Dutch Customs

[Leighb]

There have been a lot of threads here about members experiences of being boarded by British Customs.

However it seems that the Dutch are starting to get awkward, the following was posted in our Club weekly newsletter this week.

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Ships Paperwork – Good Advice for All

The following tale from a member who recently visited Holland is worthy of dissemination for the benefit of others:

“I have just returned from a cruise to the Netherlands and was chatting to Tony Cross about my encounter with Dutch Customs. He asked me to relate the experience to you in order to emphasise to the yachting community the importance of carrying the correct papers.

I was stopped and boarded by a Dutch coastal patrol about two miles offshore, in Dutch waters.

Two Customs officers scrutinised the ship's papers with exceptionally close and detailed attention. First, they demanded that I present a VAT receipt for red diesel in my tank. Fortunately, I was aware of this requirements and had such a receipt in my possession. I was left in no doubt that the yacht would have been impounded had this not been so. They explained that possession of red diesel is illegal in Holland. They also required evidence that I had paid VAT on the yacht. A satisfactory bill of sale from a well known, reputable, yacht broker was insufficient. On my return to the UK I was greeted by a formal letter from the Dutch Customs authorities with a further demand for evidence that VAT had been paid on the purchase of the yacht”.

Obviously, it is vital that every yachtsman is aware that VAT receipts for red diesel must be carried and that all other ship's papers must be in absolutely perfect order.

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I think most are aware of the problems re red diesel, however this demand for VAT evidence is not something I have heard of previously. It would also present a major problem for many older yachts as AFAIK there is no way of getting proof that VAT was paid on original purchase, or even due if pre 1984 ( I think?)

 

[Tranona]

Just ignore the letter. Dutch customs have no jursidiction over VAT issues on a boat that was bought in the UK (or any other EU state). They are just trying it on.

The red diesel problem might go away soon if the UK government loses its fight with the EU over the concessions curently in place (and agreed by EU).

 

[aluijten]

Just ignore the letter. Dutch customs have no jursidiction over VAT issues on a boat that was bought in the UK (or any other EU state). They are just trying it on.

The red diesel problem might go away soon if the UK government loses its fight with the EU over the concessions currently in place (and agreed by EU).

I'm not so sure about the first statement. Bear in mind that the customs are operating on behalf of Europe (Schengen agreement).

Main point is that the customs need to show to their bosses they do their work. As it's much more effort to chase real bad guys, nagging simple tourists is much easier and avoids the risk of looking at a gun from the wrong side. I can't understand why having a proof of VAT payment should be more important then smuggling drugs or people, let alone some red Diesel in a sailing yacht.

A few months back we had this issue with the police as well. It came out that one of the ways to grade the functioning of a policeman on the street was by setting a minimum number of fines he had to write down in a year, irrespectively of the nature of the fine...

 

[Tranona]

I'm not so sure about the first statement. Bear in mind that the customs are operating on behalf of Europe (Schengen agreement).

Main point is that the customs need to show to their bosses they do their work. As it's much more effort to chase real bad guys, nagging simple tourists is much easier and avoids the risk of looking at a gun from the wrong side. I can't understand why having a proof of VAT payment should be more important then smuggling drugs or people, let alone some red Diesel in a sailing yacht.

VAT is nothing to do with Schengen (that is to do with free movement of people). EU law on VAT is quite clear that the responsibility for collecting and accounting for the tax is with the state where the transaction takes place. So I bought my boat in Greece from a Greek company so paid VAT there. UK HMRC would have no interest, even though the boat is now in the UK. This does not preclude co-operation between state customs as many VAT issues can be cross border - for example a Dutch person buying a boat from a UK builder for use in Spain.

Your second paragraph is nearer the mark - hence the suggestion that the letter is ignored. The Dutch clerk has done something, but has no powers to impose any penalties on the UK owner.

 

[aluijten]

VAT is nothing to do with Schengen (that is to do with free movement of people).

Sorry, but Schengen is about free movement of people AND goods within the EU. Hence the reason they need to 'protect' the EU against un-taxed goods.

 

[Tranona]

Sorry, but Schengen is about free movement of people AND goods within the EU. Hence the reason they need to 'protect' the EU against un-taxed goods.

Still does not change the fact that VAT is a state responsibility based on where the transaction took place. Dutch Customs have no power to charge VAT on a boat that was bought in the UK - unless they can prove that it is being imported from outside the EU. By definition if the Bill of Sale says the transaction was in the UK then they have no reason to suspect it is being imported.

By definition it is only the first private owner who actually pays VAT. If the boat subsequently changes hands privately, no VAT is due, so any offence will go back to the original supplier or importer as it is they that will have committed an offence (if any), not the current owner. There is no legal requirement to keep evidence of VAT payments for more than 6 years.

