V.A.T. position on 1986 boat

[steveghoward]

Hi all,

Could someone please clarify the situation faced by an Australian couple just arrived here in France on their boat.

The yacht is a 1986 Gibsea, originally bought in France and promptly exported to the USA by the owner and all points onward from there, ending up in Turkey. There is no paperwork from this transaction.

It was bought by the present owner 5 years ago in Turkey and they have just returned with it to France to sell it.

The question is, is VAT liable on the sale? If so how is this calculated? There was a scheme where certain countries had a "subsidised" vat rate for yachts as a revenue generator. If this is still applicable, does the boat actually physically be in the country at registration time?

Many thanks in advance

regards

 

[Talulah]

As no one has responded yet here is my take.
A vatable transaction has taken place. (Importation of the boat from outside the EU.)
VAT rate at point of import will apply. i.e. French VAT rate on current value of boat.
The earlier stuff is not relevant as the boat has been out of the country for so long.
I should add that VAT won't be payable on the sale of the boat but it is due now due to the importation.
It certainly hasn't been temporarily imported.
VAT won't be payable on the sale as the owners are not VAT registered.

 

[theoldsalt]

Sell "VAT not paid" ? Then up to the new owners to sort - this often happens.

 

[Tranona]

Just to clarify. The couple now owning the boat and importing it into the EU are responsible for paying VAT on the value of the boat at the first point of entry into the EU. They will get a receipt from customs in the state they pay, but it will be valid across the EU. They are then free to sell the boat without any other VAT being payable.

Failure to declare the boat is a criminal offence and could lead to fines as well as VAT if not declared properly. The VAT liability could also follow the boat so anybody buying the boat without proper paperwork showing the tax has been paid could lose the boat.

Fortunately the boat was built in the EEA so does not need to get a post construction certificate to get a CE mark.

 

[Talulah]

Sell "VAT not paid" ? Then up to the new owners to sort - this often happens.

It won't be the responsibility of the new owners to sort as the current owners have created the chargeable event. The responsiblity lies with them.
However, if the current owners wait until the boat is sold and then don't pay the VAT due the Customs can then impound the boat from the new owners.
So as a buyer I wouldn't be paying for the boat until I had prove VAT was paid.

Tranona beat me to it and gives a better explanation.

 

[Tranona]

Sell "VAT not paid" ? Then up to the new owners to sort - this often happens.

Not as easy as that, unless the boat changes hands outside the EU. Once somebody has imported it, they are liable to pay the tax, although in practice if there is a buyer already lined up, they could provide the funds to pay - but it is not their liability, but the importer.

 

[theoldsalt]

Not as easy as that, unless the boat changes hands outside the EU. Once somebody has imported it, they are liable to pay the tax, although in practice if there is a buyer already lined up, they could provide the funds to pay - but it is not their liability, but the importer.

How do account for so many boats for sale in the UK "VAT not paid" They are allowed in the UK for a limited period during which they should be sold and the new owners either remove the vessel or pay the VAT.

I have just purchased a "VAT not paid" boat in the UK and subsequently paid the VAT to HMRC.

 

[Talulah]

Some explanation here:
http://www.berthon.co.uk/yacht-sales/vat-and-all-that.html

 

[steveghoward]

Thanks all, great advice as always on this forum. Just one additional question, who decides the value of the boat for the vat calculation?

Thanks

 

[Tranona]

How do account for so many boats for sale in the UK "VAT not paid" They are allowed in the UK for a limited period during which they should be sold and the new owners either remove the vessel or pay the VAT.

I have just purchased a "VAT not paid" boat in the UK and subsequently paid the VAT to HMRC.

There are many reasons why a boat can be offered "VAT not paid". Without knowing the specific circumstances of the transaction it is impossible to comment.

My comments are, I believe, correct in relation to the situation described by the OP.

 

[Talulah]

Thanks all, great advice as always on this forum. Just one additional question, who decides the value of the boat for the vat calculation?
Thanks

That I can't help with. In some places it depends upon the official. If VAT is paid at time of sale then the price paid is an indicator but it's best there are two invoices. One for the sale of the boat and one for the sale of the carry on extras.

 

[theoldsalt]

Thanks all, great advice as always on this forum. Just one additional question, who decides the value of the boat for the vat calculation?

Thanks

When I recently contacted HMRC to pay my VAT, I offered a value for the vessel with supporting evidence (sales info on similar boats). This was accepted and I was not asked to provide proof of the actual purchase price of the boat including a copy of the receipt (surprisingly).

So, in short, negotiable.

P.S. The declared value was a lot less than the purchase price - but please don't tell HMRC.

 

[Bobc]

Thanks all, great advice as always on this forum. Just one additional question, who decides the value of the boat for the vat calculation?

Thanks

You declare a value, and hopefully they will accept your valuation.

 

[Tranona]

Thanks all, great advice as always on this forum. Just one additional question, who decides the value of the boat for the vat calculation?

Thanks

EU rules allow a variety of methods, either based on a transaction value or a valuation. Different states use different methods for valuation and it may be subject to negotiation, or by getting a professional valuation. With an old relatively low value boat there is not likely to be much argument. Either the owner employs an agent or just submit a value that is less than the asking price of a similar boat.

 

[Bobc]

I would base you value on about 30% lower than the average asking price.

 

[KellysEye]

My understanding is there is VAT to be paid on import. There is an exception : Pleasure yachts built pre-1985 and in EU waters on 31st December 1992 are treated as VAT paid. Evidence that the yacht was in EU waters on this date may be required. Clearly I wouldn't suggest the Aussies produce some paperwork to prove that.

Source: http://www.ionianyachtsales.com/useful-info/vat-yachts/ scroll down to non-EU vessels

 

[Bobc]

It has been taken out of the EU, and has then changed hands, which means (I believe) that VAT needs to be paid on entry into the EU again.

 

[Tranona]

My understanding is there is VAT to be paid on import. There is an exception : Pleasure yachts built pre-1985 and in EU waters on 31st December 1992 are treated as VAT paid. Evidence that the yacht was in EU waters on this date may be required. Clearly I wouldn't suggest the Aussies produce some paperwork to prove that.

Source: http://www.ionianyachtsales.com/useful-info/vat-yachts/ scroll down to non-EU vessels

As Bob says - that is wrong. First of all the qualifying date for deemed VAT paid depends on the state it was in at the time of accession, but more importantly VAT is payable according to the nature of the transaction - and importing a boat is a chargeable event, irrespective of age or whether VAT has been paid previously. There are some reliefs available in certain circumstances (see HMRC VAT Notice No 8) but the boat or owners in the OP do not qualify, unless they are using the boat in the EU and then exporting it again. In that case they can apply for temporary import, but cannot sell the boat.