Tax on liveaboard boats... Who should sort this out?

[goeasy123]

Liveaboards and long-distance sailors risk having to pay sales tax/import duty multiple times on their ‘home’ because governments around the world (in particular Europe, Australia and the US) insist on treating boats in circulation as tradeable goods. Surely some organisation that represents us could take on sorting this out??

 

[nortada]

Liveaboards and long-distance sailors risk having to pay sales tax/import duty multiple times on their ‘home’ because governments around the world (in particular Europe, Australia and the US) insist on treating boats in circulation as tradeable goods. Surely some organisation that represents us could take on sorting this out??

With regards to Europe, at present, doesn't proof of VAT paid, backed up by a T2L (if requested) resolve this problem.

 

[BobnLesley]

With regards to Europe, at present, doesn't proof of VAT paid, backed up by a T2L (if requested) resolve this problem.

And elsewhere - that we've been anyway - there is a period of grace before any duty's levied; generally this is a year, though French Poly was 2 years and I believe it's the same here in NZ and in Aus. In the USA as I recall the tax liability was generally a state levied rather than federal tax, but again, there was no liability until you'd been continuously within that single state for 3 - 6 months and I've never heard of a foreign-flagged vessel being chased even when they'd exceeded the period. Unless you plan to take up long term residence in a single country this is a non-issue.

 

[goeasy123]

OP here. My point is... Yes, there are grace periods and Europe has an inter-country system, but you've bought a product paid sales tax and duty on it, you add no value to it and a state then demands you pay again.... and again.... just because of your travel timing. And yes many countries don't bother, but if they do you're screwed.

For example, if you leave Europe (VAT paid boat) and take more than 3 years to circumnavigate when you return you lose VAT status. Then Portuguese customs, with no grace period or warning, can impound your boat (which they have done) and demand payment before you get it back.

 

[BobnLesley]

OP here. My point is... example, if you leave Europe (VAT paid boat) and take more than 3 years to circumnavigate when you return you lose VAT status. Then Portuguese customs, with no grace period or warning, can impound your boat (which they have done) and demand payment before you get it back.

Do you know someone who has had this happen to them? and by that I mean 'know' personally, in the real world, not a third hand report about someone's cousin's friend that you've read on the internet?

Whilst I believe that you can theoretically 'lose' you VAT paid status in the manner you note, but after 10+ years cruising during which we've met hundreds, perhaps thousands of people who've exceeded this limit, we've yet to meet anyone who has had their boat impounded or had to pay a second lot of VAT?IVA; another non-issue.

 

[Refueler]

For example, if you leave Europe (VAT paid boat) and take more than 3 years to circumnavigate when you return you lose VAT status. Then Portuguese customs, with no grace period or warning, can impound your boat (which they have done) and demand payment before you get it back.

To quote the Colonel from 'Few Good Men' .. just spitballing here ...

If the owner of the boat who's been away for over 3 years still has his bill of sale / vat receipt or whatever - wouldn't it just be same as the guy who buys a second hand boat in say UK - moves to France for example and shows the historical paperwork to gain VAT paid status etc ? My Neighbour just did that with the MoBo he just bought in Sweden and brought here ... he had the original owners docs and showed them ... all fine.

Just asking what's the difference ??

 

[Graham376]

To quote the Colonel from 'Few Good Men' .. just spitballing here ...

If the owner of the boat who's been away for over 3 years still has his bill of sale / vat receipt or whatever - wouldn't it just be same as the guy who buys a second hand boat in say UK - moves to France for example and shows the historical paperwork to gain VAT paid status etc ? My Neighbour just did that with the MoBo he just bought in Sweden and brought here ... he had the original owners docs and showed them ... all fine.

Just asking what's the difference ??

The difference is that unlike now, UK owned VAT paid boats not in the EU on Brexit day lose their status. UK citizens can use Returning Goods Relief to take their VAT paid boat back to the UK after longer periods away than 3 years but they must have been the owners when it was exported. The EU has the same rule for its citizens.

 

[Refueler]

The difference is that unlike now, UK owned VAT paid boats not in the EU on Brexit day lose their status. UK citizens can use Returning Goods Relief to take their VAT paid boat back to the UK after longer periods away than 3 years but they must have been the owners when it was exported. The EU has the same rule for its citizens.

The OP post was not specifically EU ... he talks about the 'world' ... I was just spitballing to use the expression and as a question.

Not sure how other countries may act - but I know over here before EU - there was a 6 month rule on cars .. boats ... etc ... as long as you took them out of Latvia before 6 months elapsed - you could return literally next day and it could stay another 6 months.

