VAT on possible temporary export

[Momac]

,,,,,,,EU states are much more proactive in monitoring the movement of boats than in the UK.

I guess they must be.

 

[dunedin]

Hi MRC - been a long time!

Yup I agree the above. Assuming you are yourself not resident in EU, then you may take the boat into the EU VAT free under "TI". You will only pay VAT if you fail subsequently to exit the boat from EU within 18 months. No charter use in EU. You will need some paperwork to do TI and I'd recommend PSP (Brian) who did it for me recently very efficiently via a French subcontractor - there's a fee of course but well worth it. Importing into France is somewhat easier than Spain, imho, paperwork wise. As said above you must exit EU within 18 months else VAT becomes due (though you can extend that 18mths by "winter warehousing" the boat - will only go into that if relevant to you).

Doesn't sound like it will be a problem but to re-import to UK after the Med period you must reimport to UK within 3 yrs of the original export from UK, otherwise you're risking UK VAT for a second time.

What paperwork process is actually needed for a temporary stay of the boat up to 18 months in Europe?
I am no expert but thought all you need is the ships registration document on arrival in the first port of entry.
Shouldn’t even need your proof of UK VAT paid if not claiming RGR to re establish EU VAT paid status.

 

[DavidJ]

What paperwork process is actually needed for a temporary stay of the boat up to 18 months in Europe?
I am no expert but thought all you need is the ships registration document on arrival in the first port of entry.
Shouldn’t even need your proof of UK VAT paid if not claiming RGR to re establish EU VAT paid status.

You will need to prove to the HMRC on entry that you haven’t exceeded the 18 months outside the UK. Now you can guess at what may satisfy the customs guy or for a few hundred quid you can have correct paperwork and fly through
Your choice.
I add
As time goes on knowledge will be gained on what is accepted by by HMRC (and what is not) and from that we will be in a better position to DIY but for the moment I think the formal process is all we safely have.

 

[DavidJ]

There is an assumption that there is a significant gain in VAT saving by using the 18 month allowance (I’ll call it) and eventually paying up on a depreciated boat.
I quote my own experience of buying a new boat in 2002 and selling in 2023 and it depreciated in £ terms by only 29% (in 21 years!!)
I await the flaw in my thinking with interest.
…….probably something along the lines of the depreciation curve but nevertheless you get my point.

 

[Momac]

I quote my own experience of buying a new boat in 2002 and selling in 2013 and it depreciated in £ terms by only 29% (in 21 years!!)
I await the flaw in my thinking with interest.

You should consider inflation over the same period which is about 100%
Even if you sold the boat in 2023 for the sum you paid for it in 2002 it would have depreciated 50%

 

[DavidJ]

You should consider inflation over the same period which is about 100%
Even if you sold the boat in 2023 for the sum you paid for it in 2002 it would have depreciated 50%

Yes but the boat value is beating inflation (by 2.6 times) and the value is what you will be paying VAT on.
I’ve just looked it up and £100 in 2002 is same as £176 today (so your guess is not far out)

 

[Momac]

Yes but the boat value is beating inflation (by 2.6 times) ...........

Could you explain that one please

 

[dunedin]

You will need to prove to the HMRC on entry that you haven’t exceeded the 18 months outside the UK. Now you can guess at what may satisfy the customs guy or for a few hundred quid you can have correct paperwork and fly through
Your choice.
I add
As time goes on knowledge will be gained on what is accepted by by HMRC (and what is not) and from that we will be in a better position to DIY but for the moment I think the formal process is all we safely have.

Why is being outside the UK for more than 18 months an issue (for a UK VAT paid boat)? The previous time limit was 3 years and, as Tranona says in post #9, even that has now been waived. 18 months is the TI time period for being in the EU without being liable for VAT, so not of interest to HMRC.
Yachts cross the Channel back and forth between UK and France frequently and without lots of paperwork - though now need to use a recognised location and get any UK passports stamped.

 

[DavidJ]

Could you explain that one please

Ah yes
I‘m using my figures of 29% boat depreciation against 76% money depreciation
76/29 is 2.6
Apologies I should have given more explanation.

