specific survey, plus a pre-purchase survey all as a package. if you throw a rigging survey on top of that hell charge you circa 1200 quid.

Everybody (well. most people we discussed with) keeps advising that what makes you NON- EU VAT liable is your residence and where you pay tax, NOT your nationality or Flag of the boat. Still, having dealt with EU public employees in the past, Im nervous about how the conversation would go when checking in in a EU country with a NON VAT boat, EU Flag, and Swiss residency... a true mine field ha ha!

For those who asked the question about why non-VAT, we are indeed planning to export the boat in 2026, the plan is to refit in Slovenia during 2025 and then start cruising in 2026.

 

[Irish Rover]

Hi all!, Exchange will take place in October so I will need to wait. in the meantime I had a nice exchange with Irish Rover (legend) who shared his experience in detail. one caveat is that he did this during the EU admission process for Croatia, so a few years back so a question remains as to:

option 1: leave Croatian territorial waters reflag and back in? (30nm or so)
option 2: all the way to Montenegro check in, reflag and back into Croatia? (far longer and inconvenient, as we need to be based in Slovenia for a refit)

closer to the date we will decided between polish flag with all benefits associated to it, or British ensign for which we would need a additional tonnage certificate. on this point, Baggy put me in touch with a local chap that does this specific survey, plus a pre-purchase survey all as a package. if you throw a rigging survey on top of that hell charge you circa 1200 quid.

Everybody (well. most people we discussed with) keeps advising that what makes you NON- EU VAT liable is your residence and where you pay tax, NOT your nationality or Flag of the boat. Still, having dealt with EU public employees in the past, Im nervous about how the conversation would go when checking in in a EU country with a NON VAT boat, EU Flag, and Swiss residency... a true mine field ha ha!

For those who asked the question about why non-VAT, we are indeed planning to export the boat in 2026, the plan is to refit in Slovenia during 2025 and then start cruising in 2026.

You may be confusing your baggys with your rovers. I only did this in April.
From what you told me your seller does not appear to need an export cert to reclaim VAT so option 1 seems best for you.
Polish flag is not an option if you want to stay in the EU without paying VAT.
Based on my past experiences you won't have any difficulty getting TA as long as you can prove your Swiss residency - in Greece at least they like to see utility bills and if you have an online bank account with your Swiss address print the relevant address page and offer to show it live on hour phone.

 

[Ramsey]

sorry I mixed you up guys !

yes I keep getting lots of conflicting information on this point: "Polish flag is not an option if you want to stay in the EU without paying VAT." while the advise of the registration agency for example was "it only matters where you pay tax". the only reason we were having second thoughts about UK flag is that the boat will be non VAT while we are cruising, and so we may have problems while checking in to places like St Helena or BVI.

thoughts?, alternatives?. Malta?

 

[Tranona]

Hi all!, Exchange will take place in October so I will need to wait. in the meantime I had a nice exchange with Irish Rover (legend) who shared his experience in detail. one caveat is that he did this during the EU admission process for Croatia, so a few years back so a question remains as to:

option 1: leave Croatian territorial waters reflag and back in? (30nm or so)
option 2: all the way to Montenegro check in, reflag and back into Croatia? (far longer and inconvenient, as we need to be based in Slovenia for a refit)

closer to the date we will decided between polish flag with all benefits associated to it, or British ensign for which we would need a additional tonnage certificate. on this point, Baggy put me in touch with a local chap that does this specific survey, plus a pre-purchase survey all as a package. if you throw a rigging survey on top of that hell charge you circa 1200 quid.

Everybody (well. most people we discussed with) keeps advising that what makes you NON- EU VAT liable is your residence and where you pay tax, NOT your nationality or Flag of the boat. Still, having dealt with EU public employees in the past, Im nervous about how the conversation would go when checking in in a EU country with a NON VAT boat, EU Flag, and Swiss residency... a true mine field ha ha!

For those who asked the question about why non-VAT, we are indeed planning to export the boat in 2026, the plan is to refit in Slovenia during 2025 and then start cruising in 2026.

