Regularising VAT status in the EU.

[dtynan]

I thought I'd ask this here, as I've never really seen any commentary around it (from my Google searches at least).

Some friends in Ireland co-own a boat in Greece which they bought as a consortium in 2004 or so. They bought the boat ex-charter, and had it removed from the Greek registry. For some reason, there is also a document releasing the boat from the UK registry (Small Ships Register) so it seems to have been on the SSR at some point as well. Given that the SSR release cert lists the consortium owners, it looks like it went from the Greek registry to the SSR to these guys. Anyway, there is zero data showing VAT status of the boat. Given that it's around 40 years old, there isn't a prayers chance of finding an original invoice. It also looks like the charter company probably bought the boat initially with a VAT exemption. They're now trying to sell this boat, and to say the title docs are a mess would be an understatement. Given that they don't want a huge amount of money for the boat, is there some way to retroactively pay VAT and show VAT-paid? From my non-lawyer, non-accountant perspective, it would seem that they should have paid VAT in Ireland in 2004 when they bought the boat as it passed from a company to private ownership. The problem is (again as I see it) is they can't go back and retroactively pay the VAT from then as they would be liable for 21 years of interest and penalties. Plus, the current value of the boat doesn't compare with what they paid back then.

In short, is there a way to just pay VAT *somewhere* based on the current value of the boat in order to sort out a long absence of proper VAT status? The consortium want to sell the boat and as it stands, buyers aren't that keen on vessels with VAT issues.

 

[Tranona]

There is no mechanism for paying VAT retrospectively. VAT is a transaction tax, not a tax on the asset. The transaction that would trigger VAT payment is when it is sold by a VAT registered entity to a private person - in this case when the charter company sold it to the private buyer. However Greece in that period might have been termed "another country" as prior to 2004 it did not comply with the EU VAT directive on VAT in relation to charter boats. You are correct that charter companies are able to reclaim VAT on purchase, just like any other business but now would charge VAT if they sold to an EU resident. In those far off days this was ignored and ex charter boats were sold without VAT but maybe with a piece of paper with lots of stamps on it from the local tax office saying effectively that all VAT requirements have been met.

As I say this was changed in 2003/4 when the Commission finally forced Greece to comply with the directive - part of that ongoing battle between the Commission and the Greek government to improve its tax collection processes. I know all this because I bought a new boat in 2001 through a Greek charter management company VAT free but well aware that by the time full ownership was transferred to me (2007) some VAT would be payable, probably based on the written down value rather than the original cost. That is exactly what happened and the boat became VAT paid and free to move as "union goods" with the VAT receipt from the management company as evidence.

Unfortunately your friends are not in that position, but they are not alone - there are hundreds of old boats in that position in Greece and the best the buyer can expect is a decent trail of title. The key thing in Greece is to ensure that the owner and boat can get a transit log to continue using the boat in Greece. Presumably they have a transit log now so it should not be a problem for the new owners to take that over.

Just to clarify things on registration. It is quite normal for an ex charter boat to be removed from the Greek register and then re-registered on the SSR (if the new owners qualify) - that is exactly what I did. Registration though is nothing to do with VAT status, nor is the citizenship or residence of the owners. However since Brexit there has been some confusion in Greece (what a surprise) about UK registered boats that are considered VAT paid in the EU (like your friends' boat) and their eligibility for an unlimited transit log, but from what I hear this has been resolved. BTW there is absolutely no reason why VAT should have been dealt with in Ireland - it is payable in the EU state where the transaction takes place, not where the buyers are resident.

I hope this clarifies the situation, although I appreciate it may not help much in how the boat is presented to potential buyers. On the other hand they are not alone and boats change hands all the time even in the absence of "clean" paperwork. It may be worth selling through a local broker as they will have come across all these issues and know how to get round them.

Hope this helps

 

[Irish Rover]

@Tranona is our resident expert in these matters and has pretty much said it all. However, there are some facts missing from the OP which are probably relevant, and may help.
Is there a Bill of Sale, contract, invoice from the original sale circa 2004 to your pal's consortium. If so, does it show anything about tax? Does it have official stamps?
Is the boat currently registered - what flag does it fly? Are the current owners paying the cruising tax - Tepai? Where was the boat on 31/12/2020, and is there proof?

