Selling UK vat paid yacht in Europe

[BacktoBoats]

I have searched but can't see the answer to this exact question.

I would like to sell my UK vat paid and registered yacht in the Med in Europe to UK residents. The yacht was in the UK on Brexit she is definitely uk vat paid not EU. I have seen suggestion that selling the yacht , which currently is in Europe under the temporary admission rules, is a breach of the rules and therefore EU vat will be payable upon sale. Is this correct?

( I know that it will lose uk vat paid status as the sale took place outside the uk.)

I have already asked the question about selling in Gibraltar and the answer was she loses UK vat paid status but nobody suggested that eu vat would be due. Would the situation be the same for other non Schengen countries eg Turkey, Tunisia, Montenegro, Morocco?


A 2nd question, could the new uk resident owners then import back to the UK under the IPA rules for refit work and short test sails without paying uk VAT? And if so how stringent are the refit criteria?

Thanks!

 

[j24jam]

1. EU VAT would not be due at the point of sale, however as you have pointed out you cannot sell the boat while in under TA in the EU, so the sale needs to complete outside of the EU (Non-EU country or International Waters), then the new owners can import the boat back into the EU under a new TA in their name.

2. Yes, the boat could come into the UK under IP scheme without UK VAT being paid on the boat or for the refit works, but the boat cannot be 'enjoyed' by the UK owners while it is here. Sea trials are allowed. The boat would be under the control of the company who has the IP for the import. What are you really asking about the stringency of the refit criteria?

We do refits for our clients under IP Rules in Hamble, we strictly control what happens during the refit as we are on the hook if anything dodgy happens. I doubt many other companies that offer this would turn a blind eye to playing the system...

 

[BacktoBoats]

1. EU VAT would not be due at the point of sale, however as you have pointed out you cannot sell the boat while in under TA in the EU, so the sale needs to complete outside of the EU (Non-EU country or International Waters), then the new owners can import the boat back into the EU under a new TA in their name.

2. Yes, the boat could come into the UK under IP scheme without UK VAT being paid on the boat or for the refit works, but the boat cannot be 'enjoyed' by the UK owners while it is here. Sea trials are allowed. The boat would be under the control of the company who has the IP for the import. What are you really asking about the stringency of the refit criteria?

We do refits for our clients under IP Rules in Hamble, we strictly control what happens during the refit as we are on the hook if anything dodgy happens. I doubt many other companies that offer this would turn a blind eye to playing the system...

Thanks for this . The question about refit was genuine, to understand what the rules are.

So do we believe a sale in any non eu country in the Med, including Gibraltar, will avoid the sale triggering the EU vat liability?

 

[j24jam]

Correct.

 

[jfm]

So do we believe a sale in any non eu country in the Med, including Gibraltar, will avoid the sale triggering the EU vat liability?

A point was made by j24jam and I'm wondering if it was slightly missed. Going to a non EU country will avoid triggering the VAT EU liability*, but you don't need to do that. You merely need to be not in any EU country, so you can just sail out of wherever you are into international waters, 12nm +, and deliver the boat to the buyer there, ie hand them the BoS and the keys. Then the new owner returns to EU with a new TA in their name (18 months).

It is irrelevant where the contract was signed, EU or not, but the delivery/handover must occur outside EU.

*By the way, the EU VAT wouldn't be triggered on the sale at say 20% of the sale price; it would be triggered by the sale, retroactively on your prior TA import, at say 20% on the value at the time you originally TA-ed the boat, and in some countries with interest payable for the time that has passed since you TA-ed it. The reason is that your sale of the boat breaches the conditions you were required to follow to qualify for TA. This VAT is your liability and there is no VAT payable by the buyer in this circumstance, except that if you were him you might be worried by the fact that many countries place a statutory lien/mortgage on the boat to cover their tax collection in the event you default on paying your import VAT.

 

[Graham376]

I've seen many UK flagged boats change ownership here in Portugal. The bills of sale don't have any location noted and the new owners have changed registration (SSR or Part 1) just as they would do if based in the UK. I don't know of anyone who has paid VAT on the sale.

 

[Tranona]

I've seen many UK flagged boats change ownership here in Portugal. The bills of sale don't have any location noted and the new owners have changed registration (SSR or Part 1) just as they would do if based in the UK. I don't know of anyone who has paid VAT on the sale.