Swiss residency and non VAT paid is quite common and of course existed pre Brexit so not sure you will have any issues there. Support getting UK part 1 registration, particularly if you are going into the wider world and leaving all the EU nonsense behind!

 

[Ramsey]

Thank you Tranona, much appreciated. wouldnt this still put us in a VAT liability situation when entering UK overseas territories?. as far as I know, if you own a NON VAT vessel with a Red Ensign, you get the bill automatically as soon as you enter any of these territories.

 

[Irish Rover]

sorry I mixed you up guys !

yes I keep getting lots of conflicting information on this point: "Polish flag is not an option if you want to stay in the EU without paying VAT." while the advise of the registration agency for example was "it only matters where you pay tax". the only reason we were having second thoughts about UK flag is that the boat will be non VAT while we are cruising, and so we may have problems while checking in to places like St Helena or BVI.

thoughts?, alternatives?. Malta?

First off, residency is the test - plenty of ex pats not paying tax in the country where they are resident and, in my case, I haven't been resident in Ireland for more than 20 years but I do pay tax there.
As regards the Polish flag you cannot get "temporary admission" in the EU if your boat is registered in an EU member state.
You also appear to be confusing EU VAT status and UK VAT status which, of course are entirely separate even if the rules are broadly similar. I'm no expert but I imagine UK VAT status is not an issue when entering a British Overseas Territory.

 

[Zing]

… as far as I know, if you own a NON VAT vessel with a Red Ensign, you get the bill automatically as soon as you enter any of these territories.

Not so. They are all outside the UK VAT regime. IOM excepted, which is closely linked, but as a non resident you won’t be charged if you visit in your boat.

 

[Ramsey]

this is getting VERY interesting, thank you guys so much. I will be talking to an (alleged) specialist in this area, based in UK. I shall revert with Findings.

 

[westernman]

Thank you Tranona, much appreciated. wouldnt this still put us in a VAT liability situation when entering UK overseas territories?. as far as I know, if you own a NON VAT vessel with a Red Ensign, you get the bill automatically as soon as you enter any of these territories.

May register in the Cayman Islands rather than the UK??

 

[Zing]

May register in the Cayman Islands rather than the UK??

V. Expensive. Jersey / Guernsey are a much better choice for most small boats.

 

[Baggywrinkle]

Hi @Ramsey

The Croatian authorities seem to be very confused about VAT status, residency and flag state .... VAT Problems in Croatia .... again!!! This is getting beyond a joke ....

Some resources ...

Is it considered an exportation, if I register my boat with a non EU registration within the European Union?
a simple answer is NO. Registration is not related to the tax status. The definition for export is: “bringing Union goods outside the customs territory of the Union. Union goods leaving the customs territory of the Union should be placed under the export procedure”. You must therefore submit an export declaration.

Boat, Yacht & MMSI Registration | Boat flag registration specialist | About us

I’m British. Can I buy a vessel with Union status and keep it in the EU? Or do I need to re-register it?
If the seller of the boat can show proof that VAT has already been paid in the EU, then the boat will retain the status of Free Movement on purchase, even if you choose to flag it to a UK registry. If you wish to import the boat into the UK you will be liable to pay UK VAT. If you want to keep it in the EU then, as it already has Union status, you can do so. Essentially, as far as customs is concerned, the ownership of a vessel is not relevant, it is VAT paid Union status which is relevant.

BOAT SALES - VAT - How does leaving the EU affect the VAT status? - Boatshed Knowledge Base

EU Law: NOTE ON MEANS OF TRANSPORT
Therefore, in principle, means of transport located in the Union or released for free circulation therein are deemed to be Union goods. The flag, plate or any other means of registration of the means of transport is irrelevant to determine the customs status to means of transport, except in the case of motorised road vehicles mentioned in Article 208 of the UCC-Implementing Act (UCC-IA) 2 . This means that, for example, the fact that a boat flying a flag of a third country and/or that an aircraft is registered in a third country does not necessarily mean that this boat is a non-Union good, i.e. it can have Union status.

https://taxation-customs.ec.europa.eu/system/files/2021-07/Note%20on%20means%20of%20transport.pdf
https://taxation-customs.ec.europa.eu/customs-4/union-customs-code/ucc-guidance-documents_en

The second link may have document translations into Croatian.

