How to purchase a EU boat w/VAT by Non EU Citizen...Sold by Non EU

[Bohica]

Hello All,

First time poster....long time listener. Looking for advice on the following:

1) We are Canadians. Not able to get grandfathered EU passports.
2) Purchasing a "for sale by owner" boat in Turkey. Boat has VAT status
3) Flagged at present in UK
4) Present owner is an Aussie - living/working in Fiji
5) We will date the transaction so that it will give us time to move boat into Greece and get a marina receipt to prove that it was in
in EU when deal was finalized.

We intend to cruise the Med for the next 1 1/2 +/- knowing our Schengen visa is only good for 3 months at a time. In and out of the EU 3 months at a time. We understand the boat is good to stay in for up to 18 months and in Turkey for up to 5 years. We would intend to stay on the hook as much as possible and find suitable marina facilities when returning home. After Med probably Caribbean. We would like to maintain VAT status in case we wish to sell in the first 3 years.

1) Our questions would be where should / could we Register the boat?
2) How do we confirm the seller is the actual owner. Hire a marine lawyer , from Turkey, from UK, from Canada?
3) How to confirm there are no outstanding debts attached to the vessel?
4) Paperwork is held by owners rep in UK. Should I go there to continue reg?
5) Anyone know any good surveyors near Didim, Turkey?
6) Any fees and or mystery taxes to pay and to whom? Imagine depending on which country paper work is signed. BUT if we are faxing back and forth through notaries in various countries how does THAT work?
7) I'm getting a headache...
8) Understandably it is SO much easier when it happens all in one country but she is a nice boat.

Cheers Sten and Rita

Thanks in advance for your inputs

 

[Melody]

Oh my goodness, you aren't making life easy for yourselves are you?

I presume when you say the boat has VAT status you mean it is VAT paid? If VAT was paid in the UK and it is UK flagged, I'd suggest using a UK marine lawyer to check everything.

I'm not sure why you are considering bring the yacht into Greece as that seems to me to be opening up another whole can of worms. You'll need the correct paperwork and I don't know how you'll get that if you don't actually own the yacht when it comes into the country.

Unless I'm missing something you could just complete the legal side in the UK without moving the yacht and either get her put into Canadian flag or, if you can get a UK address, you could keep her UK flagged.

The nationality of the owner is irrelevant I think. It's the country the yacht is flagged in that's important. But I stress that I'm not a lawyer so could be completely wrong!

 

[Tranona]

Welcome to the forum

You really need a lot more information than you have given. Firstly there is no such thing as EU VAT status for boats currently outside the EU. On entry into the EU the boat is potentially liable for VAT unless it is eligible for relief. In the circumstances you are talking about the relief that may be possible is called "Returned Goods Relief". To use this relief, the boat must have been out of the EU for normally no more than 3 years and the person who is importing it must be the same as the person who has exported it. Simply carrying out the transaction in the EU is not enough. If the boat has changed hands outside the EU, even if both parties are EU residents it would not be eligible for this relief. So, at the very least (if ownership has not changed and it has not been out of the EU for more than 3 years) the current owner must bring it back into the EU before he sells it. It will need cast iron evidence that VAT has been paid, and good evidence that the boat was physically in the EU when the transaction was completed. The fact that the boat is owned by a non EU resident suggests that he might not be the person who exported it and therefore the chain is already broken. As ever, the devil is in the detail.

Registration has nothing to do with VAT status in this context. Where you register it will depend on you and your status. It is possible to keep the British registration if you qualify, but it will need to be on the Part 1 . This is OK if the boat is already on that register, but if it is on the SSR you cannot use that as it is only open to UK residents. Registering an existing boat on Part 1 is not easy if only because it will need a Tonnage Survey which can only be carried out by an approved surveyor. Having it Canadian registered would not affect VAT, but might cause you a bit of hassle with officials, but provided your paperwork is in order is easily dealt with as they will be more interested in you (if interested at all) than the boat.

