Tax Status on 2nd hand yachts

[twodragons]

People,

For the last few months i have been trawling through sites such as yachtworld.com, looking for a used boat to use for med cruising. I believe that if a boat is originally purchased for charter purposes, then it is tax exempt. Is this correct? Also, if this is the case, what are the implications for the next owner, is he liable for the tax on this vessel, and if so at what rate, and on what value? The initial purchase price, the re-sale?

Also, if the second owner also uses the boat for charter (or at least registers it as such, and charters it for, say, two months of each year) is he still liable for tax, or does the exemption continue.

I realise this information must be burried somewhere on this site, but i have been digging to no avail.

I thank you all.

Rob.

 

[tome]

I believe you are talking about the VAT status. A charter boat is VAT free until it is sold when VAT has to be paid by the new purchaser on the resale price.

If you are thinking of charter, then I believe you have to be VAT registered to reclaim the VAT and of course you will need to maintain the commercial coding of the boat. When you sell the boat, you will have to charge VAT and hand this amount over.

 

[DaveNTL]

On a slighty different tack - I see that you are in Abu Dhabi - if you are a UK citizen and have qualified as non-resident for tax purposes - it might be worth your while, if you can be bothered with all the palava - to buy a boat from a non-tax paying country, or even a non-EU tax paying country where you can avoid the local tax, and bring it to the UK (not sure about other EU countries) as 'household possessions' and avoid paying VAT.

Essentially it's no different to the many UAE expats who take cars back.

HM Customs will send you info on this and I'm sure details will also be on their website.

 

[twodragons]

Thanks for that. As it is, we will most likely be buying the boat somewhere like spain.

Am i right in thinking that if it is an ex-charter vessel, then even if it continues to be chartered under a new owner, it is no longer VAT exempt?

There seem to be a lot of VAT not paid boats about, are these all ex-charter, or is there some other link?

Cheers,

Rob.

 

[Alastairdent]

Teh guidelines have been changed, and VAT zero-rated status is hard to get.

Sail training and charter boats have never been VAT exempt or zero-rated in the UK.

However, trip boats and passenger vessels are VAT exempt

 

[dk]

Rob
Try rimging 0845 723 1110 for HMC&E VAT advice on private/charter yachts.
D

 

[smee]

[ QUOTE ]
There seem to be a lot of VAT not paid boats about, are these all ex-charter, or is there some other link?


[/ QUOTE ]
The "VAT not paid" boats could have come from Gib or Turkey, or have been owned by companies. You can only keep the VAT unpaid status of a charter vessel if you buy it as a company, and are VAT registered - even then (I think) you would have to pay it, but it can be reclaimed.
Otherwise if it passes into private ownership VAT will be payable --- and if you do have to do that then the cheapest place that I know of to do so is in Spain where not only is the VAT rate cheaper but the values deemed to be taxable are too!

 

[jfm]

TwoDragons, the comments made above on this thread are all a bit UK VAT focussed, and hence not quite right for Med. Med VAT is different from UK VAT.

Also, DO NOT ring HM customs. This is complex stuff, and clever tax people do not work in call centres. What knowledge they do have of VAT will be UK VAT, which is different from Med VAT (even tho it is all meant to be harmonised)

Ex VAT med boats are -if well set up- usually registered as commercial boats and this allows the boat purchase price to be VAT free (zero rate). A secondhand buyer can buy the boat without VAT, and continue to benefit from the exemption, provided he maintains the same commercial status. The rules for commercial status vary in each country but as you say, this generally involves chartering the boat to third parties and/or yourself. There are some clever bells and whistles you can introduce here, not sure I want to write them all up here

The detail rules vary by country. Eg in France you do not have to pay VAT when you buy 2ndhand boat then reclaim it, you just buy an ex-VAT boat at ex-VAT price, but the catch is you must have one permanent full time crew person employee. In Spain (I'm less familair with Spain) I think you dont need the crew and I think you only pay the exVAT price, ie you do not the VAT when you buy the boat then reclaim, but I'm not 100% sure of that (I'm 99%) so you wd need to confirm, and the rules for maintaining commercial status are a bit tougher in Spain i think, other than the no need for paid crew. Italy is different again, quite heavy on paperwork.