The definitive answer, is that if you are a non-EU resident then you can have a boat in the EU under Temporary Admission and that boat need not pay EU VAT.

The way that works with ex-charter boats is that the boat can be bought VAT free and immediately exported. This involves going to customs on the day of sale and going through an export procedure. Your broker should be able to arrange all this for you.

You sail off into the sunset (officially leaving Croatian territorial waters but going out of sight of the customs authorities is what takes place in practice) and then you re-name and re-flag the boat. You can then turn round and re-enter with a new boat identity and request entry under TA. Explain to the customs people on re-entry what has happened and be open with them. They do this all the time and charter companies all over Croatia dispose of boats this way all the time.

Issues will arrise if the boat has an EU flag, as this causes them to confuse flag state with your residency, and an EU resident can't have a VAT free boat in the EU. A U.K. flag will be fine coupled to residency outside the EU.

My preference is to go for Part 1 rather than SSR as it is a definitive statement of ownership - but both work. I did my export/TA on an SSR registration and changed to Part 1 once the ownership paper trail was completed.

 

[Baggywrinkle]

By the way, collecting VAT on boats on behalf of the EU is a lucrative business for the Croatians. This is why I assume they keep getting it wrong in terms of what constitutes a boat that is entitled to TA. It's a real pain and this is the second time in 3 years I've had a fight with them over the VAT status of my boats and what is the correct way to handle the combination of VAT, flag state, citizenship and residence.

I'm buying a VAT paid boat off a German citizen with German residence and it is German registered. I am a UK/German dual citizen, resident in Germany and will re-flag the boat to the U.K. - This blew their minds and they told me I need to export it, lose the VAT (union goods) status, and then re-enter under TA which is complete bollox. If I were stupid enough to do that then they would undoubtedly present me with a VAT bill as soon as I re-entered as I am EU resident, and they would claim the sale took place outside the EU which is why I lost the previous union goods status.

 

[Ramsey]

Part 1 rather than SSR

Oh man, Im sorry they are messing you around. I though your deal was done and dusted?! what the hell ?!.

this is GREAT info, I will do my own legal trawling too... frustrating, but it seems like they dont have a clue.

sorry for the ignorance, but what's the difference between Part 1 and SSR ??

 

[Ramsey]

the frustrating part is that I started this thread in an effort to write the "ultimate guide" to do this, but in view of the problems Baggy is having, Im contemplating taking up crochet or collecting stamps instead....

 

[Tranona]

Thank you Tranona, much appreciated. wouldnt this still put us in a VAT liability situation when entering UK overseas territories?. as far as I know, if you own a NON VAT vessel with a Red Ensign, you get the bill automatically as soon as you enter any of these territories.

No. you could enter the UK mainland without paying VAT because you are non resident by using the TA rules (same as the EU). Flag has nothing to do with any tax liability.

SSR and Part 1. SSR is only available for UK residents as it is intended to comply with international requirements for boats based in UK who might want to venture outside UK waters. Part 1 does the same thing plus it is a register of title (hence the need for an inspection to confirm that the boat exists) and is available to qualifying non residents. You could also use another 2red Ensign" registry such a Jersey or Guernsey but their requirements are essentially the same. Most important thing for these registers is to get a clear trail of title, usually original invoice then bills of Sale for each change in ownership. If you are buying an ex charter boat this should not be an issue, but may with a private vendor who might not have the best records.

 

[Ramsey]

No. you could enter the UK mainland without paying VAT because you are non resident by using the TA rules (same as the EU). Flag has nothing to do with any tax libility.

so, being a Swiss resident, could I keep my NON-VAT boat under a Polish flag, using temp admission in EU ?!?!?!!?

 

[Irish Rover]

so, being a Swiss resident, could I keep my NON-VAT boat under a Polish flag, using temp admission in EU ?!?!?!!?

No. As I said earlier only non-EU flagged vessels can avail of TA.