You don't say where you are physically located, but doing all this at a distance is a real challenge. The best thing to do is to ask the owner (or his representative) for a copy of all the title documents. Original Builders Certificate, VAT invoice, all Bills of Sale and registration document plus evidence of when it left the EU. That will help get a fix on whether re-importation is possible using the relief. You then have to figure out how to achieve it practically. Doing it in Greece is possible, but as noted earlier it is the importer (or his representative) that has to get it there. You could use a Greek notary to notarise the Bill of Sale and keep any customs entry documents and marina receipts as evidence that it was in the EU.

As to confirming ownership, that is most commonly through a trail of Bills of Sale, and if the boat is on the Part 1 register then the title will be registered. You can also get a search for any registered finance on the boat. This is part of the normal due diligence that a broker would undertake and you may well find it helpful to employ a broker in the UK to do all this for you. Normally the purchase process is governed by a contract which binds both parties subject to agreed conditions, the two most obvious being that the boat passes a survey and that the seller has clear title to sell. There are model contracts and Bills of Sale available on line from www.rya.org, but again a good broker will do this for you as well as manage the financial side in a secure manner. You could use a marine lawyer, but that is likely to be more expensive and not necessarily better. There are experienced brokers that use this forum who have experience with complex cross border deals and if you want to go that route then i can give recommendations.

Hope this helps - and that the boat is worth the hassle!

 

[Bohica]

Hi Tranona,

Thanks for your in depth reply. We are exploring all our options. Thank you for presenting a few hadn't thought of. The boat is in Turkey at present. We would like to maintain the VAT but if it's not easily possible then we will reg in Canada. The main reasons for trying to keep VAT is so if we were to sell in EU it would be more attractive and probably get less of a hassle going in and out of countries. The boat is SSR so we mightn't be able to reg in the UK. I'll be coming to observe the physical survey and haul out as well as doing the sea trial. If all is good at that point then we will proceed. Now here's were we might follow your suggestion and use a broker to assist in the paperwork. So if yu could PM me with your recommendations that would be great!
Can I rant for a quick moment? What is up with this Schengen visa thing? Why would someone spend a month to cross an ocean and then try to visit all of Europe in 3 months? Now I would have to moor the boat for another 3 months. OK so the marina makes a little money off of me but I'm going to go OUT of the EU and spend my hard earned coin elsewhere. So I don't get to sail and the EU loses out on my cash. How does THAT make any economic sense? We just sent 4 months in Gib taking YM course and then 3 months less a day traveling around Europe. Just trying to make sense of it all. Phew!! I feel better. Sorry for talking your ear off.

Cheers And Thanks for your well worded advice , Sten and Rita

 

[Tranona]

If it is on the SSR then the title is not registered so extra care on ensuring the seller has good title and there is no finance outstanding. Easier to say than to do but most mainstream finance houses will require the mortgage to be registered or at least hold the original documents as security. So it gets back to seeing a good trail of clean Bills of Sale. Just to reinforce the point, registration is not connected with VAT except that if you then want to use the boat in the EU as a temporary import as you are entitled to do as a non resident, it will have to be registered in a non EU state. It is also possible to put the boat into customs bond (at least in the UK) if you want to sell it while it is still physically in the EU, so a non resident can buy it or if the buyer wants to use it in the EU they will be responsible for paying the VAT. The 18 month bit is less of a practical barrier as the clock starts again as soon as you leave the EU and subject to political constraints there are enough non EU states (Montenegro, Turkey, Albania in the East and the north african countries such as Tunisia, Morrocco, Gibraltar) to take a short break in.

As to Schengen, given not only the issues you have raised, but also the turmoil caused by the refugee crisis, you will appreciate why our government refused to join. An ill conceived and unworkable pie in the sky idea, which was great when the EU was a rich countries club and most cross border travel was temporary, but has failed miserably since the EU was expanded and mass migration started. No thought was given to people such as yourselves and although there are proposals to make it more accommodating to longer term non EU visitors, the proposals have got caught up in the wider issues and probably not high on the list of priorities among the EU headless chickens.

Suggest you try John Rodriguez www.jryachts.com Yoiu will see from his website the type of boats he deals in/