Latest Brexit Scare

[RobbieW]

Another NASTY little twist reported in this article.
British boats thrown lifeline over double VAT after Brexit

Towards the end of the article
Ms Corkin warned that leaving a vessel in EU waters after 31 December could also cause EU tax liabilities for British boat owners. This is because the “VAT-paid” status currently enjoyed by British yachts in the EU only applies to EU-flagged craft. And after the UK leaves the EU and customs union, EU authorities may seek to charge VAT and duty on the value of the yacht.

Really bad news if this is the case
Us Med boat owners would have to register our boats under an EU country.
That would affect a huge number of boats.

Mike, that looks like the same article that has been discussed in Liveaboard, from here HMRC U-turn on tax on returning boats. Its incorrect as the flag has no bearing on VAT status, I have a friend with a US flagged boat kept in Italy that is EU VAT paid.

 

[jrudge]

EU vat paid ---- not UK Vat Paid!

 

[Hurricane]

I hope you are correct
These (so called) experts have a habit of being wrong.
In my experience, these forums have always got to the bottom of the facts - much more so than the "experts".

@RobbieW
The bit about returning boats to the UK does seem to have some authenticity - RGR etc
That US example is an encouraging example.
I have a similar thread running on the CHAT - I don't if you have been reading it.
These YBW forums have a lot more coverage and expertise but both forums are useful in this matter.

@jrudge
Thanks - maybe that is a big fat line that we can draw if things get difficult.

 

[Hurricane]

Contents of link in my post above updated
Here's another copy

 

[Hooligan]

@jrudge
Thanks - maybe that is a big fat line that we can draw if things get difficult.
[/QUOTE]
Jrudge is correct and this is very worrisome. In essence the risk will hang over everyone who has a British VAT paid boat. If the EU deem that the boat has paid no VAT in the EU regardless whether VAT has been paid in the UK (and thus deem it an import), they will or could decide to charge VAT. Changing flags is unlikely to make any difference other than perhaps discouraging customs boats from targeting British flags and hence your boat. Given the fact that to date the UK government attitude towards the EU has been fairly insulting (at least in my view) and the added fact that our government does not seem to care too much about protecting the rights and assets of its citizens who travel, I am not confident one can look to Boris for help here. I am open to correction but I suspect that the ONLY safe recourse is for all med owners of UK VAT paid boats to have TA on Jan 1 2021 regardless as to whether they have been in the med for years. This then becomes a really tricky one because if one applies for TA then unlikely you would ever be able to argue the case that UK VAT paid pre 2021 protects you. Ergo you would need to come in and out every 18 months - see post by Baggywrinkles.

 

[Portofino]

Lease it .
.Figure out how to set up a scheme from yourself or known entity back to yourself .
Theres a few red ensign Italian “ owner user main benefactor “ in our marina .
They are U.K. flagged because technically on part 1 because the lease is from a U.K. bank or finance house .

We were done ( 2nd time ) by guardi Finanza , guy spoke perfect Eng as if he has lived in eng speaking country .
We were fine as it’s originally a IT vat paid boat .You never get rid of the decal shadows on a blue hull + we have a paper trail back .
I asked him what the USP was all theses reds everywhere , VAT mitigation perfectly ok with it .
Thats all he was interested in btw the VAT angle .

So it feels to me theses are UK ( bank owned ) boats flagged with a red with EU benefactors for VAT mitigation.
If suddenly this does not count then the reciprocal IT owners association will be up in arms .
A lot do it .
Its a bit confusing as one expects a Eng speaking crew / owner .

Without completely wrapping my brain around it ( as a vat paid EU boat owner in the EU ) if theses Italians are getting round it or reducing the % then there may be a route for you guys , even if it’s owned by a EU bank or entity .Just a thought ,You will have pad the idea out yourself.