 

[DavidJ]

Why is being outside the UK for more than 18 months an issue (for a UK VAT paid boat)? The previous time limit was 3 years and, as Tranona says in post #9, even that has now been waived. 18 months is the TI time period for being in the EU without being liable for VAT, so not of interest to HMRC.
Yachts cross the Channel back and forth between UK and France frequently and without lots of paperwork - though now need to use a recognised location and get any UK passports stamped.

You do have a point and I bow to Tranona on these occasions
If your boat is in the EU for over 18 months you will have to pay EU VAT. You then loose your UK VAT (You can‘t have both although there are exceptions and I was one of them…another story) so effectively being outside the UK for 18 months looses your UK VAT.
I tentatively look around for support

 

[dunedin]

You do have a point and I bow to Tranona on these occasions
If your boat is in the EU for over 18 months you will have to pay EU VAT. You then loose your UK VAT (You can‘t have both although there are exceptions and I was one of them…another story) so effectively being outside the UK for 18 months looses your UK VAT.
I tentatively look around for support

Not sure that is true either - about losing UK VAT status (Tranona will be along shortly). Technically whenever you leave either UK or EU waters you lose any VAT status for that area. But when you return you can seek RGR (Returned Goods Relief or similar). If you are eligible - eg same ownership, nothing materially changed and within any required timescale - then you may regain VAT paid status.
The RGR period remains 3 yrs in EU, currently no limit for UK if left since Brexit cutoff date.
All AFAIK so don't rely on.

 

[Tranona]

This is getting overcomplicated.

First RGR. Taking a boat out of the UK means a potential loss of VAT status - but this only comes into effect IF the boat changes hands outside the UK as the new owner cannot claim RGR. The new owner has to import it into the EU and pay VAT if that is where it is going to be used, or in the UK. To claim RGR on re-entry all you have to do is declare the boat to customs if coming back on a truck or by calling Yachtline as normal. A record of that declaration is sufficient.

Temporary admission is a bit more complex. While the EU rules are simple and universal the implementation and management is left to each individual state so the process of managing it varies, but in all cases when you enter you have to clear customs. If you intend to keep the boat in the EU for some time it makes sense to declare that at the time and then report in and out if you end up using all your allowance. The customs on the Atlantic and Med coasts are well organised as there are many boats entering and leaving the EU, or are non EU VAT paid owned by non residents but effectively kept their permanently by exiting and returning every 18 months. Anyone in this position would be sensible to make proper arrangements with their local customs or use an agent as jfm suggested earlier.

Yes, it is possible to have both UK and EU VAT paid status because of the withdrawal agreement which meant that many boats that had originated in the UK were physically in the EU on 31/12/2020 so automatically acquired EU VAT status. They can be taken out of the EU for up to 3 years and retain that status by using EU RGR. If the boat stays in the same ownership then it will retain its UK paid status effectively indefinitely until an ownership change when its status will depend on where the sale takes place. VAT status is independent of the citizenship or residence of the owner.

 

[goeasy123]

....The new owner has to import it into the EU and pay VAT if that is where it is going to be used, or in the UK. ....

W.r.t. to the OP's situation there is a facility under HMRC rules to buy a new boat in the UK 'in bond' and export it immediately without VAT. It can then be consider non-union goods if and when it arrives in the EU27... and therefore use EU TI rules. As far as the EU is concerned it's a 3rd country boat and has made a customs declaration 'by simply crossing' the international waters limit of any EU country, as the Union Customs Code says.

This is the way the French west coast manufacturers do it.... The owner (usually with a delivery crew) takes ownership in La Rochelle and exports it immediately without VAT. They sail to Tanja where they pick up a document evidencing the boats presence by the customs authority in Morroco. It then sails to Spain, typically Ibizi where it presents this document and is issued with a Spanish Transit log citing the date, 18 months hence, by which the boat must have left the the EU. All this is arranged by an agent.