BTW the tax is not strictly related to goods, but is determined by the nature of the transaction, so you can have exactly the same "good", one of which has not paid VAT and another that has. So for 7 years my boat was "untaxed" in that it was owned by a Greek company which reclaimed the input tax as it was a business asset (so had properly accounted for VAT) but I paid VAT on its value when ownership was transferred to me as a private citizen - and that is a chargeable event. If, however, I had continued with a charter business, I could have reclaimed the VAT (if I was registered in that business) and would have charged VAT if I sold it to a private user, or transferred it to me as a private owner rather than a charter business.

So, the idea that you can determine easily whether a boat is "VAT paid" is very simplistic, you need to know the record of all transactions since it was built to identify when VAT should have been accounted for. No mean task with most boats, which is why in general the authorities don't bother.

 

[aluijten]

Still does not change the fact that VAT is a state responsibility based on where the transaction took place. Dutch Customs have no power to charge VAT on a boat that was bought in the UK - unless they can prove that it is being imported from outside the EU.

So, the idea that you can determine easily whether a boat is "VAT paid" is very simplistic, you need to know the record of all transactions since it was built to identify when VAT should have been accounted for. No mean task with most boats, which is why in general the authorities don't bother.

To the first.
It 's not for them to prove you did not pay VAT. It's for you to prove you did pay VAT.

To the second.
Forget it, given the amounts involved the authorities do care. At least in Holland they do.

And yes it's a pain in the #$%#$^% that you need to keep a record of all bill of sales to be able to prove VAT was paid, but I actually made in inquiry at the Dutch customs about this and this is how it works.
The ratio behind it is that many people buy expensive yachts and use all kinds of tricks to evade VAT-payment and still use the craft solely for private use . The general public does not like that (as in: why does mr. bigshot don't need to pay his taxes).

 

[paulskent]

What Papers Should I Carry ??

So here's the question then..

For general cruising in UK waters do we need to carry any papers at all ??

I personally like to keep them nice and safe at home where they won't get wet, dirty or stolen ???

 

[aluijten]

So here's the question then..

For general cruising in UK waters do we need to carry any papers at all ??

I personally like to keep them nice and safe at home where they won't get wet, dirty or stolen ???

Dunno about the UK, but here I have copies of all documents on board. If that does not satisfy them, then I give up. Probably the original documents would not satisfy them either and they will arrest me for not carrying some obscure XYZ item from their nagging list.

 

[prv]

For general cruising in UK waters do we need to carry any papers at all ??

You need the pointless list of irrelevant SOLAS signals. As far as I know that is the only paperwork legally required. You probably already have it, as it is printed in Almanacs and various other things to help people comply even if they weren't aware.

Having details of your insurance company seems convenient in case you have a prang, but is not required.

Pete

 

[Tranona]

To the first.
It 's not for them to prove you did not pay VAT. It's for you to prove you did pay VAT.

To the second.
Forget it, given the amounts involved the authorities do care. At least in Holland they do.

And yes it's a pain in the #$%#$^% that you need to keep a record of all bill of sales to be able to prove VAT was paid, but I actually made in inquiry at the Dutch customs about this and this is how it works.
The ratio behind it is that many people buy expensive yachts and use all kinds of tricks to evade VAT-payment and still use the craft solely for private use . The general public does not like that (as in: why does mr. bigshot don't need to pay his taxes).

You are wrong on the first count. Unless the boat is imported by a private individual, a private person cannot commit a VAT offence. The responsibility for accounting for VAT lies solely with the VAT registered vendor. A private person does not have to "prove" anything - it is up to Customs to present their evidence of an offence to the courts if they wish to take any action which the person responsible for accounting for VAT is contesting.

You are correct in a way on the second point in that yachts are a common vehicle for schemes to avoid paying VAT and customs need all the support possible in identifying people who operate illegal schemes. This is because the sums involved are large, the potential for avoidance great, the assets mobile and the owners in a position to order their affairs to minimise their tax bills. Helped along by "incentives" offered by some states to encourage yachts to fall within their jurisdiction.

However, that is nothing to do with a person who is maybe the 10th owner of a 20 year old boat who has legitimately bought it from another private citizen, when no VAT is involved.

There is a load of hogwash talked about VAT, not helped by officials being economical with the truth about their supposed powers. When have you ever heard of a private individual being found guilty of a VAT offence, or had his boat impounded? Just does not happen.

On the other hand people like Flavio Briatore regularly get into difficulties with the authorities by exploring the outer boundaries of the law, and they and their lawyers give Customs plenty to think about.