 

[lustyd]

There is no mechanism for paying VAT retrospectively.

Not strictly true, there are many ways to pay VAT. One would be to sail the boat elsewhere and then “import” it. That may cause other issues but would sort the VAT.
In the UK you can also contact HMRC who would either provide a bill or send a document confirming status. I have friends who received such a document proving status of their yacht. Europe have similar authorities who can be contacted to rectify the situation, although language may become an issue.

 

[Irish Rover]

Not strictly true, there are many ways to pay VAT. One would be to sail the boat elsewhere and then “import” it. That may cause other issues but would sort the VAT.

I was thinking along those lines as well, but it would be important to establish the facts regarding ownership, registration etc first. You can't just show up at customs and say I want to pay the VAT on that yoke out there.

 

[dtynan]

Excellent advice, thanks a million @Tranona. That really helps. To add more detail, the boat was placed on the (short-lived) Irish "Small Craft Register" which was operated by the ISA (RYA equiv). They were shut down by the Government on the basis the register had no legal standing. Boats are encouraged to register on the Irish Ships Registry which is neither easy nor particularly cheap (ask me how I know!). So the SCR certification "expired" in 2015, but the boat carried an Irish flag. The only Bill of Sale is a signed de-registration cert from the UK registry which listed the new owners and the price paid. Yes, they have paid the cruising tax every year. The boat status on 31/12/2020 doesn't really apply as the boat carries an Irish flag. I don't think it was on the UK registry very long. But to answer the question, the boat has never left Greek waters and would have been on the hard on that date.

@Irish Rover, I bet you can show up at customs anywhere and say "I want to give you money". Whether it would resolve the VAT status or not is an entirely different question!

 

[seanav]

Surely the VAT that wasn't paid in 2004 was to the Greek Government not the Irish Government. as it was a Greek company selling to Irish Tax residents

Revenue , Irelands Tax collection agency, in my experience are usually helpful and known to display "common sense" within reason . As the VAT was not collected by the Greek Government and the Irish Government suffered no financial loss by the failure to pay it they may be happy to come to an arrangement

Certainly hiding the facts from them rarely does you any good in my experience , ntalking to them always yields better results

 

[dtynan]

Not trying to hide the facts from the Irish Revenue. The owners have been sailing this boat every year without issue, in Greek waters. The issue with the VAT status has only just arisen and as they're looking to sell the boat and prospective buyers have queried the status. But you're right, Irish VAT doesn't seem to apply.

 

[seanav]

Not trying to hide the facts from the Irish Revenue. The owners have been sailing this boat every year without issue, in Greek waters. The issue with the VAT status has only just arisen and as they're looking to sell the boat and prospective buyers have queried the status. But you're right, Irish VAT doesn't seem to apply.

Wasn't trying to imply you were , just my general experience of dealing with Revenue for 30 years as Self employed. and an SME owner that they are usually helpful when approached (Bit like the Garda , common sense usually trumps bureaucratic intransigence in Ireland still , thank God ....but theres always one!)

But don't think they have any skin in this particular issue, its a Greek VAT issue

 

[Irish Rover]

@dty

Excellent advice, thanks a million @Tranona. That really helps. To add more detail, the boat was placed on the (short-lived) Irish "Small Craft Register" which was operated by the ISA (RYA equiv). They were shut down by the Government on the basis the register had no legal standing. Boats are encouraged to register on the Irish Ships Registry which is neither easy nor particularly cheap (ask me how I know!). So the SCR certification "expired" in 2015, but the boat carried an Irish flag. The only Bill of Sale is a signed de-registration cert from the UK registry which listed the new owners and the price paid. Yes, they have paid the cruising tax every year. The boat status on 31/12/2020 doesn't really apply as the boat carries an Irish flag. I don't think it was on the UK registry very long. But to answer the question, the boat has never left Greek waters and would have been on the hard on that date.

