Move yacht from Croatia to jersey without paying VAT on route?

Seven Spades

Seven Spades

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Is there a way of buying a VAT free yacht in Croatia and moving it to Jersey without paying VAT on route? As far as I can see, I am likely to be asked to prove VAt status at any time along the way and being an EU citizen I am supposed to pay VAT at the first port of entry into the EU. Is there a way of getting around this problem, or am I wrong and it isn't a problem?
 
I believe you can buy a yacht VAT free in any country providing you intend to export it (I think ) within 6 months. Likewise you can bring a non-VAT paid yacht into the EU providing you re-export it within 12 months. Check up with Customs & Excise for actual facts rather than my understanding. The rules are there for, often for a good reason but they get changed if they are being abused.

Please let us know what you find out.

Are you just flying a kite. If you are thinking of buying an Elan , my understanding is that they won't sell a UK person one except through their UK agent. The Uk agent can supply it VAT free for export and why should Elan annoy their dealer who buys a number of boats to please a sole buyer. Been there & bought the tee shirt!
 
I assume you are an EU citizen (in VAT speak, a person who "belongs" in an EU country). In that case you cannot benefit from the temporary import regime

The best action is form a Jersey company (or a non EU trusted relative?) and make that the registered owner of the boat (on the part 1 register, preferably). Then the Jerseyco (being a non EU person) can benefit from temporary import, which means the boat can stop off in all the EU countries along the way.

If you are a UK taxpayer and buying the boat out of taxed money make the Jerseyco own just bare legal title to the 64 shares and retain beneficial ownership yourself (under a simple one-page trust deed) so as to avoid UK BIK tax issues

Also I wouldn't say you are *likely* to be asked to prove VAT status along way. More likely, you will never be asked.

I wouldn't bother asking UK customs. The poeple who man the call centres do not know complex stuff and you may get the wrong answer. Moreover, they will not comment on French, Spain, Italy, etc VAT. They only comment on UK VAT, which is the one VAT you dont care about in this case.

Is the boat big and professionally crewed? If yes, I would give you a different answer, but not relevant to a smaller owner-driver boat.
 
I wanted to buy the boat to put into charter management in the UK. If I could get it to Jersey VAT free, I could then bring it to the UK , pay the Vat here and then claim most of it back claiming input relief. If I pay anywhere on route as I am not registered in those countries I cannot re-claim the VAT.

The UK tax treatment is not a problem, the problem is to get it to Jersey without being forced to pay VAT on route.
 
Once you buy her, just register her in the UK with the charter company you aim to set up. Pay the UK VAT & reclaim it.
THEN you leave Croatia. You will have all the necessary paperwork should you get challenged along the way. There is NO requirement to have the boat physically in the UK for you to be able to register her here.
We bought Yanita abroad, we registered her BEFORE she left her foreign mooring, and had no problems in doing so.
 
You might get away with that if the officials dont understand what you're doing. UK has no VAT claim on the boat till it physically arrives in UK. So the VAT you pay in UK will not be lawfully due. If a VAT inspector in say France, en route, spots this he will (correctly) be able to regard the boat as non VAT paid and charge French VAT. Having purported to pay UK VAT wont legally make you non liable for the french VAT.

I accept you might get away with this, so long as the officials dont realise what's happening. That's assuming you can get the UK Customs to accept an import VAT payment (and issued a VAT paid certificate) in respect of something you have not actually imported, which I rahter doubt....

I know you can register a boat with Cardiff even if the boat is not in UK, but that has nowt to do with VAT

As a separate point, UK customs do not pay back input VAT just like that on boats bought by one-boat privately held charter companies. They often defer paying you the VAT refund, until they see some real VATable sales of charters and suchlike. Isle of Man VAT office repays immediately, but not UK mainland.
 
"So your point is...???" was unnecessarily arsey, yanita, no?

Well done to you if you got it to work. In a nutshell, what I was saying was "you might get away with this, so long as the officials dont realise what's happening."

I'd be interested in how you paid UK VAT when your yacht was not yet imported into the UK. If you found a way to do that then you're better at this than me, and I'd genuinely be interest to hear how it's done /forums/images/graemlins/grin.gif
 
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"So your point is...???" was unnecessarily arsey, yanita, no?

