Slightly unusual EU VAT (etc) query

[prv]

The saga of the Infamous Ebay Speedboat continues!

Chris has had some professional work done on the boat, so while it still looks a bit scruffy it should hopefully now refrain from imploding, conking out, and steering round in circles. Just in time to take it (overland!) to Croatia where he will be working for the summer. He has a good tow vehicle, new wheel bearings on the trailer, and is used to driving long distances in connection with his job. However, a problem has arisen in the shape of import, export, VAT, and all the associated bureaucracy.

The problem is that he will be towing the boat out of the EU in a couple of weeks' time, and then shortly afterwards find himself back inside it as Croatia joins the alliance around him. He's apparently phoned HMRC several times and says they are even more confused than him - the only two practical suggestions were 1) delay the outbound trip until after Croatia has joined (not possible due to work schedules) or 2) do the trip anyway and "see what happens" (not a risk he wishes to take)!

As he points out, since he's not using the thing as a means of transport in or out of the EU, it should be no different to his car or a caravan, and nobody worries about getting stung for extra VAT when they take a caravan on holiday (or do they?).

At this rate he's going to end up not taking the boat at all, which would be a real pity as he's going to be based on a beach with a fair bit of free time in between bouts of work, and his boss has even arranged a bulk supply of petrol for the thing.

Any thoughts or advice about the bureaucratic aspects welcome.

EDIT: Please read the end of the thread for the current situation before answering the same questions over again. Thanks.

Pete

 

[PhillM]

I know that it may sound daft, but if he is really worried, how about towing it close to the border and then arranging storage for a few weeks? Then collect it later?

Depending on his route, I am sure you could find a caravan or storage site in Austria or Italy that would accept it for a couple of weeks.

It might even be an idea to try to get it through but if he gets to the border and they want cash, turn around and put it into storage. My experence of caravan sites in Europe is that they don't expect you to book, in fact often if you try, they will say they are full but if you turn up, then find a space.

 

[Deleted member 36384]

Surely the position is that he is not exporting anything out of the EU as it remains his property and no selling transaction has taken place? Then, when the country joins the EU, the boat then becomes in the EU and any fallacious import worries evaporate away at that time.

 

[Tranona]

No problem at all. He can freely take it into Croatia (although think he will find a significant charge for using it there) and return to the EU is covered by the Returned goods rules - provided he brings it back himself within 3 years. However, by that the time he comes back Croatia will be in the EU. Make sure he has his Bill of Sale to show he bought it in UK, get it registered on the SSR, copy of insurance and an appropriate certificate for himself such as an ICC.

 

[BrianH]

The potential problem lies with EU accession on 1st July when Croatia will assess all resident EU-registered boats for proof of VAT payment or having been "Deemed VAT-Paid" status.

Edit:
And if non-compliant they will be charged Croatian VAT at 25% after value assessment by a Croatian surveyor.

 

[bbg]

The potential problem lies with EU accession on 1st July when Croatia will assess all resident EU-registered boats for proof of VAT payment or having been "Deemed VAT-Paid" status.

Edit:
And if non-compliance they will be charged Croatian VAT at 25% after value assessment by a Croatian surveyor.

Do you have a source for that information? I will be joining a Brit-registered boat in a week or so in Venice, going to Croatia. I think the boat will stay in Croatia beyond 1 July. I would be very interested to know if the owner is going to get tagged with a big VAT bill just because he is in Croatia on 1 July.

 

[BrianH]

Do you have a source for that information? I will be joining a Brit-registered boat in a week or so in Venice, going to Croatia. I think the boat will stay in Croatia beyond 1 July. I would be very interested to know if the owner is going to get tagged with a big VAT bill just because he is in Croatia on 1 July.

There have been a number of threads with chapter and verse on the subject - one with input from a Croatian agent working for clients who have decided to take the Croatian offer of only 5% VAT by registering under the Croatian flag. It has been quite recently added to and long-running here on Scuttlebutt.

Your owner's worry mirrors my own and why I shall not be entering Croatian waters this year, which would be my normal cruising pattern. However, theoretically, visiting boats are not within their mandate for control - but after cruising regularly there for thirty years I know enough to be very wary.

Edit:
The thread is this one -
http://www.ybw.com/forums/showthread.php?339728-Croatia-EU-VAT-New-Advice!

 

[prv]

It might even be an idea to try to get it through but if he gets to the border and they want cash, turn around and put it into storage.

Trouble is, the risk is not over when he enters the country; the fact of having done so might create a liability that only surfaces on his return. That's his worry, anyway.

Pete

 

[prv]

Surely the position is that he is not exporting anything out of the EU as it remains his property and no selling transaction has taken place?

Nope, if you read the HMRC notes linked from the recent Channel Islands threads, you'll see that Customs consider you sailing your own boat out of the EU to be an export, even if its just to Alderney for a long weekend (but if you then re-import it within a certain time, the import costs are "relieved").

He's possibly confused matters because he's used to taking gear out for non-EU jobs "on carnet", which I understand as being a little like having duty-free goods in bond - you physically export the gear, but provided it all comes back again (every little thing has to be listed on the paperwork) it's treated as not having been exported and reimported. He was assuming he was going to use the same system for the boat, until I told him Croatia was joining the EU.

Pete

 

[Tranona]

Trouble is, the risk is not over when he enters the country; the fact of having done so might create a liability that only surfaces on his return. That's his worry, anyway.

Pete

There is good information on taking a boat into Croatia by road on the RYA site. I would be more concerned about complying with local regulations on using the boat than about potential VAT problems (because I don't think there are any). Would not be good if he trailed it all the way there and found he could not use it. The information sheet on the site lists all the things he needs to do and gives contact details of the Croatian authorities.