@Irish Rover, I bet you can show up at customs anywhere and say "I want to give you money". Whether it would resolve the VAT status or not is an entirely different question!

I'm surprised they got dumped by the ISA. I helped sell a boat for a friend here in Türkiye around 5 years ago. It was owned by 2 friends and had an ISA certificate. One of the guys passed away and the other was able to get an amended cert from the ISA in his sole name.
I actually fully registered a boat I bought in Türkiye on the Irish registry around 15 years ago. I managed to do it all remotely from here via email and phone but it's not easy.
Your pals definitely are in a bit of a pickle. The boat has no current registration, so even if they find a buyer who's not going to ask for proof of VAT, the buyer will have a problem registering it without proof of deletion from another registry. Would another registry accept the long out of date SSR cert of deletion??
Depending on the value of the boat it might be easier and cheaper to find someone in Greece to take it off their hands.
PS - I've never seen a de-registration/ certificate of deletion with the level of detail you mention.

 

[Tranona]

Not strictly true, there are many ways to pay VAT. One would be to sail the boat elsewhere and then “import” it. That may cause other issues but would sort the VAT.
In the UK you can also contact HMRC who would either provide a bill or send a document confirming status. I have friends who received such a document proving status of their yacht. Europe have similar authorities who can be contacted to rectify the situation, although language may become an issue.

That is not true. There are not "many ways" of paying VAT. While the letter confirming status is possible it relies on you providing sound evidence that VAT was paid or that the boat is "deemed VAT paid" on account of its age and location on the qualifying date in 1992. Similar letters/certificates are also issued in other EU states where official records of VAT payments related to specific boats are more common. Unsurprisingly for reasons I explained, Greece is not one of them.

VAT payment can arise only from a transaction, the most common of which I described. Importing from outside the VAT area can also be a VAT transaction, but that does not help the OP who wants to sell the boat in the EU. The boat has EU VAT status - it just seems to lack evidence (like many old boats). It could lose that status by leaving the EU and VAT could be payable on return, particularly if it changes ownership in that period. However the current owners would be eligible for RGR up to at least 3 years.

 

[Tranona]

Excellent advice, thanks a million @Tranona. That really helps. To add more detail, the boat was placed on the (short-lived) Irish "Small Craft Register" which was operated by the ISA (RYA equiv). They were shut down by the Government on the basis the register had no legal standing. Boats are encouraged to register on the Irish Ships Registry which is neither easy nor particularly cheap (ask me how I know!). So the SCR certification "expired" in 2015, but the boat carried an Irish flag. The only Bill of Sale is a signed de-registration cert from the UK registry which listed the new owners and the price paid. Yes, they have paid the cruising tax every year. The boat status on 31/12/2020 doesn't really apply as the boat carries an Irish flag. I don't think it was on the UK registry very long. But to answer the question, the boat has never left Greek waters and would have been on the hard on that date.

@Irish Rover, I bet you can show up at customs anywhere and say "I want to give you money". Whether it would resolve the VAT status or not is an entirely different question!

I don't recall seeing a deregistration certificate from the SSR as you describe, although the Part 1 has more detail (although not anything about value) - I am looking at one now for my current boat. It is certainly not a recognised Bill of Sale. Pretty sure that when the boat was sold by the charter company it would have used the official Greek registry Bill if Sale as this is required for deregistration. It is an impressive document with lots of stamps on it and signed in the presence of the Port Police. This is the prime document of title. I am surprised that the syndicate does not have this if they bought it direct from the charter company. While they may have been lax about VAT Greeks are very particular about the integrity of their register and this part of the transaction is usually handled by a lawyer.

Having said all that it is what it is. On the plus side the boat is clearly an "EU" boat as owners are also EU residents and it is (notionally) registered in the EU. The Greek authorities, at least in terms of cruising tax recognise that. The issue is whether a potential buyer is happy with the incomplete paper trail and is able to both register the boat and comply with local requirements for continuing use in Greek waters.

