The 18 Month Rule

[Ian_Rob]

If you have to take a UK registered boat out of the EU for a period of not less than 24 hours every 18 months to avoid having to pay VAT again, what constitutes leaving the EU? Is it just a case of having the boat’s departure formally registered and leaving EU territorial waters for 24 hrs or is one required to have formal proof of the boat being in a non-EU country for 24 hrs?

 

[Tranona]

Don't think there is a clear answer as although the rule is simple its enforcement is up to each individual state. The perceived wisdom seems to be collect evidence such as a marina receipt from a non EU state. Don't think there is anything in the rules about 24 hours - indeed there is discretion to extend the period without leaving. Some have suggested that just having a track on your plotter to show you have been in international waters would be enough.

 

[LadyInBed]

I would have thought that a document / receipt of arrival and departure from the destination port would be the proof.

 

[Ian_Rob]

Don't think there is a clear answer as although the rule is simple its enforcement is up to each individual state. The perceived wisdom seems to be collect evidence such as a marina receipt from a non EU state. Don't think there is anything in the rules about 24 hours - indeed there is discretion to extend the period without leaving. Some have suggested that just having a track on your plotter to show you have been in international waters would be enough.

I was hoping that a plotter track or AIS position showing that you have simply left territorial waters would suffice but I guess that that could fairly easily be fiddled and therefore not regarded as sufficient proof?

 

[greeny]

Here in Portugal, plotter tracks were unable to be used as proof of location/route during the initial covid periods last year and this. Even boats coming across the pond that had technically been in isolation for 3 weeks or more, were still made to do 2 weeks quarantine on arrival here. Regardless of any other information or proof produced.

 

[vyv_cox]

I was hoping that a plotter track or AIS position showing that you have simply left territorial waters would suffice but I guess that that could fairly easily be fiddled and therefore not regarded as sufficient proof?

I have read claims by Australian and other liveaboards that plotter tracks were accepted by some countries in the Mediterranean.

 

[thinwater]

Doesn't this all sound a bit like intentional tax evasion?

Within the US there are states with high tax rates and states with none. Within the rules, there are exceptions for visitors. If you "visit" for 18 months, motor 3 miles to the territorial limit for 24 hours, and then return, are you a visitor or a resident play games? You know the answer.

 

[Tranona]

Doesn't this all sound a bit like intentional tax evasion?

Not at all. Exercising ones rights as part of the Brexit agreement, although the rules go back 30 years and were designed to allow genuine visitors from outside the EU to have access to EU waters for cruising. one of the few good things in Brexit - but only for a vey small number of people is the 18 month limit a bonus and does not offset significantly other losses as a result of the agreement.

 

[Ian_Rob]

I think that the EU will eventually realise that it is actually to their financial advantage to extend both the 18th month rule and the 90/180 day rule.

 

[starfire]

I think that the EU will eventually realise that it is actually to their financial advantage to extend both the 18th month rule and the 90/180 day rule.

If not individual states breaking ranks ?

 

[Graham376]

If not individual states breaking ranks ?

That's more likely, some turning a blind eye rather than expecting the EU to change policy for a few boaters who chose to leave the club.

 

[thinwater]

Not at all. Exercising ones rights as part of the Brexit agreement, although the rules go back 30 years and were designed to allow genuine visitors from outside the EU to have access to EU waters for cruising. one of the few good things in Brexit - but only for a vey small number of people is the 18 month limit a bonus and does not offset significantly other losses as a result of the agreement.

That is a suitable rationalization for breaking nearly any law. No dice.

 

[Graham376]

Doesn't this all sound a bit like intentional tax evasion?

Within the US there are states with high tax rates and states with none. Within the rules, there are exceptions for visitors. If you "visit" for 18 months, motor 3 miles to the territorial limit for 24 hours, and then return, are you a visitor or a resident play games? You know the answer.

Not tax evasion at all. The boat can be there for 18 months but the crew/owner are limited in our case to 90 days in 180 or in other third country cases, the length of a visitors visa. Being time limited to 90 days at a stretch, we can't be considered residents. Anyone classed as resident would have to pay tax on arrival, no 18 months grace.

 

[Ian_Rob]

There will be very few who who will leave their boats in the EU over 18 months and thus makes themselves liable to paying VAT again. The loss to the EU economy of forcing boats to leave must far exceed any VAT gains.

 

[Deleted member 36384]

The 18 month rule satisfies the EU and owners of the large charter yachts. For example: a yacht can sail to the Mediterranean and charter for a season, layup in the EU in winter for some reason such as refit, charter again in the Mediterranean the following season and then sail to the Caribbean for the winter season, thus not impacting the 18 month tax rule. It attracts large charter yachts to EU waters and benefits EU yards, without threatening tax.

The vast majority of yacht owners will not be impacted as residents, hence it can be considered a special case to help a EU business such as tourism and yacht maintenance.

 

[stranded]

Doesn't this all sound a bit like intentional tax evasion?

Perfectly lawful tax avoidance by the sound of it. It would be easy for the EU to introduce an “and no return within…” clause if they wanted to.

 

[Tranona]

That is a suitable rationalization for breaking nearly any law. No dice.

Not breaking ANY laws - but complying with a new set of rules under a treaty which stated that when the UK left the EU rules on boats became the same as for any other "third country", including the US. So you could take advantage of them just as many of your fellow citizens do.

 

[Portofino]

Italy accepts AIS tracks ( plotter position) in international waters for new yacht transactions.
As said above to boost local yards and the SY industry.
So when a 3 rd party acquires the NEW boat “ tax not paid “ they just sail 12 mlies + offshore , sign what needs to be signed , do the money transfer s etc while it’s considered outside the EU .
How ever someone normally takes there notary along .
As said no time limit , they return that day so the notary can go home .

This is of course different to re zeroing a 18 m stint but a precedent has been set circa 2014 ish of what’s acceptable in terms of leaving the EU .
This example enables 3 parties ( none EU citizens) to buy EU manufacturers ( normally SY s ) easily tax free then re in port them under TI , sail back to port the same day .


The killer Q is if sailing outside a 12 mile limit , with a suitable AIS print off counts for a purchase, then it ought to count for a exit / re entry under the TI rules ??

As said above traditionally folks at the end of the 18 m have sailed to a none EU Med state and taken a date pic / got a marina receipt - stayed a min of overnight which where is the “24 hours “ phase cropped up .
You could just top up tanks and turn around , but a marina receipt is bit more concrete and should pass deeper investigation by a officialdom after they contact the said marina and see it’s copy of its visitor list on those dates .

As said nowadays with tech ( AIS traces / prints ) I suspect it’s going to become far less arduous and international waters will gradually be acceptable .

 

[pandos]

I think that the EU will eventually realise that it is actually to their financial advantage to extend both the 18th month rule and the 90/180 day rule.

Bless your cotton socks for thinking that EU countries think like that...

 

[Ian_Rob]

The 18 month rule satisfies the EU and owners of the large charter yachts. For example: a yacht can sail to the Mediterranean and charter for a season, layup in the EU in winter for some reason such as refit, charter again in the Mediterranean the following season and then sail to the Caribbean for the winter season, thus not impacting the 18 month tax rule. It attracts large charter yachts to EU waters and benefits EU yards, without threatening tax.

The vast majority of yacht owners will not be impacted as residents, hence it can be considered a special case to help a EU business such as tourism and yacht maintenance.

As an aside and for no other reason than trying to understand all this better, isn’t it the case that boats brought into the EU under the 18th month rule aren’t actually allowed to be chartered??