 

[Seven Spades]

I think his problems are unfounded. If you have a boat in Croatia on which no VAT has been paid then you might have a problem. But then you return after the 1st July you are returning from the EU so no one is going to take any notice.

 

[PhillM]

Trouble is, the risk is not over when he enters the country; the fact of having done so might create a liability that only surfaces on his return. That's his worry, anyway.

Pete

I can understand that, although I have no idea of its valid or not. I guess I'm saying get the boat close then see how the land lies closer to the eu membership.

 

[westernman]

Many years ago (1980s), I drove to Greece through Yugoslavia and Austria from Germany.

In Greece, they registered in my passport that I entered with a windsurfer on the roof. I was told that I had to leave the country again with it or I would be in big trouble.

Sure enough when leaving, when check the passport, the guy come out of his building to check that the thing on the roof of the car really was a windsurfer before crossing it off in the passport and putting a stamp over the entry record.

I would expect that if you are going to Croatia as a tourist and leave again within three months you will be in a similiar situation. I cannot see how VAT could be possibly due assuming you can prove you bought the boat from a private citizen resident in the EU (your bill of sale) and that it has not been exported permanently in the meantime.

 

[prv]

I would expect that if you are going to Croatia as a tourist and leave again within three months you will be in a similiar situation.

A) I'm not going to Croatia.
B) My friend Chris, who is, is going for work, not as a tourist.
C) I'm a little hazy about how long he's staying, but it could easily be more than three months.

Apart from that, all good

In fact I think Tranona (and others) are probably right, and import issues are a red herring. However, he may well have problems with other paperwork that he hasn't even considered yet. Doubt there is any proof of VAT (bought second hand, no paperwork as far as I'm aware), I know it's not on SSR, and although he did a PB2 through the Cadets while we were at school, the odds of him digging up that certificate now are zero.

Because no paperwork is required in this country, I don't think it occurred to him that it may be elsewhere.

Pete

 

[PhillM]

Tell him to print of the eBay listing showing it sold to him. That's your bill of sale.

Also worth printing off any PayPal transaction as well.

He can use that to register for SSR part 2.

 

[prv]

Tell him to print of the eBay listing showing it sold to him. That's your bill of sale.
[...]
He can use that to register for SSR part 2.

Yep, "bill of sale" is not a problem, but it won't show VAT which is the issue at hand.

You don't need a bill of sale to register for SSR - just fill in the online form and hand over your £25 or so. But he's off next Friday, so would it arrive in time?

Part 2 is for fishing boats . SSR is Part 3.

Pete

 

[Tranona]

Has he sorted out his competence certificate yet? Make sure his insurance covers Croatia, preferably with a translation of the certificate, otherwise he may have to take out insurance in Croatia. Check whether he has to buy a vignette (cruising permit), which I think is around 300 euros for a visiting boat.

 

[westernman]

Yep, "bill of sale" is not a problem, but it won't show VAT which is the issue at hand.

You don't need a bill of sale to register for SSR - just fill in the online form and hand over your £25 or so. But he's off next Friday, so would it arrive in time?

Part 2 is for fishing boats . SSR is Part 3.

Pete

The bill of sale proves that the buyer has no VAT to pay.

 

[PhillM]

The bill of sale proves that the buyer has no VAT to pay.

Agreed, here is what the HMRC website says (after giving a list of documents that you can use to prove VAT status:

If you are unable to provide any of the above for used vessels kept in the UK you should, whilst cruising within the EU, carry a Bill of Sale (if applicable and between two private individuals in the UK). Whilst this is not conclusive proof that VAT has been paid, it does indicate that the tax status is the responsibility of UK customs authorities. It is also advisable to contact the relevant authorities in the Member State you intend to visit, or their Embassy in the UK, to confirm what documentation will be required in advance of your voyage.

So the ebay sale will prove that the boat was purchased from an private individual and that there is no VAT due.

Howeve,r that only applies AFTER Croatia has joined the EU. Which brings us back to taking the boat to Italy or Austria and collecting it from there afterwards.

Last point, is excatly how much is this boat worth? 20% of a cheap boat, may in itself be worth the risk. He can prove what the boat is worth because he has a very recent sale document.

 

[Tranona]

Agreed, here is what the HMRC website says (after giving a list of documents that you can use to prove VAT status:

If you are unable to provide any of the above for used vessels kept in the UK you should, whilst cruising within the EU, carry a Bill of Sale (if applicable and between two private individuals in the UK). Whilst this is not conclusive proof that VAT has been paid, it does indicate that the tax status is the responsibility of UK customs authorities. It is also advisable to contact the relevant authorities in the Member State you intend to visit, or their Embassy in the UK, to confirm what documentation will be required in advance of your voyage.

So the ebay sale will prove that the boat was purchased from an private individual and that there is no VAT due.

Howeve,r that only applies AFTER Croatia has joined the EU. Which brings us back to taking the boat to Italy or Austria and collecting it from there afterwards.

Last point, is excatly how much is this boat worth? 20% of a cheap boat, may in itself be worth the risk. He can prove what the boat is worth because he has a very recent sale document.

Whilst in general that is good advice, as HMRC says a Bill of Sale is not conclusive proof of of no outstanding liability for VAT on a boat. All it indicates is that the last transaction was between two private individuals and therefore not a "chargeable event". The importance here is that this means any VAT issue is the responsibility of the state where the transaction took place. However there are circumstances where a previous transaction was a chargeable event, and VAT not accounted for, and where the liability stays with the boat. The most obvious is if the boat has at some time in the past been privately imported into the EU and not declared by the person who imported it.

Having said all that it is still a non issue in the circumstances described and the main concern is about complying with the legal requirements to use the boat in Croatia.