Vat and delaware

[Delphinus]

We have a bavaria 44 we purchased in Croatia in February this year, no tax is paid on the boat. The boat is registered in delaware with a US flag. I am a UK and therefore EU resident. Yesterday in Corsica we were fined 4000 euros and ordered to pay 20% vat. We have not paid i wanted to understand the law.

Does anyone have knowledge of the subject or specific legal contacts who could advise?

 

[jimbaerselman]

EU residents are not permitted to use boats within EU waters on which VAT has not been paid.

On taking a non-VAT paid boat into the EU (from Croatia, presumably), an EU resident must report the import of the boat, and pay VAT. See HMRC notice 8 - http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000289&propertyType=document

Your fine was for not declaring the import of a non-VAT paid boat into the EU. If, on entering the EU, you had declared entry, you could have been permitted temporary import to transit to the country where you wished to base the boat - if the local officials were aware of this provision.

You would have to pay VAT anyway . . .

It's a pity you missed the 5% VAT window then availble if you'd imported into Croatia and registered as Craotian.

 

[Tranona]

Surprised you were not aware of the tax implications of buying that boat. Although there was some confusion about exactly how the Croatians were going to deal with VAT on Accession to the EU it was clear that VAT would have to be paid on many boats. As Jim says there is a possibility of temporary importation if the boat is in transit to another country outside the EU, or if you are non EU resident, but this must be arranged in advance by declaring on entry.

In the end there was a possibility of paying a concessionary rate of VAT in Croatia with a well publicised scheme, but you needed to comply with strict conditions - and that opportunity is now passed. There was also the possibility if the boat was more than 8 years old and had been kept in Croatia to get a customs declaration confirming it is VAT exempt under the transition arrangements. However, having now left Croatia you may not be able to do this.

Without wanting to raise your hopes too high, if the boat is more than 8 years old and was in Croatia on the qualifying date (which I think is 1 July 2013) there is a possibility you may be able to convince customs that it is VAT exempt. However, not having declared the boat suspect they will not be very accommodating. The best you can hope is that you can persuade them to set the value at a low level, although they will probably use the price you paid in February as the value. Make sure you keep the receipt you get from customs. It may be sensible to find a customs agent to negotiate on your behalf.

BTW if you can, remove the boat from the Delaware register and if you are UK resident, put it on the SSR as you will always attract attention with a US flagged boat, and there are no other advantages in the EU of using that registry.

 

[Delphinus]

Thanks for that, you mentioned "if the local officials were aware", i said our intention was to pay the tax in the UK and they never accepted this. I also mentioned that i Registered entry into the EU when we entered Greece and they did not accept this. I feel aggrieved at paying a 4000 euro fine, do you know if legal help would work?

what is the point of a Delaware flag, i thought it gave exemption?

 

[macd]

Thanks for that, you mentioned "if the local officials were aware", i said our intention was to pay the tax in the UK and they never accepted this. I also mentioned that i Registered entry into the EU when we entered Greece and they did not accept this. I feel aggrieved at paying a 4000 euro fine, do you know if legal help would work?

what is the point of a Delaware flag, i thought it gave exemption?

VAT is due in the country of importation into the EU. By the sounds of it this should have been Greece.

There's a recent long thread about the Delaware flag. For the most part it's 'has a point' in Turkey, which is where they're commonly seen.

 

[jimbaerselman]

VAT is due in the country of importation into the EU. By the sounds of it this should have been Greece.

Not necessarily. You can choose the country of importation, and have a period of transit allowed from your country of entry. I believe Greece allows temporary import of up to one month before VAT must be paid, or the boat must leave the EU.

Technically, en route from Greece, you left the EU if you went outside territorial limits (difficult not to!), so it's always possible for a sharp witted official to claim that you should show a Q flag on entering, and go through a proper entry process, even if your past port was an EU one. This may have been the cause of your fine.