Registration has nothing to do with VAT. It depends on the VAT status of the boat. If it is considered EU VAT paid, then no VAT due. If the boat is in Portugal under TA VAT is due if the buyer is EU resident. Non resident buyers can re-enter under TA so no VAT payable.

Of course the parties to the transactions you mention could be ignorant as to the rules and storing up problems if they have not complied.

 

[dunedin]

I've seen many UK flagged boats change ownership here in Portugal. The bills of sale don't have any location noted and the new owners have changed registration (SSR or Part 1) just as they would do if based in the UK. I don't know of anyone who has paid VAT on the sale.

If the boat is already Union Goods status, ie as in EU on Brexit effective date, that is quite correct. Wasn’t on Temporary Admission, so no issue there, and preserves Union Goods status for the new buyer (though if UK resident can’t bring back to UK without paying UK VAT).
Very different from OP

 

[Graham376]

Registration has nothing to do with VAT. It depends on the VAT status of the boat. If it is considered EU VAT paid, then no VAT due. If the boat is in Portugal under TA VAT is due if the buyer is EU resident. Non resident buyers can re-enter under TA so no VAT payable.

Of course the parties to the transactions you mention could be ignorant as to the rules and storing up problems if they have not complied.

I'm well aware registration has nothing to do with VAT. I was pointing out that new owners just reregistered the boats as if sale had been completed in UK, without any problem.

Some of the boats I'm aware of being sold here were under TA but no-one cares, authorities just want to see names on registration and insurance match passports if/when inspected.

 

[BacktoBoats]

A point was made by j24jam and I'm wondering if it was slightly missed. Going to a non EU country will avoid triggering the VAT EU liability*, but you don't need to do that. You merely need to be not in any EU country, so you can just sail out of wherever you are into international waters, 12nm +, and deliver the boat to the buyer there, ie hand them the BoS and the keys. Then the new owner returns to EU with a new TA in their name (18 months).

It is irrelevant where the contract was signed, EU or not, but the delivery/handover must occur outside EU.

*By the way, the EU VAT wouldn't be triggered on the sale at say 20% of the sale price; it would be triggered by the sale, retroactively on your prior TA import, at say 20% on the value at the time you originally TA-ed the boat, and in some countries with interest payable for the time that has passed since you TA-ed it. The reason is that your sale of the boat breaches the conditions you were required to follow to qualify for TA. This VAT is your liability and there is no VAT payable by the buyer in this circumstance, except that if you were him you might be worried by the fact that many countries place a statutory lien/mortgage on the boat to cover their tax collection in the event you default on paying your import VAT.

Thanks that is good detailed info. Can I ask if you have a source for this info that you can reference?

 

[Tranona]

I'm well aware registration has nothing to do with VAT. I was pointing out that new owners just reregistered the boats as if sale had been completed in UK, without any problem.

Some of the boats I'm aware of being sold here were under TA but no-one cares, authorities just want to see names on registration and insurance match passports if/when inspected.

Of course there won't be any problems with SSR if the new owner is UK resident under the SSR definition. However the boat will have lost its UK VAT paid status but can still be used in the EU under TA. The fact that local authorities are not interested does not change things. The VAT position is a matter of fact and where the transaction took place is irrelevant. At some point in the future the lack of compliance will catch up with them.

 

[Tranona]

Thanks that is good detailed info. Can I ask if you have a source for this info that you can reference?

That is one way of complying. Not sure the EU rules are prescriptive as implementation of TA is down to individual states. Croatia accepts the process described, but Greece (according to reports here from members) allows change of ownership if the boat is in bond. Their local law allows for TA to be stopped if the boat is not being used and documents lodged with Port Police, so the 18 months can cover several years' holiday use. As you can see from the current exchange Portugal seems to take a different approach!

It is a bit of a minefield and probably the best advice is to engage with customs in the state where the boat is going to enter/re-enter the EU to determine exactly what they require to comply with either TA or import. A local agent mat also be a goo idea.

 

[Graham376]

Of course there won't be any problems with SSR if the new owner is UK resident under the SSR definition. However the boat will have lost its UK VAT paid status but can still be used in the EU under TA. The fact that local authorities are not interested does not change things. The VAT position is a matter of fact and where the transaction took place is irrelevant. At some point in the future the lack of compliance will catch up with them.

