Cruising to Croatia. Yet another VAT question

[Deleted User YDKXO]

If you took a VAT paid boat from Italy (inside the EU) to Croatia (outside the EU) for a couple of seasons and then took her back into Italy, would VAT be be due on re entry into Italy? Is there a time limit to the period a boat can be outside the EU before it loses it's VAT status? Conversely, if a boat does lose it's VAT status, is there a time limit to the period it can spend in the EU before VAT is due or is VAT due immediately? Does Croatia have any special arrangements with the EU over VAT status seeing as lots of boats must cruise into and out of Croatia from/to other EU countries like Italy, Slovenia and Greece?

 

[MapisM]

Is there a time limit to the period a boat can be outside the EU before it loses it's VAT status? Conversely, if a boat does lose it's VAT status, is there a time limit to the period it can spend in the EU before VAT is due or is VAT due immediately?

The answer to the second question is 18 months I reckon.
Not sure about the 1st question, possibly never as long as you're still the owner, but surely someone will be around soon to sort that out.
On a side note, you could consider keeping her in Italy also for cruising Croatia. Distances are reasonable, and you can enjoy tax free diesel even if the boat is not registered as commercial.

 

[MapisM]

it is getting more difficult to find a bay to lie to your own anchor without being charged

Really? Been there till 2005, I can't remember of having paid anything for anchoring anywhere, with the only exception of Kornati and Telascica... Glad I moved on!

 

[Deleted User YDKXO]

Thanks for that Windlass100. I don't understand why foreign flagged boats are bailing out this year when accession is not until next year. Are you saying that foreign flagged boats might be hit with Croatian VAT this year or are they going in advance of next year's accession?
I know Croatian marina prices are rising but I have to compare them with the 2 boating areas with which I'm already familiar, W Med (Balearics, Costas and SoF) and the Solent. The Croatian marina prices I have seen so far are less than half what I was paying last year in Palma, Majorca and certainly still less than a berth in a posh Solent marina. I haven't yet seen Croatian marina prices in the real hotspots in high season but I can't believe that they are as high as Balearic prices which can be between €100 and as much as €400 per night for a 15m berth. Also, surely, if marinas are emptying of ex VAT boats, that will bring down Croatian marina prices or at least peg them

 

[jfm]

If you took a VAT paid boat from Italy (inside the EU) to Croatia (outside the EU) for a couple of seasons and then took her back into Italy, would VAT be be due on re entry into Italy? Is there a time limit to the period a boat can be outside the EU before it loses it's VAT status?

Alas on that point there is lack of clarity in the EU directive, so you can get a slightly different answer in each EU country, and in geenral there is no specific period of time in any EU country. UK guideline is 3years, but they are open to requests for longer. I don't know what Italian answer is. Of course, you would be very unlikely to be picked up on this one

Conversely, if a boat does lose it's VAT status, is there a time limit to the period it can spend in the EU before VAT is due or is VAT due immediately?

VAT is due immediately if TI doesn't apply. Or after 18months if TI does apply, though the TI can be refreshed before expiry of the 18mths. One crucial determinant of whether TI applies is whether the owner of the boat belongs in EU. If he does, he cannot qualify for TI. You'd have to set up a (say) Jerseyco to own the boat, as a minimum, which is a pita

Does Croatia have any special arrangements with the EU over VAT status seeing as lots of boats must cruise into and out of Croatia from/to other EU countries like Italy, Slovenia and Greece?

No. Nothing like the IoM or Monaco arrangements

 

[Deleted User YDKXO]

you can enjoy tax free diesel even if the boat is not registered as commercial.

You better explain to me how that one works!

 

[Deleted User YDKXO]

Thanks, jfm, concise and helpful as usual. Say that Italy operated a 3yr period like the UK. Would it be enough to visit an Italian port for just one day during that 3 yr period for that 3 yr period to be 'refreshed' as you say or would you need to visit for longer? How exactly do you refresh the VAT status or is it simply a case of keeping the berth fee receipt as proof of entry

 

[MapisM]

You better explain to me how that one works!

Your wish is my command!

 

[MapisM]

I don't know what Italian answer is.

I must admit that neither do I, but actually I never heard of any problem in this respect.
Btw, there's no legal requirement to keep the marina receipts for the boat owner, so I don't think anyone would bother, as long as you can show that the boat was originally "VAT paid", so to speak.
The typical situation which can lead to careful controls is (obviously) the other way round, when a non VAT paid boat is brought back to Italy a few years after purchasing and keeping her in Croatia... But that's not what Mike was asking.

 

[Deleted User YDKXO]

Your wish is my command!

Blimey, as easy as that! Now you have reminded me, I do remember hearing about this. I think it is done to protect local fuel suppliers as too many people were going across the border to fill up or am I wrong? I think a similar arrangement does exist or used to exist with vehicle fuel? Looks like it's worth visiting Italy every few weeks then?

 

[MapisM]

How exactly do you refresh the VAT status or is it simply a case of keeping the berth fee receipt as proof of entry

See previous post. Consider also, on top of that, that there's no paperwork required, either when leaving Italy for Croatia or when returning (unless you used the tax exempt fuel, but that's another story).