 

[Tony Cross]

Liveaboards and long-distance sailors risk having to pay sales tax/import duty multiple times on their ‘home’ because governments around the world (in particular Europe, Australia and the US) insist on treating boats in circulation as tradeable goods. Surely some organisation that represents us could take on sorting this out??

The problem is, that boats are tradeable goods and people can sell them at any time and pretty much anywhere. Is it not that case though, that if you pay tax/VAT on importing it to a country you can claim that back again when you export it?

 

[Graham376]

The problem is, that boats are tradeable goods and people can sell them at any time and pretty much anywhere. Is it not that case though, that if you pay tax/VAT on importing it to a country you can claim that back again when you export it?

AFAIK, possibly if you're a VAT registered business but not as a private individual.

 

[goeasy123]

I believe the EU rule is... a boat loses VAT paid status if it leaves the EU and WITHIN 3 years if it returns under different ownership or has been modified it loses VAT paid status AND if it returns after 3 years under the same ownership it also loses VAT paid status. I.e. RGR cannot be used.

Now you may say the no-one has been caught, but the law is clear. It is the owners responsibility to declare return a therefor evicdence the VAT status on return. Not to do so is an offense. One should apply for 'special circumstances', but i don't know if this has been tested. Has anyone out there tested it?

 

[dgadee]

I believe the EU rule is... a boat loses VAT paid status if it leaves the EU and WITHIN 3 years if it returns under different ownership or has been modified it loses VAT paid status AND if it returns after 3 years under the same ownership it also loses VAT paid status. I.e. RGR cannot be used.

You must have worked as a legislative draftsman. Too many ands and if and withins for me to scan this properly. Is your final AND not supposed to be an OR?

 

[goeasy123]

dgadee,
If a boat leaves the EU and is sold when outside the EU it loses VAT paid status.
If a boat leaves the EU and is substantially worked on before it returns is loses VAT paid status.
If a boat leaves the EU for more than 3 years it loses its VAT paid status even if it is returned by the same owner.

.... I think!!?

 

[Graham376]

If a boat leaves the EU and is substantially worked on before it returns is loses VAT paid status.

VAT would be due on parts fitted and maybe on increase in value of boat but not on the complete boat.

 

[goeasy123]

VAT would be due on parts fitted and maybe on increase in value of boat but not on the complete boat.

I beleive the wording of the EC rule says the whole boat.

 

[Graham376]

I beleive the wording of the EC rule says the whole boat.

Do you have a link?

This is from VAT notice 236 -

Goods temporarily exported for process or repair in a third country aren’t eligible for RGR on re-importation (unless returned unaltered). You should use the OP relief arrangements in Notice 235 Outward processing relief for those goods

We will allow RGR on goods which did receive some treatment outside the Union as long as:

(a) the treatment was limited to:

maintaining the goods in sound condition, for example routine servicing or lubrication of machines

handling which only altered the goods’ appearance, for example affixing of operating instructions in foreign languages

carrying out unforeseen repairs or restoration work on goods which were found to be defective or unsuitable for their intended use, or suffered damage, provided the work (including incorporation of any spare parts):

was solely to allow them to be used as intended
-
didn’t increase their value at the time of export from the Union (NB if value did increase, the OPR charging rules under ‘(b)’ will apply)

 

[STILL AFLOAT]

I do not undertand this thread !
I have sailed all over the northern atlantic, from 1990 to 2005, and I have never experienced anything, other than clearing in and clearing out, and long term stays, in the Canaries.
So , Im with BOBnLESLY, on this .

 

[Stingo]

I hope a tax boffin can come along and either correct me or confirm that there is no VAT on your Principle Primary Residence. If you are a permanent liveaboard and have no other residential address i.e. you only have one PPR, then you'll not have any VAT issues, even if you are returning to the UK after an extended absence. Again, this needs confirmation from someone in the know, but you cannot sell your boat within 18 months of your return.

 

[goeasy123]

Graham376: I'm not sure where I read it, but I think was in a translation of an EU state other than the UK's implementation of https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02013R0952-20190515&from=EN

Article 203 "5. The relief from import duty shall be granted only if goods are returned in the state in which they were exported."

The UK's notice 236 is not too bad. My worry is other states.

 

[Graham376]

The UK's notice 236 is not too bad. My worry is other states.

I wouldn't worry about it, they don't know what state your boat was in when you left and who's going to tell them you've updated it?