 

[aluijten]

You are wrong on the first count. Unless the boat is imported by a private individual, a private person cannot commit a VAT offence. The responsibility for accounting for VAT lies solely with the VAT registered vendor. A private person does not have to "prove" anything - it is up to Customs to present their evidence of an offence to the courts if they wish to take any action which the person responsible for accounting for VAT is contesting.

I suggest you avoid visiting Holland. I may have expressed myself wrongly but in Holland you as owner of a boat are required to show evidence that VAT has been paid for the boat in your ownership. I've got a special declaration of the (Dutch) yard that build our boat stating VAT has been paid.

This must be kept with the boat even if the boat is sold.
It does not matter where you've paid the VAT (even Malta is OK), but you must have proof VAT was paid in the EU for the boat. If not, and the boat is registered in the EU, you can expect a VAT bill together with a annoying fine. It's your boat after all so you are required to have the proper paperwork.
I do agree customs are much more interested in very expensive and recent yachts but they can make your life very miserable.
Mind you this only applied for yachts build after somewhere in the late 80-ties if I'm not mistaking. All older yachts are considered to be VAT paid AFAIK.

 

[sailorman]

I suggest you avoid visiting Holland. I may have expressed myself wrongly but in Holland you as owner of a boat are required to show evidence that VAT has been paid for the boat in your ownership. I've got a special declaration of the (Dutch) yard that build our boat stating VAT has been paid.

This must be kept with the boat even if the boat is sold.
It does not matter where you've paid the VAT (even Malta is OK), but you must have proof VAT was paid in the EU for the boat. If not, and the boat is registered in the EU, you can expect a VAT bill together with a annoying fine. It's your boat after all so you are required to have the proper paperwork.
I do agree customs are much more interested in very expensive and recent yachts but they can make your life very miserable.
Mind you this only applied for yachts build after somewhere in the late 80-ties if I'm not mistaking. All older yachts are considered to be VAT paid AFAIK.

i have a certificate stating vat exempt

 

[aluijten]

i have a certificate stating vat exempt

So why don't you visit our nice and small country then

Nothing to fear if you have proper documents. It's what bureaucrats thrive on.

 

[sailorman]

So why don't you visit our nice and small country then

Nothing to fear if you have proper documents. It's what bureaucrats thrive on.

prol been 25 times in the past 30 yrs. 10 times with present boat & she was based in Holland ( German owner )prior to us buying her

 

[Joker]

Was boarded by German coastguard off Nordeney recently. Suspect they were bored - it was a Sunday morning and I was the only boat about.

Three people - one being a woman of not more than about 20. They wanted ship's papers and passport. Gave them the plastic SSR card. The bod wrote the details,looked at the card, and asked,'Das ist alles?'.'Ja, das ist alles.'

One thing that they wanted that I couldn't lay my hands on was my VHF callsign [anyone ever use theirs]? Found it eventually before they got too shirty.

 

[Tranona]

I suggest you avoid visiting Holland. I may have expressed myself wrongly but in Holland you as owner of a boat are required to show evidence that VAT has been paid for the boat in your ownership. I've got a special declaration of the (Dutch) yard that build our boat stating VAT has been paid.

This must be kept with the boat even if the boat is sold.
It does not matter where you've paid the VAT (even Malta is OK), but you must have proof VAT was paid in the EU for the boat. If not, and the boat is registered in the EU, you can expect a VAT bill together with a annoying fine. It's your boat after all so you are required to have the proper paperwork.
I do agree customs are much more interested in very expensive and recent yachts but they can make your life very miserable.
Mind you this only applied for yachts build after somewhere in the late 80-ties if I'm not mistaking. All older yachts are considered to be VAT paid AFAIK.

I suggest you ask your customs what law you have broken if you do not have the evidence. There is no legal requirement to keep records after 6 years, nor is there any offence that an individual can commit. Of course your government may have passed a law making you responsible for something that you cannot be responsible for - but it is not an EU law.

As I have said over and over again VAT is a tax on a transaction, not on a boat , so I cannot see how your customs can present you with a bill if there is no transaction. Customs can only collect VAT from private individuals in very specific circumstances (see below).

When you buy a boat from a private individual it is not a "chargeable event" for VAT purposes and your Bill of Sale will state that it is transferred to your free of all encumbrances (or similar wording).

What you have from the original builder is quite common - as only he has the record of VAT. There is no central record that identifies VAT to a particular boat. Indeed there is no requirement on the VAT invoice to refer to anything other than the goods on the invoice were subject to VAT. So there is no way that customs or anybody else can prove that VAT has been paid on a boat, other than having a record of the invoice. As I pointed out, there is no legal requirement for anybody to keep this more than 6 years, and anyway, many builders and dealers have gone out of business long ago.