I don't know the procedure for gaining temporary import for transit to the country where you will pay VAT for permanent import. I dare say it's hidden somewhere in the EU directions. Sadly, EU directions are not always adopted by individual nations. A telephone conversation with HMRC will be in order here. They are most helpful. Your local UK consulate may also be able to put you in touch with a maritime lawyer. However, these processes take time and have uncertain outcomes.

Tranona's point about whether or no the boat was in Croatia before 1 July, and was more than 8 years old, is a good one. However, proving this may not be easy, and if provable, would then involve getting a "VAT deemed paid" certificate from Croatia. You now have to trade off the fine, against the time taken stuck in port while you argue/prove your case. Don't think days, think weeks or more, depending on the locality.

A non-EU flagged boat (US in your case) can only gain temporary import relief from VAT to cruise around Europe for up to 18 months if it is only used by non-EU people. Your Delaware flag, and your EU passport, in conjunction are a liability! Most officials will wish to inspect your papers, and see proof that VAT has been paid, before they permit you to move on.

Sorry to sound so negative. But I think you'll need the professional help of a local maritime lawyer to duck the fine.

 

[Uricanejack]

Just curious.
If I show up in EU in My Amercican flagged boat or in the fullness of time Canadian boat.
As a Canadian I would have 18 months to visit.
Although a Canadian Citizen I am also British born in Uk.
Could I run into same problem as OP.

 

[Marsupial]

Just curious.
If I show up in EU in My Amercican flagged boat or in the fullness of time Canadian boat.
As a Canadian I would have 18 months to visit.
Although a Canadian Citizen I am also British born in Uk.
Could I run into same problem as OP.

welcome to the complexities of Flags, registration and Owners Country (state).

I would try it out before you arrived but suggest that most of the decision whether to tax the boat or not would rely on which passport the owner offered the immigration officials in the EU. BROADLY: If the owner is an alien then the BOAT gets 18 months, if the owner is EU then the BOAT is taxed.

I wouldn't even try and test the temporary importation caveats in any country if the owner had a EU passport.

 

[jimbaerselman]

welcome to the complexities of Flags, registration and Owners Country (state).

I would try it out before you arrived but suggest that most of the decision whether to tax the boat or not would rely on which passport the owner offered the immigration officials in the EU. BROADLY: If the owner is an alien then the BOAT gets 18 months, if the owner is EU then the BOAT is taxed.

I wouldn't even try and test the temporary importation caveats in any country if the owner had a EU passport.

Actually, residence is the test, rather than nationality.

But you're quite right in saying that if you presented an EU passport with a non-EU registered boat, investigations would start, and the onus would be on you to prove you were not an EU resident.

Of course, you have the option, since you have the right of residence in UK, to declare your intention to take up residence in UK again (for at least a year, if memory serves). You can then import your vessel (as part of your worldly goods) without paying VAT, and re-register it on the SSR. Of course, you then become a UK tax payer as well . . .

A minefield of complexity!

 

[rogerthebodger]

Yes and the rules of residence can be very complex as you can le liable for tax even if you are not resident in the UK of elsewhere for that matter.

I still have to pay UK tax on my UK private pension even I have not lived in the UK for more than a month in the last 30 years.

 

[westernman]

As an EU resident you were obliged to declare your import to customs at the first entry into the EU which should have been in a port of entry. (You should have been flying the yellow flag, no body should have descended from the boat until clearance given by customs etc etc).

You did not. Therefore the fine is legally justified.

You would have had to pay the VAT somewhere anyway. The biggest factor in how much you have to pay is not the rate, but the valuation of the boat.

If the valuation of the boat was reasonable, then I would just pay up.

I don't think you stand a chance of fighting the fine - and if you do, you will need a lawyer and it will probably cost as much as the fine with no certainty of a better outcome.

If the valuation of the boat was unreasonable, then you have a much better case for getting that adjusted and reducing the amount of VAT you have to pay. But I don't see any realistic chance of avoiding/reducing the fine.