 

[jfm]

Thanks, jfm, concise and helpful as usual. Say that Italy operated a 3yr period like the UK. Would it be enough to visit an Italian port for just one day during that 3 yr period for that 3 yr period to be 'refreshed' as you say or would you need to visit for longer? How exactly do you refresh the VAT status or is it simply a case of keeping the berth fee receipt as proof of entry

I dont have the italian law to hand but I'd say yes to all your questions. Reimporting to Italy for say one day is recognised as an importation. It's not in the tax authority's interest to argue otherwise. Evidence of the one night in Italy in the form of marina receipt, logbook, etc must be acceptable as a matter of common sense

 

[MapisM]

I think it is done to protect local fuel suppliers as too many people were going across the border to fill up or am I wrong? I think a similar arrangement does exist or used to exist with vehicle fuel? Looks like it's worth visiting Italy every few weeks then?

The regulation is actually the same anywhere in Italy, but the Adriatic is where it's more widely applied because the nearest non-EU Country is very close. In Sardinia for instance, it's necessary to go to Tunisia, which is obviously less handy.
Yup, there's a similar arrangement for car fuel, but that's only granted to those citizens whose residence is near the border of a "cheaper" Country (e.g.Switzerland).
Re. the convenience of returning to Italy to refill, well, that depends on where you are located in Croatia. Maybe from Istria, but surely not from Split area for instance. You surely would burn out the cost differential, and then some.

 

[jfm]

Blimey, as easy as that! Now you have reminded me, I do remember hearing about this. I think it is done to protect local fuel suppliers as too many people were going across the border to fill up or am I wrong? I think a similar arrangement does exist or used to exist with vehicle fuel? Looks like it's worth visiting Italy every few weeks then?

In my experience it's even easier if you are commercial reg and not italian flagged. They just give you detax fuel at the pump without any recordkeeping and no need for the application form and the cargo book. And you can use the fuel in italian waters; no need to be intending to go outside the eu and no need to get the book stamped in croatia etc

 

[MapisM]

In my experience it's even easier if you are commercial reg and not italian flagged.

Agreed, but a commercial reg & VAT paid boat is a sort of oxymoron, innit?

 

[jfm]

Agreed, but a commercial reg & VAT paid boat is a sort of oxymoron, innit?

Not really. You might find a 2nd hand VAT boat as Deleted User has done. You could then commercially register it, then cruise Italian waters on detax fuel for the rest of your days

 

[MapisM]

Yup, that's feasible, but unusual. If you have a commercial reg usage in mind, it's better to look for a non-VAT paid boat, otherwise you're paying for something you don't need, so to speak.
Anyhow, I did say "you can enjoy tax free diesel even if the boat is not registered as commercial".
But undeniably, there are other advantages in commercial reg while in IT waters (as a non-IT citizen and with a non-IT boat).

 

[PowerYachtBlog]

Malta created a very strong Marina market by offering 5% VAT for yachts - the Marinas became very full. So Croatia could help maintain or boost their leisure marine industry if they made an early policy announcement.

This pure bullocks... Yes a lot of big 24 metres yachts came to do this in the first 3 months of 2004 perdiod this was done, but most of the yachts (99.9%) left after a couple of weeks or a month. Saying that Malta marinas are full because of this is false.

Malta marinas are full first of all for 90% by Maltese owned boats, and second is because there is not enough berths. About 1500 berths total is really little for an island where sea is a natural call.
This problem has been going on since 1994 and from that period we have promises of berths increases which will also put the price down, and what we are seeing is stupid planned private marinas who increased space by about 600 berths. These marinas also reserve an area for Super Yachts where in actual fact this is for 75% always empty, and prices are triple to what they used to be.
In 1994 Malta had over 900 berths today with three private marinas we have less to 1500. Stupidty is we just need a breakwater (planned during the British colonization in the early middle twenteeth century) at the entrance of Marsamxett harbour and you could fit 15000 berths easily there. And then Malta can really become a first class yacht centre....

Sorry for the OT..... Have a good day to everyone

 

[strakeryrius]

I'm sure that JFM will correct me if I'm wrong, and I've no wish to "muddy the waters" as he normally puts it, but ..

I thought that if it was the original owner who took the boat out of the EU that eventually re-imported the boat back again into the EU then no VAT was payable. And there is no time limit on this. Or is that just the UK?

 

[jfm]

I'm sure that JFM will correct me if I'm wrong, and I've no wish to "muddy the waters" as he normally puts it, but ..

I thought that if it was the original owner who took the boat out of the EU that eventually re-imported the boat back again into the EU then no VAT was payable. And there is no time limit on this. Or is that just the UK?

There is a concept of time limit but the language in the actual law is very vague. In UK HMRC's public statement on the matter is along the lines that "normally" 3 years is the limit but that would certainly be challengeable. However the law doesn't explicitly allow for an indefinite period overseas, even for the same owner, and is written in terms of "permanently exported" vs "temporarily exported" which is a bit fuzzy

See para 4.4 of HMRC notice 8, on www.hmrc.gov.uk , though remember that isn't law, it's only HMRC's janet n john guide to the law