Through this mechanism there have been more than a few new cats arriving in Greece in recent years under owner/charter arrangements. A boat arrives in Greece. The onwer forms a Greek company, pays VAT and then claims it back as a business. At the end of the charter period the owner buys the boat of the company for a nominal fee and puts the boat under TI and a 3rd country flag. We have two friends that have done this and gone onto import their boats into the Channel Islands.

 

[DavidJ]

This is getting overcomplicated.

First RGR. Taking a boat out of the UK means a potential loss of VAT status - but this only comes into effect IF the boat changes hands outside the UK as the new owner cannot claim RGR. The new owner has to import it into the EU and pay VAT if that is where it is going to be used, or in the UK. To claim RGR on re-entry all you have to do is declare the boat to customs if coming back on a truck or by calling Yachtline as normal. A record of that declaration is sufficient.

Temporary admission is a bit more complex. While the EU rules are simple and universal the implementation and management is left to each individual state so the process of managing it varies, but in all cases when you enter you have to clear customs. If you intend to keep the boat in the EU for some time it makes sense to declare that at the time and then report in and out if you end up using all your allowance. The customs on the Atlantic and Med coasts are well organised as there are many boats entering and leaving the EU, or are non EU VAT paid owned by non residents but effectively kept their permanently by exiting and returning every 18 months. Anyone in this position would be sensible to make proper arrangements with their local customs or use an agent as jfm suggested earlier.

Yes, it is possible to have both UK and EU VAT paid status because of the withdrawal agreement which meant that many boats that had originated in the UK were physically in the EU on 31/12/2020 so automatically acquired EU VAT status. They can be taken out of the EU for up to 3 years and retain that status by using EU RGR. If the boat stays in the same ownership then it will retain its UK paid status effectively indefinitely until an ownership change when its status will depend on where the sale takes place. VAT status is independent of the citizenship or residence of the owner.

Thanks @Tranona for the time you take to steer us back on track….again!

 

[st599]

The OP still hasn't answered about his residency status. Citizenship is irrelevant.

If he's an EU resident, or does something like take out a residence visa to allow him to stay for 18 months, then Temporary Import is not available and VAT becomes due.

 

[Momac]

If he's an EU resident, or does something like take out a residence visa to allow him to stay for 18 months, then Temporary Import is not available and VAT becomes due.

So any idea of staying in the EU with the boat over say a year or so would cost VAT on the boat..
This situation must be deterring many 1000's of UK people from longer stays in the EU as surely the matter of VAT liability is not confined to boats.

 

[Sticky Fingers]

So any idea of staying in the EU with the boat over say a year or so would cost VAT on the boat..
This situation must be deterring many 1000's of UK people from longer stays in the EU as surely the matter of VAT liability is not confined to boats.

It’s 18 months, and can be avoided (and the clock reset) by a day trip out of the EU.

 

[westernman]

You dont need to pay VAT in the EU. As long as you take it out the EU before 18 months and return as temporary import you need not pay VAT. If you then return to UK you will pay VAT but on a much reduced value.

This sounds like a great plan.

Importing a used boat of course the value is much reduced.

The first owner of my boat which was built in Canada was delivered on its own bottom across the Alantic and imported into the UK/EU at the first port of entry which was Cowes. The value agreed by customs for what is now a used boat was half what it cost to build.

When importing, make sure the boat is dirty, the sink has a pile of dirty washing up to do, the bedding is scattered all over the cabins etc. to make a very bad impression to substantially reduce the perceived value by the customs officials!

May be even pay a friendly broker to give a low valuation for sale?

Or even never come to the UK. Take the boat out of the EU every 18 months (e.g. Morocco, Tunisia, Turkey) for a short time before sailing back in for a new 18 months. And never pay VAT. Anywhere.

 

[Momac]

It may be 18 months for the boat but its 90 days per 180 days for the people
Then it sounds like if the people get a visa the 180 days for the boat does not apply

 

[st599]

It’s 18 months, and can be avoided (and the clock reset) by a day trip out of the EU.

Not if you become an EU resident due to the length of time you're there. EU residents don't get Temporary Import.