Location has everything to do with VAT being due or not. As jfm points out, to avoid EU VAT being due, the sale has to take place outside the EU. Technically, as he says, being in international waters would suffice but anyone would have a hell of a job convincing anyone of that. As I've said before, standard bills of sale do not specify location. I can't think of anyone I know personally who has had a detailed inspection of historical boat documents.

Anyway, back to the OP, if the potential purchasers want to take the boat back to the UK and maintain its UK VAT status, they could take it back as delivery crew on behalf of the current owner and then complete the sale there. Taking it back to the EU afterwards would start TA again in their names.

 

[Tranona]

Location has everything to do with VAT being due or not. As jfm points out, to avoid EU VAT being due, the sale has to take place outside the EU. Technically, as he says, being in international waters would suffice but anyone would have a hell of a job convincing anyone of that. As I've said before, standard bills of sale do not specify location. I can't think of anyone I know personally who has had a detailed inspection of historical boat documents.

Anyway, back to the OP, if the potential purchasers want to take the boat back to the UK and maintain its UK VAT status, they could take it back as delivery crew on behalf of the current owner and then complete the sale there. Taking it back to the EU afterwards would start TA again in their names.

Read his post carefully. It is the physical location of the boat NOT where the documents are supposedly created or signed. It is easy to determine where the boat was with an AIS track. as I said, other states such as Croatia and Italy for example, accept this.

 

[Irish Rover]

As I've posted previously on the forum I bought a boat in Greece in 2017 which was in the EU under TA. The boat was actually on the hard and out of use at the time to prolong the TA and all papers were lodged with Greek customs. Everything was done openly with the full knowledge of customs, and they issued a new TA for 18 months.
My advice would be speak to the local customs office and hear what they have to say.

 

[robp]

If the boat is already Union Goods status, ie as in EU on Brexit effective date, that is quite correct. Wasn’t on Temporary Admission, so no issue there, and erUnion Goods status for the new buyer (though if UK resident can’t bring back to UK without paying UK VAT). We recently bought a small
Very different from OP

I'm well aware registration has nothing to do with VAT. I was pointing out that new owners just reregistered the boats as if sale had been completed in UK, without any problem.

Some of the boats I'm aware of being sold here were under TA but no-one cares, authorities just want to see names on registration and insurance match passports if/when inspected.

I'm not going to try and answer the original op's question on the VAT appertaining to geographical transactions. However, where the vessel is now and will stay, and it's registration, might have some bearing at some time. In the current EU, different states handle things differently. There are many boats which have been here in Spain and UK flagged for many years. So far and in seven years, I haven't seen any response from the authorities. I'm sure it has happened but I've not seen any. Many have re-registered to a Polish flag. How long it will be before the Agencia Tributaria turn their attention to this, who knows? We recently bought a small yacht. In searching, our criteria was to find a boat with proof of VAT paid in Spain. Ours was registered elsewhere in the EU but was a simple process to put it on a Spanish flag. That then though attracts other, extra costs and restrictions. (I can detail that but don't need to for this comment). My point is, they are very keen here in finding untapped taxes. My belief is that if a transaction occurs on a UK registered vessel and the owners are residents, they will be open to investigation at some time

 

[Koeketiene]

Of course there won't be any problems with SSR if the new owner is UK resident under the SSR definition. However the boat will have lost its UK VAT paid status but can still be used in the EU under TA. The fact that local authorities are not interested does not change things. The VAT position is a matter of fact and where the transaction took place is irrelevant. At some point in the future the lack of compliance will catch up with them.

On the contrary, it changes everything.

There is no benefit to be gained from trying to be more catholic than the pope.

 

[truro expat]

Sorry if this is a daft question but how can you prove you were12 miles out when you sign the contract?
Would you take a picture of the chart plotter if no AIS.

 

[Tranona]

Sorry if this is a daft question but how can you prove you were12 miles out when you sign the contract?
Would you take a picture of the chart plotter if no AIS.

Yes, that could be one way. You only have to demonstrate that you have complied with the conditions to apply for TA. It is up to customs at the entry point to satisfy themselves you comply. Hence the advice to check with customs first as to what they will accept.