 

[lustyd]

That is not true. There are not "many ways" of paying VAT. While the letter confirming status is possible it relies on you providing sound evidence that VAT was paid or that the boat is "deemed VAT paid" on account of its age and location on the qualifying date in 1992. Similar letters/certificates are also issued in other EU states where official records of VAT payments related to specific boats are more common. Unsurprisingly for reasons I explained, Greece is not one of them.

VAT payment can arise only from a transaction, the most common of which I described. Importing from outside the VAT area can also be a VAT transaction, but that does not help the OP who wants to sell the boat in the EU. The boat has EU VAT status - it just seems to lack evidence (like many old boats). It could lose that status by leaving the EU and VAT could be payable on return, particularly if it changes ownership in that period. However the current owners would be eligible for RGR up to at least 3 years.

You’re being overly black and white, and what I said absolutely is true. It gives OP some options for a way forwards rather than shutting them down and suggesting they’re stuffed, which they’re not.
As I said, there are many ways to ensure VAT status, but you have to be open to some thinking rather than blindly repeating the simplest option.
For the record, no, my friend didn’t provide much to HMRC aside from a letter explaining his situation. They replied with the certificate shortly afterwards with no further questions. Some people have been through this stuff, don’t tell them they’re wrong as they have the experience to say otherwise.

 

[Irish Rover]

You’re being overly black and white,

He's being more Blue and White . OP's friends are not dealing with HMRC, and your friend wasn't dealing with Greek customs.

 

[Tranona]

You’re being overly black and white, and what I said absolutely is true. It gives OP some options for a way forwards rather than shutting them down and suggesting they’re stuffed, which they’re not.
As I said, there are many ways to ensure VAT status, but you have to be open to some thinking rather than blindly repeating the simplest option.
For the record, no, my friend didn’t provide much to HMRC aside from a letter explaining his situation. They replied with the certificate shortly afterwards with no further questions. Some people have been through this stuff, don’t tell them they’re wrong as they have the experience to say otherwise.

No I am not. You said "there are many ways to pay VAT" and there are not. As to establishing "status" there are different ways - again as I explained, however none of them are available in this situation.

Your friend clearly supplied enough information to HMRC to satisfy them that they were able to confirm the status of their boat. No help to others without having specific details as such documents are individual based on the circumstances.

 

[dtynan]

Thanks for all the really useful info. I've been digging into this a bit more, and no it is not a de-registration cert. My mistake. The boat was transferred from the Greek registry (the original charter company sent me scans of those docs which was helpful) to the UK SSR and in 2010 was shifted to the ISA SCR and "re-flagged". What I thought was the de-registration cert is actually a bill of sale which is on an MCA document, listing the original consortium owners. The copy I've seen is actually on fax paper (!!!) with hand-written names and addresses! It would appear (to my uneducated eyes) that the charter company used the MCA doc (like an early version of MSF 4705) to transfer ownership from them to the consortium which confused me seeing as it was a Greek-registered boat and a charter company operating in Greece. As the boat was registered under the Irish SCR scheme (while it lasted), I assumed this was the de-registration cert. I have the Greek one as a scanned copy. @Tranona, as you said, I think this is a case of selling the boat with proper ownership title and no VAT status to a local Greek buyer who can attempt to re-register the boat on the Greek registry, or just not bother. It has been a learning experience.

My own boat is fully registered with the Irish Ships Registry (run by the Revenue, not the ISA). It incorporates proof of VAT status as well as ownership, because I had to prove the VAT status before they'd issue the cert. This service used to exclusively deal with large ships so they're not particularly used to dealing with the general, unwashed public. Also, the survey requirements were "interesting". Anyway, I think the reason the ISA Small Craft Registry got shut down is because it didn't really have much in the way of a chain of title as I understand it. It certainly didn't prove VAT status and wasn't guaranteed to be recognized by the more, uh, "diligent" of customs officials overseas. It's a pity. It provided an alternative for people who wanted to register their boats but didn't need all of the official stuff that the Revenue requires.

