VAT on USA boat or not?

[janeh]

Buying a boat from USA.
Used to be a UK registered boat. Home built from wood in the UK.
Launched 1996.

Can I keep it USA registered? If so does it have to have USA insurance and not UK. Can I do that as a UK citizen? Or can I have UK insurance on a US boat?

Can I then sail it around Caribean for a bit, across the pond to Greece for a bit?

I have no idea about VAT so sorry for ignorance.

If I register it as UK boat then I have to pay VAT don't I.

Do I sound confused - well I am. They're only going to use the VAT to pay for their second homes.
Tra La

 

[Bilgediver]

Buying a boat from USA.
Used to be a UK registered boat. Home built from wood in the UK.
Launched 1996.

Can I keep it USA registered? If so does it have to have USA insurance and not UK. Can I do that as a UK citizen? Or can I have UK insurance on a US boat?

Can I then sail it around Caribean for a bit, across the pond to Greece for a bit?

I have no idea about VAT so sorry for ignorance.

If I register it as UK boat then I have to pay VAT don't I.

Do I sound confused - well I am. They're only going to use the VAT to pay for their second homes.
Tra La

The VAT does not get paid to the seller. It gets paid to the Customs and excise at the port of arrival in Europe.

You should be asking these questions in an american forum or the Liveaboard Forum here as there are various pitfalls to avoid such as the local USA state taxes . You can probably re licence the boat in your name and insure with a USA broker. Some UK brokers don t seem to want to be involved in the insuring of foreign boats operating entirely in foreign waters however they may put you in touch with local brokers. I recently went through all this regarding boat ownership and operation in Canada and GJW were very helpull in assisting finding a Canadian Insurance company.

In Canada just like in the UK they do not allow foreigners to own fully registered craft/ships however foreigners can licence boats on the small craft registry (Like our SSR) Just means you have a bloody big number on the bow and not a name The USA may have something similar.

 

[Saguday]

You can register the boat locally in the State of your choice even if you are UK citizen not resident in the US. Normally if you buy a boat in a particular US State and leave it there for more than a certain length of time e.g. 30 days in Maryland for example then you become liable to pay State tax on the purchase, in the case of Maryland this would be 5%. If this is ok then you can get a registration number and keep it there and get it insured, either with an accommodating UK insurer or a friendly US one although you will have to ask around. In general UK insurers insure UK boats and US ones US registered boats, but people like Lloyds of London insure anyone. Several people on here live in the UK and keep a boat in the US on this basis and they can help you with this.

If you move the boat out of the State you bought it in you do not pay the local tax but you will have to pay tax in the State which it is moved to if you plan to keep it there any length of time. The trick here is to move it to, say, Delaware (which has no State tax) or Rhode Island (which has no tax on boats). There are some other coastal States with little or no tax but I can't recall which. Note that States with taxes have become a bit wise to the Delaware trick and they have started keeping careful note of where boats spend most of their time, so even if you mostly keep a DE registered boat in a DE marina but you spend a lot of time cruising MD next door they may think you are based in MD for tax purposes. Keep good logs.

Now, if you buy the boat and register it as a UK vessel under the SSR and keep it there that's fine but you are not automatically exempt from the local taxes. If you bought it, SSR'd it and kept it *in service* Maryland then the State would argue (correctly) that the boat is using Maryland facilities and should pay State tax. This type of action has become very prevalent in the last few years, with some high profile cases where people from say Florida have been served with tax bills on their own boats because they've been delayed more than 30 days due to repairs whilst in another State. These were being fought in court of course but I do not know the outcome - need to check on the current legal status of this.

I say *in service* because there is an important distinction between a boat in the water and cruising and one that is laid up. Foreign registered boats can be laid up ashore while owners return home and do not pay State tax - to do so would be unreasonable really.

So you need to consider what you are going to do with your acquisition. If you are UK registered you will need to keep moving from State to State - no more than 30-60 days in any one typically or at least keep logs to prove that you are moving around and not just avoiding taxes. You will also need a Cruising Permit which is valid for a year and is free - but which has the condition that you need to be out of US territorial waters for a period (2 weeks last I checked) and then re-enter each year (Bahamas, Bermuda, Canada etc ok for this). The Cruising Permit can run for up to 12 months from the time of entry to the US.

If you go locally registered you need to pay tax or clearly keep the boat in a State with no tax on boats.

If you bring the boat back to Europe you will pay VAT on it at the rate applicable at the first port of entry, as Bilgediver states. The exception to this is if you have been resident in the US for at least 2 years and have owned the boat for more than 6 months before you enter Europe, in which case the boat is considered personal possession and is deemed VAT paid. There is a time limit on this in that the boat should normally be brought into Europe within a year of your own return, although this can be extended at HMRC discretion.

As I understand it if a European boat, even if it is VAT paid, has been out of Europe for a while and changes hands while out of Europe then VAT is again payable on re-entry - can anyone confirm this?

You also need to make sure that the boat meets RCD requirements, i.e. is CE certified to meet the directive. Otherwise it can be expensive to get it to meet RCD requirements for use in Europe. Many secondhand US boats are not CE compliant, in fact many new ones aren't either.

Canada is somewhat draconian, in my estimation, as not only are the boat taxes higher if you register there but they will sting you for GST even if you are foreign registered if you stay longer than 6 months, even if you hop from province to province. I believe this applies even if laid up - if anyone knows better on this please correct me. This can cause a few problems if you over winter there and then get stuck for some reason...

This whole area is pretty complex and what I have offered is based on my own knowledge over the last 3 years, which is not exhaustive or infallible. I am not a tax lawyer and suggest you get someone professional and knowledgeable to advise you - although I have to say when I spoke to some lawyers in the US about the situation at the time they admitted there were grey areas in the whole thing and nobody really knew. In any case things change so it's as well to find out the up to date situation.

I'm sure some of the US based UK cruisers will chime in and correct or add to this.

It's a great place to cruise though, highly recommended, so if you can set things up in a way which is acceptable to you then you won't be disappointed.

Hope this helps a bit

 

[DownWest]

Not sure about how this affects your case. Homebuilt boats that are non CE certified cannot be sold on in less than 5 yrs after first use. Then they are considered OK or 'safe'.
So possibly your boat may not have to be CE certified as it was homebuilt in '96 in the UK.
A

Just reread your post. Sounds like you are not intending to keep it in the US for any length of time. Nothing to stop you registering on the UK SSR. It is voluntary and not connected to VAT and you are presumable resident in the UK, or have a property there.Reg is online and costs 25 GPB.-A

 

[Tranona]

Three separate issues

Registration. You can register the boat on the SSR (Part 3) but you have to be UK resident. See the MCA site for details. This type of registration is very simple and its primary purpose is to show foreign authorities that your boat is registered in the UK when visiting. Other states may, however place restrictions on your stay in their country.

VAT. This is the most straightforward. VAT will be payable when you enter the EU. Exceptions are if you are a non-resident you can apply for temporary importation, but his is restrictive both in time and usage, although not unduly so if you are a genuine visitor who leaves the EU at the end of the period. The other exception that may apply is if you are currently non-resident in the EU and are planning to take up residency in which case there is an allowance for personal ssets. The rules are very precise so you need to check. For a summary of VAT the RYA have a good section on their site, but the HMRC site has guidance which is long winded but not too difficult. There is also a helpline for queries related to boats.

RCD This is less clear because of the date of build and the fact that it was homebuilt. Suggest, again you contact the RYA as they are a CE notifying body, or CE Proof, a specialist firm in the subject.

Hope this helps