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No, it isn't. This sort of questions pop up regularly - whenever I offered a suggestion in the past, the next post was more often than not one of yours disagreeing with me.

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Well done to you if you got it to work. In a nutshell, what I was saying was "you might get away with this, so long as the officials dont realise what's happening."

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The way I suggested earlier was actually suggested to me by C&E Dover. UK C&E prefers you to pay VAT in the UK, not elsewhere in the EU.
If your boat is UK registered (Part I or III) it is technically UK territory, so you are liable for UK VAT, where ever it is.
 
OK, well I thought it was a bit arsey. I didn't realise I was disagreeing with you on a repetitive basis - I dont mentally log who I'm replying to. Sorry if it has looked like I'm picking a repeated fight, not meant that way. But even if I have disagreed with you a zillion times that's ok isn't it?

On the actual facts of your case I'm intrigued and thanks for clarifying what happened. I'm going to disagree with you agian though: you are quite wrong as a matter of law in saying: "If your boat is UK registered (Part I or III) it is technically UK territory, so you are liable for UK VAT, where ever it is." VAT liability is not triggered in a country becuase you are flagged there, nor is it avoided by flagging somehwere else. But the interesting thing in your case is that the C&E bods made this mistake, and you got an advantage out of it, so all excellent and well done.

If original poster followed your method he might well get away with it as you have done but there is risk he might not. Your position results from a mistake in law of a customs official, which happens, but you can't rely on that being repeated. Original poster is perfectly free to do as you did and take the same risks, it's his boat and money, but it's not unfair to point out the risk that he'll come up against a customs official who actually understands the law and applies it correctly, and then the whole thing is derailed. If that customs official happens to be one of the en-route countries then he faces having to pay the VAT again. All the countries would be perfectly entitled to disregard the purported UK VAT payment and charge it (correctly) themselves and they'd be correct, legally

I dont dispute you did what you did and that it "worked", all I'm saying is that it happened becuase the customs official messed up. You were lucky, in other words.

The only suggestion in this thread that avoids along-the-way VAT and doesn't rely on an official making a mistake of law is to register the boat in the name of a non EU person (eg a Jersey co) then sail it Croatia to Jersey without spending more than 18mths in an EU country along the way. That method of not paying VAT has the force of law in each country concerned as well as EU law, which is different from a might-work-but-not-legally-enforceable method, and it's perfeckly ok imho to point all that out to the original poster. I think, and imho......
 
Not quite true I believe .

Firstly if you pay Vat on a yacht in say Spain as your first point of entry, it is not unknown for the spainish C&E to value the boat low as tax paid to them is a benifit to their economy. If UK c&E suspect this they can levy VAT on the difference between what they consider the true value and the low "Agreed value".

Secondly if you buy a seconhand boat that originally was VAT paid but bought it say in the USA then if you bought it back to the UK as a new owner you are importing it and VAT is due on the purchase price/value.

The good news is that C&E don't appear to know all the rules themselves and are only staffed up to stop the regular abuses. They cannot go round checking the VAT status of every boat in UK marinas/moorings.

I am aware of a charter company who state that they were suprised by the various and different approaches different owners received from their local VAT office. I have spoken to C&E frequently regarding charter boats and they are always very helpful but on the last occassion the person dealing with my case (and about to grant the refund) found out at the last minute that they couldn't and needed to transfer my papers to a person in Portsmouth. I got the impression that a number of staff at the Portsmouth office are becoming specialists in boat VAT issues and trying to bring a uniform application of the rules.
 
Happy to agree to disagree but for the sake of the forum and the original poster it's useful if the correct legal position is stated.

You are 100% correct that (barring some esoteric exceptions, which we can ignore) once VAT is paid in ANY EU country, another country can not levy it again.

But there is a crucial proviso. The VAT paid in the first country must have been *lawfully* paid. If it wasn't, then the second country is able to charge its own VAT, and the punter ends up paying twice. This is a crucial rule as far as EU exchequers are concerned. If this rule did not exist, then any EU country could accept VAT payments on goods not imported into that country, in an attempt to deprive the country into which the goods were actually imported from collecting their own VAT. That would plainly be abusive and would allow any country could "bagsy" the VAT that really belonged to another country. To avoid this abuse the law has been written such that only VAT *lawfully* paid in country A can exempt you from paying VAT in country B.