Presenting an EU passport with non EU ships papers in an EU port is a huge red flag to any customs/port authority.

 

[Marsupial]

When it comes to residency there's another web of complexity, depends on if you are the taxed or the tax man as to where you live along with if you want to claim welfare benefit - I think (at least that's the cynical view).

Lord Scarman is your man read about it here

:http://www.ukba.homeoffice.gov.uk/s...ns/nisec2gensec/ordinaryresidence?view=Binary

 

[Tranona]

Presenting an EU passport with non EU ships papers in an EU port is a huge red flag to any customs/port authority.

Yes, just speculating, but wonder if the situation would have arisen in this case if the boat had been flying the red ensign and on the SSR which the OP seems to be eligible for. As you say a US flag and EU crew is going to raise questions. Seems many problems with customs arise because the boat has some abnormality about it. As we hear many times from Posters, they travel for years around Europe and never get asked any awkward questions.

 

[Delphinus]

Thanks for all the responses, much appreciated. Paying the tax seems to me to be required, i don't have any problem with this. I do feel that a 4000 euros fine for what seems to me to be a trivial mistake is completely disproportionate to the offence of not knowing the rules (which seem to vary in interpretation by country and port). I will contact HMRC and see if they can offer support. I will also contact a customs broker to see if their experience can offer any help.


I suspect a 4000 euros fine would be for genocide!!

 

[westernman]

Yes, just speculating, but wonder if the situation would have arisen in this case if the boat had been flying the red ensign and on the SSR which the OP seems to be eligible for. As you say a US flag and EU crew is going to raise questions. Seems many problems with customs arise because the boat has some abnormality about it. As we hear many times from Posters, they travel for years around Europe and never get asked any awkward questions.

I fly a red ensign (and I am registered part I).

I have been asked just once for my passport and ships papers by customs. They looked at my UK passport. I told them the registration document for the boat was in the capitainerie (a Spanish Port). They asked where I lived - I gave them my UK address and they seemed happy with that and then drove off.

I suspect if I had presented a Spanish passport, they would have been very very interested and checked in detail all kinds of things. Similiarly may be if the passport was different from the country of registration or the country of registration is outside of the EU.

I have been buzzed on two occasions by customs helicopters near the French/Spanish border in the Med. But both times the instant I asked a crew member to get the VHF so I could call them up to ask for a copy of their photos, they buggered off before I had a chance to call them. I suspect a sophisticated sound monitoring system on the helicopter.

 

[Tranona]

Thanks for all the responses, much appreciated. Paying the tax seems to me to be required, i don't have any problem with this. I do feel that a 4000 euros fine for what seems to me to be a trivial mistake is completely disproportionate to the offence of not knowing the rules (which seem to vary in interpretation by country and port). I will contact HMRC and see if they can offer support. I will also contact a customs broker to see if their experience can offer any help.


I suspect a 4000 euros fine would be for genocide!!

I expect there is a very high maximum fine for the offence - and it is a criminal offence to smuggle into EU. Thats the problem when you make laws that essentially rely on non official people to collect taxes - the opportunities for evasion are high, so the deterrents are correspondingly severe. Difficulty with this one is that it is one of the few situations where a private person is personally responsible for paying the tax.

 

[Sybarite]

You can then import your vessel (as part of your worldly goods) without paying VAT, and re-register it on the SSR. Of course, you then become a UK tax payer as well . . .

A minefield of complexity!

There used to be a criterion related to the period of time you were owner of the goods prior to entry. When I was moving it used to be six months.

 

[akyaka]

I still have to pay UK tax on my UK private pension even I have not lived in the UK for more than a month in the last 30 years.

No reason why being a private pension that you should if you are a none resident you just need to make a declaration to the relevant department of the HMRC and your UK pension provider will pay it gross.

Sorry back to thread