There are two common scenarios where offences can occur. First if the boat is sold to a VAT registered entity as a business asset, for example a charter company or a leasing business where the VAT can be reclaimed. Such boats could change hands more than once to other businesses, and each time a VAT invoice is raised, but the buyer reclaims it as an input tax. All legal and proper. However if the boat is then sold at a later date to a private person VAT is charged on the contract price and accounted for in the normal way by the vendor. It is this kind of history that suggests a buyer should make absolutely sure each transaction has been accounted for properly and he gets a copy of the invoice for the one that transferred ownership to a private individual.

The second scenario is where the boat is privately imported into the EU and does not qualify for the numerous exemptions. It that case the person responsible for importing it will pay VAT (and duty if applicable) direct to customs and get a receipt showing it has been paid. There is always a risk that an individual will fail to pay, but he still remains liable.

The sting in the tail for any subsequent purchaser is that (at least in the UK) the liability can follow the boat and HMRC could register a charge against the boat for unpaid tax. However, it would have to go to court to get a court order to do this. So it is important to pay extra attention if there is something in the history of the boat that suggests it has spent time outside the EU - for example even if VAT has been paid and the owner takes it outside the EU and sells it, even to an EU resident it could be liable for VAT on re-importation. Once again illustrating that it is the nature of the transaction that counts, not the physical asset.

Customs would like you to believe that they have powers they do not have. VAT legislation does not fit easily with customs notion of duty on goods, and they have difficulty in accepting that.

Would be quite happy to revise this explanation if you can provide the law that says you have to keep evidence of VAT payment, examples of people who have been penalised for failing to do so, and examples of people who have received a demand for VAT simply because they are unable to produce the "evidence" that it has been paid.

 

[aluijten]

Would be quite happy to revise this explanation if you can provide the law that says you have to keep evidence of VAT payment, examples of people who have been penalised for failing to do so, and examples of people who have received a demand for VAT simply because they are unable to produce the "evidence" that it has been paid.

I can provide you with several links. Problem is however they're all in Dutch!

But if you want, this is from the official Dutch Tourism Board:

http://www.anwbwatersport.nl/vaarinformatie/varen-in-europa/btw-bewijs.html

With google translate:

http://translate.google.com/transla...matie/varen-in-europa/btw-bewijs.html&act=url

Cheers

 

[Tranona]

This is only advice. This is not the law. Somewhat similar advice is given by HMRC - but it is still not law. There is (as far as I know) no offence in relation to keeping evidence of VAT payment. The offences are related to failing to account form VAT. If you have purchased a boat privately, no VAT is involved - so how can you have committd an offence?

To take any action customs would have to show that a chargeable event ocurred and VAT was not accounted for properly. They would then pursue the person responsible, which may not be the current owner.

Our HMRC has stopped issuing "VAT exempt" certificates as routine, because in the absence of an original invoice they are unable to make any judgement - which gets us back to square 1. They used to issue certificates for pre-1985 boats if they met the criteria, but no longer does so because the evidence required to meet the criteria is sufficient to satisfy them.

None of this is in any way suggests that you should not carry the document, nor that you should not make every effort to ensure that a boat you buy is "clean", but there are literally thousands of boats where the owners do not have the original invoice, particularly older boats where VAT was paid well before the 1992 harmonisation took place. If customs investigated every one they would have no time to do anything else - and as they will find in most cases no offence has been committed they don't bother.

As I said, if you can reference the law that says it is an offence for a private individual to own a boat without evidence of VAT and give details of people who have suffered a penalty, then I am quite happy to say I am wrong in my understanding.

You might find reading the RYA/HMRC guidance on the subject useful, and in particular the wording in relation to original VAT invoices and what to do when asked for documents when abroad.

 

[aluijten]

As I said, if you can reference the law that says it is an offence for a private individual to own a boat without evidence of VAT and give details of people who have suffered a penalty, then I am quite happy to say I am wrong in my understanding.

I never said that was the case. The offence is that a boat is kept in EU waters and no VAT has been paid for the boat. As you are the owner, the first they will turn to is you. Then you need to prove that the VAT omission was not caused by your (lack of) actions.
In Holland by the way there is a law that says you need to perform adequate (this word alone causes many court-cases) research in goods you buy. So a simple "I wasn't aware" doesn't cut it. You should be able to make the case "I had no ways of knowing this". There is a difference.

The whole point about this is that you arrive with your boat via the sea and potentially from outside the EU.
So if you want to have you boat impounded during the time they investigate this or even just being hassled about this matter, you're welcome to it. For most people I'd say it should be avoided.
So even if your reasoning is true (which I do not believe is the case) you still end up in a lot of problems.

Let's agree to disagree