I repeat, the VAT you paid in the UK on your yacht that had not been imported to the UK was not lawfully due and was not therefore VAT as that term is recognised in EU law. It was merely purported VAT. There is no UK law on our statute boooks that required you to pay VAT. It was in fact a payment made voluntarily or under mistake of law.

Think of the inverse. Imagine you imported a boat from outside the EU direct to UK, and when UK customs asked for the VAT you said "Ah, no need to pay, I have flagged the boat in Luxembourg and paid the 15% there even though the yacht hasn't ever been to Luxembourg". Do you think they'd let you off the UK VAT? In your dreams...... /forums/images/graemlins/grin.gif

So if the orginal poster did this, and the French (say) found out he had paid UK VAT on a yacht that had not been to UK, they could lawfully disregard the purported UK VAT and charge proper french VAT. I'm only pointing that out so those who want to do this know the risk they're taking

With respect to your last sentence, apart from cases resulting from mistakes by customs officials and a few esoteric exceptions, there are no boats (whether UK flagged or not - flag state is simply irrelevant) whose first country of EU import was not the UK but which are UK VAT paid.
 
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Firstly if you pay Vat on a yacht in say Spain as your first point of entry, it is not unknown for the spainish C&E to value the boat low as tax paid to them is a benifit to their economy. If UK c&E suspect this they can levy VAT on the difference between what they consider the true value and the low "Agreed value".

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This is a bit urban myth. Some UK C&E officials are reputed to have said it but I repeat these guys often do not know the law. The UK has no power to charge any VAT in this circumstance. They do have a power to take legal proceedings against Spain for not collecting VAT under the Treaty of Rome (not that they would over a few yachts....), but there is absolutely no law in the UK giving UK customs any right to charge this "top -up" VAT.

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Secondly if you buy a seconhand boat that originally was VAT paid but bought it say in the USA then if you bought it back to the UK as a new owner you are importing it and VAT is due on the purchase price/value.

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Correct. Easily fixed by contracting the sale after the boat has entered UK territory, and using options to manage the sellers risk of buyer pull-out

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The good news is that C&E don't appear to know all the rules themselves and are only staffed up to stop the regular abuses. They cannot go round checking the VAT status of every boat in UK marinas/moorings.

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Very correct!

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I am aware of a charter company who state that they were suprised by the various and different approaches different owners received from their local VAT office. I have spoken to C&E frequently regarding charter boats and they are always very helpful but on the last occassion the person dealing with my case (and about to grant the refund) found out at the last minute that they couldn't and needed to transfer my papers to a person in Portsmouth. I got the impression that a number of staff at the Portsmouth office are becoming specialists in boat VAT issues and trying to bring a uniform application of the rules.

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Yes this has happened over last few years. They are now delaying refunds of VAT on boats bought by one-boat one-owner charter companies, until they have seen VATable charter revenues returned on a VAT return. Thus the attractiveness of this route has reduced, ans Isle of Man has become more popular becuase they still promise instant VAT refund
 
Yanita: just a point of clarification, as this might explain why we disagree...

You said originally "We bought Yanita abroad, we registered her BEFORE she left her foreign mooring, and had no problems in doing so"

Can you spell it out some more. Did you buy her outside the EU? Was the first EU country into which you sailed her somewhere other than the UK?

Thanks
 
I think you have scarred him off. There seem to be only two real options ,1 foreign ownership Jersey or some other, or, sailing along the North African coast and then non-stop to Jersey which is not an attractive option.

Isn't it utter madness that the EU takes no account of this situation, it would be far more sensible if I could pay the VAT in the first port and simply claim input tax relief on my UK return. If they did this it would also remove the "Missing Trader" fraud that takes advantage of VAT free movements between VAT registered entities in different EU countries.
 
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I think you have scarred him off.

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No, he hasn't.

It's just a conversation going nowhere fast. He's already made up his mind. The people at C&E in Dover who gave me the advice in the first place, and every Douane along the way are total incompetents. No-one, apart from him, understands this legislation...
 
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