 

[studgies]

Argh so my plans to buy a boat in Corsica to bring it back to the south coast will cost me 20% on top when it gets to the UK? If so I need to change my plans :-(

 

[DavidJ]

So hypothetically if I wanted to sell my boat in Spain next year, would anyone want it? Both a EU or UK buyer would have the sword of VAT (IVA in Spain) hanging over them.
Have I got this right?
ps VAT paid in UK and boat taken to EU 15 yrs ago

 

[Hurricane]

So hypothetically if I wanted to sell my boat in Spain next year, would anyone want it? Both a EU or UK buyer would have the sword of VAT (IVA in Spain) hanging over them.
Have I got this right?
ps VAT paid in UK and boat taken to EU 15 yrs ago

Thats a good question.
I would like to think that the boat would keep its EU Goods status even after it is sold (to anyone) as long as it is sold in the EU.
I thought it was "Importing" it that triggered the tax.
Surely, if it is already an EU Good, it won't need importing.
Am I correct in thinking that?

 

[DavidJ]

Just making a reference to Hurricanes link and Ruth Corkin’s statement.
The new boat was £250k incl VAT of £50k
She is saying in round figures that the boat when imported back was worth £200k (depreciation of £50k) therefore £40k vat.
I can understand having to pay VAT twice but surely not pay VAT on VAT
I‘m suggesting the boat new was £200k plus VAT
After depreciation of £50k the boat was reimported at £150k plus VAT which is £30k not £40k

 

[Elessar]

A big problem is convincing the boat builder or broker to supply a UK built boat without charging VAT.
The reason is if it all goes "tits up" or if you don't cary out what you say, the boat builder/broker is liable to HMRC for the VAT.
Remember VAT is a tax on a transaction so (say for example) you claimed you would export the boat and didn't, the supplier is liable to VAT.
They would, of course look to you to cover the VAT but that is a risk they might not like taking,

They take the boat to Guernsey and you buy it there. Liability entirely shifted to the purchaser.

 

[Hurricane]

They take the boat to Guernsey and you buy it there. Liability entirely shifted to the purchaser.

I believe that a broker would still be reluctant to supply a boat from the UK into Guernsey VAT free.
I'm sure that they will do it but I think they would require some convincing.
I speak with experience.

 

[Hooligan]

Argh so my plans to buy a boat in Corsica to bring it back to the south coast will cost me 20% on top when it gets to the UK? If so I need to change my plans :-(
[/QUOTE
I think that it seems pretty clear for people with boats in the EU now. Make sure you have proof that it is VAT paid wherever and that it was in the EU on 31/12/20. After this you probably have some risk that some EU states may try a fast one. But not much you can do frankly as it stands today. Personally I would not fly the Ensign and maybe re register the boat in the EU - Malta or Holland. Won’t solve a VAT problem re where you paid VAT but may make everyone in the EU not look at you as a target. Sometimes matter over substance is important! If you are in EU and want your boat back in the UK then my conclusion is to get it back before year end if you want to be sure because I can almost guarantee there will be no hard answer. Anyone who voted for Brexit should stop whining. This is what you indirectly voted for so when you pay your tax feel happy because I assume you voted for a better Britain - apparently. Perhaps you could also volunteer to pay for those who didn’t vote for the insanity.

 

[volvopaul]

Just another thought .
How will the UK dealers who supply new boats here to buyers with a part ex in the EU / med etc stand ?
Will the boat taken in PX from outside the uk be de valued by 20% in order to allow it back into the UK to be sold on again , I’m thinking of the likes of Boats.co.uk , Princess MY at Swanwick , and numerous others that trade here in the UK which are constantly trading boats from abroad ?

 

[Hurricane]

Just another thought .
How will the UK dealers who supply new boats here to buyers with a part ex in the EU / med etc stand ?
Will the boat taken in PX from outside the uk be de valued by 20% in order to allow it back into the UK to be sold on again , I’m thinking of the likes of Boats.co.uk , Princess MY at Swanwick , and numerous others that trade here in the UK which are constantly trading boats from abroad ?

