French Leasing

[wn6789]

I had organised all the funds I needed for the purchase of a cruiser, when I got an email from a company that offered "french leasing". This option would save quite a lot of money considering the VAT would be halved. I expect to keep the boat outside the UK, so it appears tempting.

There must be a downside. Who knows what the downside is?

Regards

 

[Plomong]

A boat leased under such a scheme cannot remain in Spanish waters for longer than X days, where X has been expressed to me on different occasions and by different officials as 1 month, 3 months and 183 days.

I don't know what regulations are in force in other countries, but in this area, some customs officials do spot checks and impound such boats until the paperwork is sorted -- that means: purchase the boat, register it in Spain, etc, etc

So much for free movement of goods in the EC. It seems that only applies to big business and not to the small fry, like you and me.

 

[wn6789]

Just to avoid any confusion, the leasing would come from france and the boat would be in spain, virtually 100% of the time. I can see though where you are coming from.

 

[Plomong]

A friend had this same problem. His boat was "impounded" by the Spanish customs "for circulating in Spanish waters beyond the max period allowed". They did not take the boat away, nor immobilise it in any way -- they just prohibited its use. He was allowed to run the motor and do other maintenance, but it was made clear that if caught under way he would be fined, and probably more drastic measures taken to ensure compliance.

The boat was impounded at the end of July and it took more than 6 months to clear the paperwork. It took even longer to rescind the impoundment, but once he had the necessary permits to navigate he did just that, and had no further problems, apart from the difficulties and delays in cancelling the impoundment.

 

[Anonymous]

You don't say what the deal is about. Why 50% VAT? If VAT is paid in any EU country then VAT is not payable again - period. If you bring a yacht to Spain - French or British flagged - and it is VAT paid you can leave it here for as long as you like - the spotlight is on you, the owner, not the actual boat. If you stay in Spain longer than 183 days in any calendar year then technically you are resident and technically an extra vehicle tax of 12% becomes payable along with a fine if you are caught. One point about the flag; if you are flying the French flag then you need to keep the yacht to French standards and hold the appropriate French quals.

Now, if the boat is not fully VAT-paid then you are in a different situation. You can get Spanish customs to seal the boat which allows you to live aboard but not go to sea. You can have the boat released for sailing for a certain number of days per year. The US cruisers tend to do this but there is a time period after which they have to get out of the EU to reset the clock. Some US friends of mine have just been through this and the time is several years, and you only need to be out for a day or so to reset the clock. If in the Med you could go to Morocco or Tunisia - the favourites for that. To get chapter and verse on that, look at some of the US cruisers sites but get back to me if you fail and I will ask my friends.

 

[tcm]

The downside is that the boat must be french registered, unles you can stipulate otherwise. French regulation means that stictly speaking you need to have qualifications (in french) for the vessel, and even uif they let that slide they won't let the equipment list for ther boat slide, nor the fact that you have to pay sailing tax.

I said "unless you can stipulate otherwise" cos i had a boat and did this, all fine, nice and cheap, but after two years i asked to transfer to UK registry and they sed ok! So do that, then you get the nice french leasing deal of almost negative credit cost, and no nasty french regulations.

 

[wn6789]

Thanks to everybody.
The leasing company does not tell you about these sort of problems. It makes sense that the spanish authorities dont like it that they have not received spanish vat when the boat is in spain for a prolonged period of time.
Want to sail in peace, so there ...

 

[Plomong]

The VAT is not the problem. It has been paid in full by the owner of the boat -- the French company that proposes to lease the boat to you.

Spanish authorities do not allow a French-owned (and flagged) leased boat to remain in Spanish waters longer than X days, as I explained in my earlier post.

Why?? Who knows -- maybe someone can explain it to me?

Does a UK-registered and owned boat need to be transferred to the Spanish register when the owner has resided in Spain for 183+ days?? If so, that would explain it.

As for this being a big problem, I think it depends on where you sail, in which port you are based, etc. And the interest the local customs officials put into searching for and dealing with such cases. The many foreign boats seen moored in Spanish Mediterranean ports cannot all be there less than 183 days!!!

 

[Anonymous]

[ QUOTE ]
Does a UK-registered and owned boat need to be transferred to the Spanish register when the owner has resided in Spain for 183+ days??

[/ QUOTE ]
Yes, you become liable to 12% import duty (not VAT) and you must re-flag to Spanish. Then you have to go and get a Spanish Padron de Yate qualification before you can sail it legally! Re-flagging is near to impossible with many boats, unless they are very new.

