The ins and outs of vat for yachts cruising the Med.

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EchoBeach

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Hi, could any one out there please give me a rough giude to the implications of buying a yacht without the vat paid on it and then cruising the med on it. Thanks Paul.
 
Legally, if you are a resident of an EU country you should pay VAT.
If you are not a resident (like me, from America) you can purchase a yacht and not pay VAT as long as you leave the EU every 18 months.

But if you are purchasing a used boat that the VAT has already been paid on the current owner probably wants to recover some of that cost. There are boats for sale without VAT and all new boats can be bought without paying VAT (but again, legally only if you are not a EU resident).
 
you could buy one in Turkey which has no vat paid on it or buy a new one elsewhere in the EU and not pay the vat on it if you declare you are taking it to a non eu country ,ie Turkey for instance. You will have a problem if and when you want to sell it on say to someone in the EU as they will not want to buy a yacht where the vat is unpaid.There are loads of yachts available vat paid for sale in Europe so why not buy one of those?
 
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There are loads of yachts available vat paid for sale in Europe so why not buy one of those?

[/ QUOTE ]

Because the vat unpaid boats are cheaper. If you can legally buy a vat unpaid boat (as I could), why would you choose to pay 15%-20% more for the same boat?
 
As said elsewhere you can always buy one in a non EU country, eg Turkey, with no vat and then pay the vat later when you come to sell. The best bit is that the vat due at that time will be on the value of the boat at that time. Given that boats depreciate, you will not pay as much. Also, it matters not where in the EU you apply to pay the vat and there are places and people who will not value the boat as highly as some others. The bottom line is, therefore, that you will end up paying less than if you buy the boat vat paid. And another aspect is that you have use of the vat monies in the interim period.... the interest won't be significant, but it's a plus nonetheless.
 
Last time I checked, the lowest VAT rate for boats in the EU was in Cyprus. But have heard that the higher VAT rate in Spain is applied to a subjective valuation of the boat, so that it may be possible to negotiate (pay for) a lower valuation.
 
Quote "And, beware, the rules (afaik) are the FIRST port of call within the EU." unquote.

So what about the 18 month rule then? Where you can sail in the EU under a, say Turkish flag, for 18 months before paying the vat.
 
Thought that buying the boat in Turkey (or Croatia) opened the right to the 18 month freebie for EU residents. Time enough to sail to the Azores - if they have full EU VAT status? Are they not a bit like the Channel Islands?
 
nothing like the channel island olive.. an autonamous region of portugal and eu member.
I am still under the impression that the 18 months IS NOT apllicable to an EU citizen.. ie, you cant buy a boat in the states and sail in the eu for 18 months.. no reason to see turkey as differing.
 
OK for the Azores - VATably part of Portugal, albeit with a lower rate. Was confused by a mate who bought a boat in Australia, and "imported" it into the EU via a French Pacific island. He swears it's VAT paid, and has the paperwork to prove it.....
Think this revolves around vessel's nationality - a Brit buys a
non-EU boat outside of the EU, and the boat remains foreign, thus subject to the TI rule of 18 months. On the other hand, a Brit buys a non-VAT paid boat in the EU (Greek ex-charter for example), and must pay VAT according to the rules in the country of point of sale.
 
If a boat is valuable enough, don't buy it yourself - lend capital to a tax haven bank - eg Guernsey - who will in turn lend capital to a single purpose Guernsey company. You can then lease the boat when required. Vat may be payable on the lease amount. Havent you noticed how many gin palaces' port of registration is in a tax haven.
 
If a vessel is nearing the end of it's 18 month vat exempt status... and then I (as a non EU resident) purchase said vessel do we get another 18 months VAT free or just the remainder of the original 18 months?
 
That's a novel variation on an old theme.
This is just a best guess.

The VAT-exempt status you mention ('temporary importation') precludes the vessel being sold in the EU -- on pain of possible seizure. It could only legally be sold in the EU if it were properly imported -- i.e. VAT and duties paid and any other local red tape taken care of. Depending on where you plan to flag it, there may also be RCD (Recreational Craft Directive) implications in 'putting a vessel into service' in the EU.

All round, if you had such a boat in mind, the simplest course (and possibly the only legal one), might be to actually complete the purchase in a non-EU country such as Croatia or Turkey, then bring it into the EU to earn your own period of 'temporary importation' grace. Obviously, depending on where she is, this may not be so convenient.
 
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