I think your example is quite straight forward.
Any new boats destined for the EU will be exported from the UK so no VAT would be due until they get to the EU where they will pay EU VAT.
I believe this is just like before.
In the past, people have paid Spanish VAT instead of UK VAT

But any part exchange boat will have to be imported back to the UK (effectively devaluing the boat) if thats what the broker wants to do.

As I've said before, you could look at this the other way round.
A used boat being sold in the Med to a UK citizen is worth more than a similar boat in the UK - I think!!!

 

[volvopaul]

I think your example is quite straight forward.
Any new boats destined for the EU will be exported from the UK so no VAT would be due until they get to the EU where they will pay EU VAT.
I believe this is just like before.
In the past, people have paid Spanish VAT instead of UK VAT

But any part exchange boat will have to be imported back to the UK (effectively devaluing the boat) if thats what the broker wants to do.

As I've said before, you could look at this the other way round.
A used boat being sold in the Med to a UK citizen is worth more than a similar boat in the UK - I think!!!

Sort of understood.
How would a med boat be worth more to import into the uk as it will only be worth market value plus it will attract a 20% Levy for it to be used in the uk .

UK boats will be less attractive to overseas buyers as I’d assume they will carry an EX EU vat status from next year , where before it was a level playing field , I’m talking about used boats that cannot have the vat status altered .
As of recent times the uk boats have been attractive due to the currency exchange rate .

 

[jrudge]

I think your example is quite straight forward.
Any new boats destined for the EU will be exported from the UK so no VAT would be due until they get to the EU where they will pay EU VAT.
I believe this is just like before.
In the past, people have paid Spanish VAT instead of UK VAT

if a new boat no vat will be paid. People will export every 18 months and keep it vat unpaid. This also solves ( for them ) the reimportation issue.

 

[Portofino]

Knock on effect is U.K. med bound boaters might just buy a EU vat paid ( most states have mandatory registration anyhow whereby VAT paid is prerequisite of entry on it ) .
This might add extra stimulus to that sector of the used market .
Or swing a decision to buy from say the huge range and span of a Ferretti group dealer or equivalent in the Med instead of Fairprinseker in the U.K.
Or seek out a fairprinseeker if you insist from a Med dealer .
You can still do factory visits and “control freak“ the build , but not change there for either.

More Eng voices at Cannes and Genoa and less crowded at SIBS .Life goes on ,

The thing not to do is buy one from a U.K. dealer with a view to take to the Med for while then bring it back .
Tiny % of the sales profile I would think .
Apart from a few ^^^ on here most I know have bought in the Med, when finished just sold it and moved on to the next .No bringing the thing to the UK .

The main worry for fairprinseeker is getting caught in the x fire a trade war tariffs bun fight , selling boats into the EU .

FG will rubbing there hands together in anticipation of the conquest sales for Brits wanting a new Med based boat .
Brits boats ( reputation aside ) could have eye watering price tags at Cannes / Genoa .
Flip side those on here ^^^ with a fairprinseeker all ready in the Med that’s actually a EU boat might see firmer residuals or even min depreciation.
Say a S/Sker Y 86 2 y old bought for £4M , .Replacement was £4.5 a doable increment with a few improvements, is now new with tariffs £5.2 M , so the listing price of the used boat VAT paid from the la Napoule Fr dealer looks good @ £3.9 M for a nearly new .

 

[Hurricane]

if a new boat no vat will be paid. People will export every 18 months and keep it vat unpaid. This also solves ( for them ) the reimportation issue.

Yea - probably - but that was the case before if they could convince the broker/builder to sell ex VAT

 

[Hurricane]

As of recent times the uk boats have been attractive due to the currency exchange rate .

Sorry, I said
A used boat being sold in the Med to a UK citizen is worth more than a similar boat in the UK - I think!!!
I meant
A used boat being sold in the Med to a UK citizen for use in the Med is worth more than a similar boat in the UK - I think!!!

UK boats will be less attractive to overseas buyers as I’d assume they will carry an EX EU vat status from next year , where before it was a level playing field , I’m talking about used boats that cannot have the vat status altered .

Yep - kind of what I was saying but the other way round