[ QUOTE ]
As for this being a big problem, I think it depends on where you sail, in which port you are based, etc.

[/ QUOTE ] Yes, down here they seem to be doing one marina per year.

[ QUOTE ]
And the interest the local customs officials put into searching for and dealing with such cases. The many foreign boats seen moored in Spanish Mediterranean ports cannot all be there less than 183 days!!!

[/ QUOTE ]They are allowed to. The boats can stay indefinitely, it's only if the owners are in Spain for longer than 183 days that you have a problem.

 

[Nick_H]

There are also Italian and Maltese schemes, which are both cheaper than the French scheme. All 3 schemes are based on the assumption that boats are mobile, and may therefore spend some of their time in the EU and some of it outside. Therefore when you make lease payments, you would sometimes pay EU VAT and sometimes not. Rather than argue the case with each boat owner, the gov'ts of the scheme countries have agreed standard proportions for EU and non EU use depending on the size and type of the boat.

Those countries offering the schemes then caught on that 8% of something is more than 9% of nothing, so there's a bit of competition to offer the best rates. Little Malta thought all its christmas's had come at once, and offered the best rates of all so that it could receive VAT on boats leased all over Europe. The bigger countries had a bit of a sense of humour failure over this, and "persuaded" Malta to apply some restrictions, most noticeable of which is that the boat must visit Malta at some time during the lease period.

 

[charles_reed]

Yes, very attractive and an inducement by the French government to promote purchase by charter companies for use in French waters.

Unfortunately you are categorised an a business, which leads to some considerable challenges in other waters (not notably Spain - but Greece, Turkey, Croatia)

 

[tcm]

No, that's not true. You are not classed as a business at all. The french VAT system works very differently from the UK, and the french leasing is specifically aimed at those who need to pay VAT ie private individuals. Those buyers get an ornage logbook (acte de franchisement) whereas a commercial coat er gets blue logbook(or not orange anyway).

The way in which it works is that the VAT rate in france is 19.6% but the clever govt frenchies reckon that since it's a boat, see, well then it could and would spend a fair bit of its time outside french waters, and the bigger the boat the more time it could spend away from french waters, and hence they give a discount on the VAT *provided* that you lease through a french leasing company/bank.
Under these schemes the effective VAT rate is reduced by up to 50% (ie 9.9%) but the boat is deemed "vat paid". Of course, the aim is to encourage (say, med) boat buyers to buy using french banks and pay french tax, instead of UK or other competing tax regimes, a tacit admission that their vat rate is too high.

Using the scheme fixes the repayments in Euros, ususally over three years and requires that the the boat is french flagged at least initially as far as I know. The french sailing tax is payabale each year and is not cheap, expect a few grand each year, find out first. There are also equipment levels legally enforceable so a policeman can board the board and nick you for not having enough fire extinguishers. Although avctually the equipment levels are sensible so that's not too much of a drawback really.

I suspect that technically you need a French Permis Bateau for a french flagged vessel, strictly speaking. This *could* be a real problem in the event of a moving-vessel accident, dunno.

After a couple of years I asked the bank if i could re-register as a uk vessel and they said yeah, ok.

One other drawback of leasing a boat is that technically the boat is not yours, and if the bank from whom you borrow the money gets into any difficulty then "your" boat is actually at risk. This is a bit of a long shot, i think, really and creditors would have to find the boat to repo it.

Overall the savings aren't huge and other schemes can save more (or all) VAT without faling into the clutches of the french tax system. I wouldn't do it again.

 

[wn6789]

it appears from my contacts in spain:
- leasing from a french company is commoan and does not cause any problems with spanish authorities as long as i sign a letter that i will not take the boat to the uk
- we assume sailing under a uk flag, and i do not stay in mallorca for more than x days (183?)

lets see ...

 

[Anonymous]

[ QUOTE ]
does not cause any problems with spanish authorities as long as i sign a letter that i will not take the boat to the uk

[/ QUOTE ]Does not make sense. Why would the Spanish authorities want to see a letter signed by you that you will never take the boat to the UK? Why should they care and what right have they to any say in the matter? If your contact is wrong about that it calls into question anything else he told you. The boat can stay in Spain/Mallorca for 'ever' with no problems as long as the owner is not resident in Spain (that's the 183 days issue). Of course if you are not the actual owner....but then again, you might be deemed to be the owner in this special case, it would make sense.