VAT status for european boats

[andyachtie]

Hi all.

I am interested in buying a boat in Croatia and keeping it there.

The boat was sold to a company then sold to the current owner (also owned the company). This was sold at the written down value in the companies books plus VAT. The value sold at was 2,800€ including VAT.

The real value of the boat is around €50,000. He has send me the VAT invoice and the registration certificate in his name. Does this ensure that the boat is deemed VAT paid for europe even though he paid a nominal fee for the VAT. I can post pictures

 

[andyachtie]

He has just replied with this. Sounds right, but not sure.

If a company that is VAT registered buys a ship (in this case ADON sro), then it will apply VAT in its accounting in the usual way. The ship is depreciated annually, so its accounting value decreases. The company can sell the ship (movable property) for a price that is equal to its current accounting value. Of course, it will add VAT to this price at the rate of a specific EU country. When I bought a ship from ADON at the residual price, 20 percent VAT was added to my invoice. VAT was paid by paying the invoice.
The situation might be different if the ship was owned by a private person without VAT registration and VAT would not be paid because the goods were not imported into the EU. In that case, VAT would be calculated from the estimated price of the ship.
If you are unsure about VAT issues, consult a tax advisor.

 

[greeny]

Ask the Croatian VAT department and get the answer in writing for future reference maybe. Ask the seller if he would be happy to allow you to do this and his response may give you an idea if the transaction was above board or not. That's what I would do.

 

[Fr J Hackett]

Presumably he is selling you the boat for it's value when he bought it or less, ie €2,800 if not then there could be some interesting questions asked in the future and a strong fishy whiff pervading the boat.

 

[andyachtie]

Ask the Croatian VAT department and get the answer in writing for future reference maybe. Ask the seller if he would be happy to allow you to do this and his response may give you an idea if the transaction was above board or not. That's what I would do.

It's a slovakian registered boat. I am sure it would be OK in slovakian waters, but how about elsewhere!!!

 

[andyachtie]

Presumably he is selling you the boat for it's value when he bought it or less, ie €2,800 if not then there could be some interesting questions asked in the future and a strong fishy whiff pervading the boat.

That's my thoughts. But is it legal?

 

[KevinV]

The bill of sale lists his address alternately as in Slovakia or Czechia - if that's the standard of accounting I'd be very wary.

The whole construction is a tax dodge - he's extracting money from his company without wanting it to show as income. My limited understanding is that over here it would be on shaky ground because artificial constructions with the sole purpose of evading tax are illegal. I'd be concerned that if the paperwork was ever queried in port that a E50k boat with so little vat paid would be chained up while the legality of the construction was sorted out.

 

[greeny]

It's a slovakian registered boat. I am sure it would be OK in slovakian waters, but how about elsewhere!!!

OK then ask him if you can approach the Slovakian authorities about it. His reaction will tell all I suspect. If he's under declared then they will be interested I'm sure. That's a lot of "writing down". How long did the company own the boat? Personally I would not want to be anywhere near this transaction but then again I'm very risk averse.

 

[andyachtie]

OK then ask him if you can approach the Slovakian authorities about it. His reaction will tell all I suspect. If he's under declared then they will be interested I'm sure. That's a lot of "writing down". How long did the company own the boat? Personally I would not want to be anywhere near this transaction but then again I'm very risk averse.

 

[andyachtie]

The company owned the boat for 10 years

 

[westernman]

10 years is quite a long time - the write down might be in accordance with some commonly accepted scale.

 

[Fr J Hackett]

10 years is quite a long time - the write down might be in accordance with some commonly accepted scale.

But then you are faced with the sudden increase in value all pointing to an artificial write down and later problems.

 

[andyachtie]

10 years is quite a long time - the write down might be in accordance with some commonly accepted scale.

Yes, the written down value from €50,000 in 10 years would equate correctly to the 2,800. He is saying he will pay the capital gains on the increase of Sale value.

 

[Graham376]

Looking at his paperwork, it appears he bought the boat in 2024 and, if in the UK, with such a gain in value in a short period, it would certainly raise questions on a VAT inspection - I've had those a couple of times and they're very thorough HMRC can impose an open market value.

Under UK rules, HMRC can charge VAT retrospectively and no doubt EU/Croatia will be similar but I suspect any penalty would be against him and his company as sale to you is not a chargeable event.

 

[andyachtie]

Thanks for your reply. So, does that mean it's VAT paid and no problem for me in the EU. I am a UK citizen but resident in italy. I have heard of boats that have been impounded in italy for unpaid VAT.

 

[Graham376]

Thanks for your reply. So, does that mean it's VAT paid and no problem for me in the EU. I am a UK citizen but resident in italy. I have heard of boats that have been impounded in italy for unpaid VAT.

It seems every EU country has it's own rules and to be certain, as suggested above, you need to check this out with the authorities. For instance, under Portuguese law, debts can be attached to a car/boat etc. which follow through leaving the new owner liable. You need to check if Croatia is the same.

 

[ylop]

Thanks for your reply. So, does that mean it's VAT paid and no problem for me in the EU. I am a UK citizen but resident in italy. I have heard of boats that have been impounded in italy for unpaid VAT.

The problem is, even IF what he has done is technically legit under the Croatian/Slovakian VAT rules it doesn't mean a keen Italian* customs officer won't see it as just as dodgy as you and most people here did when you first saw it. Accordingly you could find yourself impounded for investigations to establish it is OK (or not). You will already standout as UK passport and Italian Resident with a boat arriving from elsewhere.

*I am picking on Italy because they have a reputation for this, but also because you live there!

 

[kingfisher]

Was the boat in Croatia prior to 1 july 2013? Boats that were in Croatia at the time of accession to the EU are exempt from VAT-proof.

 

[Tranona]

lly under

Thanks for your reply. So, does that mean it's VAT paid and no problem for me in the EU. I am a UK citizen but resident in italy. I have heard of boats that have been impounded in italy for unpaid VAT.

VAT is a tax on transactions, not on assets (boats). From the information given there is nothing wrong with the transaction history of the boat. It was originally sold to a VAT registered entity which reclaimed the tax as an input. It was then sold to a private individual and VAT was charged on the invoice value. Title was transferred to the private buyer. You are now buying from the private individual so there is no VAT.

You are what is known in UK terms a "good faith buyer". You have evidence that the seller has title to sell and evidence that VAT has been paid. Any VAT offence can only bee committed by a VAT registered entity and there does not seem to be any offence here. VAT is based on the invoice price NOT market value. If there is an offence (and I doubt there is one) it is fraud against the company - but again there is noting to say that a company must sell at market value. Just to give an example. I bought a boat through a charter management agreement where I paid 48% upfront and at the end of the contract VAT was paid on transfer to me based on the 48%, not the market value which was probably 25% higher at the time.

I can't see why you should experience any problems with the VAT paperwork you will have when travelling around the EU. Any problems are with the seller and the original owner in Slovenia . It might be wise to not have a value on the Bill of Sale. This is a transfer of title and not an invoice or receipt. In the UK it is common to use the expression "£1 and other considerations" although strictly speaking even this is not necessary.

 

[andyachtie]

Was the boat in Croatia prior to 1 july 2013? Boats that were in Croatia at the time of accession to the EU are exempt from VAT-proof.

That's interesting. I will find out. What sort of proof is needed?