 

[westernman]

Generally speaking a private sale by an EU resident of goods legally belonging to him and present in the EU to another private person or company, resident or not, is not a transaction which has any VAT attached to it in anyway. And cannot have any VAT attached.

That company buying those goods, cannot deduct VAT (input tax). There wasn't any on the transaction. A private person is not a VAT entity and cannot collect VAT on the sale.
So basically, there is absolutely no reason for the Greek tax authorities to take any interest in the transaction.

If the transaction was from an company to a private individual, the company is responsible for paying the VAT to the tax collectors. Not the private buyer.

If you buy a second hand sofa from a private person, you don't ask for VAT certificates do you?

Of course if you are buying in one place and importing to another tax region, all kinds of things happen. Tarrifs, Import Duty, VAT, verification against standards (RCDII for boats, many others for toys, cars, ...).

 

[Irish Rover]

Thanks for all the really useful info. I've been digging into this a bit more, and no it is not a de-registration cert. My mistake. The boat was transferred from the Greek registry (the original charter company sent me scans of those docs which was helpful) to the UK SSR and in 2010 was shifted to the ISA SCR and "re-flagged". What I thought was the de-registration cert is actually a bill of sale which is on an MCA document, listing the original consortium owners. The copy I've seen is actually on fax paper (!!!) with hand-written names and addresses! It would appear (to my uneducated eyes) that the charter company used the MCA doc (like an early version of MSF 4705) to transfer ownership from them to the consortium which confused me seeing as it was a Greek-registered boat and a charter company operating in Greece. As the boat was registered under the Irish SCR scheme (while it lasted), I assumed this was the de-registration cert. I have the Greek one as a scanned copy. @Tranona, as you said, I think this is a case of selling the boat with proper ownership title and no VAT status to a local Greek buyer who can attempt to re-register the boat on the Greek registry, or just not bother. It has been a learning experience.

My own boat is fully registered with the Irish Ships Registry (run by the Revenue, not the ISA). It incorporates proof of VAT status as well as ownership, because I had to prove the VAT status before they'd issue the cert. This service used to exclusively deal with large ships so they're not particularly used to dealing with the general, unwashed public. Also, the survey requirements were "interesting". Anyway, I think the reason the ISA Small Craft Registry got shut down is because it didn't really have much in the way of a chain of title as I understand it. It certainly didn't prove VAT status and wasn't guaranteed to be recognized by the more, uh, "diligent" of customs officials overseas. It's a pity. It provided an alternative for people who wanted to register their boats but didn't need all of the official stuff that the Revenue requires.

I think the course you're now advocating is the wise one.
As I said earlier I too did a full registration in Ireland. I've since done the same in Jersey and the UK. The requirements are very similar including the Tonnage Survey but Jersey and the UK are dedicated one stop shop outfits unlike Ireland where I had to deal with a few different offices. I think the MMO rather than Revenue now issue the certs.

 

[billskip]

It is quite normal for an ex charter boat to be removed from the Greek register and then re-registered on the SSR (if the new owners qualify) - that is exactly what I did.

those far off days this was ignored and ex charter boats were sold without VAT but maybe with a piece of paper with lots of stamps on it from the local tax office saying effectively that all VAT requirements have been met

This is true, I bought a Greek ex charter boat, I re registered on SSR..
I was issued with a paper VAT paid,exempt or words to that effect

 

[lustyd]

No I am not. You said "there are many ways to pay VAT" and there are not. As to establishing "status" there are different ways - again as I explained, however none of them are available in this situation.

Your friend clearly supplied enough information to HMRC to satisfy them that they were able to confirm the status of their boat. No help to others without having specific details as such documents are individual based on the circumstances.

What a strange response.
There are many ways as i clearly showed. You clearly don’t understand tge subject as well as you would like to think.
Several are available in this situation, including the very simple one I mentioned. It might not be the most cost effective but it would be fast and efficient.

You really need to stop saying others are wrong when they aren’t. Your lack of understanding or agreement is not a prerequisite for my information being correct. Especially where you clearly have a gap of knowledge.