VAT status for european boats

[andyachtie]

lly under

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.

Thanks for this. But could any relevant authority say that, me the buyer must know not enough vat has been paid as the value of the boatvwhen sold with vat was not market value?

 

[Refueler]

I have purchased various from my own company - at written down value + VAT .... (Latvia EU)

What the seller of this boat has done is same as what I have done here and no problem with Tax Authorities. BUT and this is a sobering thought ... here - if the authorities believe any 'trick' or deceit has been made to defraud Tax - then they can apply a 'Book value' to the item and require payment against that.

I've passed the OP's question to my Accounts Dept - who deal with so much EU crap and how with other EU states as well .... I'm intrigued as to what they say ... (I accept it will Latvian biased).

 

[andyachtie]

Who would be liable? Me the current owner or the guy who did the 'trick'?

 

[andyachtie]

Yes, the boat was in Croatia, under a Croatian flag.

 

[Refueler]

Who would be liable? Me the current owner or the guy who did the 'trick'?

The authorities would attach the debt to the item and then impound it till paid. Who pays - they don't care. But remember - I am NOT talking Croatia .. only making comment to show that EU is not as uniform about things as some believe.

Like USA - each state applies own tax rules.

I am waiting to see what my accounts dept say ...

 

[Refueler]

I was made aware of it when people I knew were bringing in German Auction cars ... (its big business here and Latvian Govt has been trying to limit it for years - to stop being the scrap-bin for clapped out BMW's etc).

I knew of cases where cars were coming in at marked down values - with paperwork .. but authorities then compared to 'book values' and required the difference - the buyer coughing up ! The reasoning being - as authorities believed - that car was coming in - not as a private individual buying for personal use - but as a business to sell on at much higher market value.
I got round this when I bought my Range Rover - by paying the German Dealer direct and transport fees + commission to 'importer'.

Ok ... Accounts are asking me questions such as :

Why would owner of company sell the boat at book value he paid company ?? Must be a really good pal of buyer !!

If VAT has been paid during Boats history - why the worry now ?

Is the boat going to be moved into another legislative location ?

Will pass on anything else they say !!

 

[Tranona]

Thanks for this. But could any relevant authority say that, me the buyer must know not enough vat has been paid as the value of the boatvwhen sold with vat was not market value?

In my view no. The responsibility for VAT is with the seller which charged VAT. As it happens I was just clearing out all my old VAT records from 15 years ago and re-read the guidance on keeping VAT records. There is nothing about VAT being related to market value, only transaction price. The "market value" bit related to imported boats is an exception because the importer becomes responsible for VAT. For a trade importer of new boats who is VAT registered it is paid on the invoice price. For a private non VAT registered person there is a choice of methods that aim at establishing market value. The way this si implemented varies from state to state and depends in part on the specifics of the boat. In this case VAT is paid direct to customs and a receipt is issued. Very different process from normal trading VAT.

The responsibility for dealing with VAT issues lies with the state where the transaction took place. As your boat is in Croatia there is no reason for local customs to query VAT paid in Slovenia. Although registration has nothing to do with VAT (nor does your citizenship/residence) the chances of local customs troubling you are slim.

 

[Refueler]

IMHo - its all like the old days of selling your house / car or whatever to best pal for £1 when in trouble ! ... it was "obvious" to all that a 'deal' was made and eventually authorities clamped down on it ... (we are relating to actual figure - not VAT liability).

As I understand it - the value question goes back to the origin of the boat passing from trade to private and if VAT was paid as to boat transaction value ... in this case - the boat has been basically written of by the sellers company as account paid and closed ... VAT paid on that closure amount.

Now the question my accounts have is : Why is the next buyer paying VAT to seller ? As they tell me - private to private is a non VAT matter and as long as VAT paperwork is already sorted from previous sales - what's issue ?
As with my 38 ... seller in Sweden had the boat on his Wifes company ... then it was 'bought' by him ... couple years later sells to me at about 60% of usual market price ... I sailed the boat to Latvia .... no-one's asked me anything ... even when I started discussions about registering with Latvian Shipping .... Bill of Sale was asked for .. looked at .. given back ..... in fact Lat Registry was refused as they require second hand boats to have full import docs / previous registration - to avoid Latvia being dumping ground for cr** !!

Boat now Swedish International ... and no-one bothers me at all ...

But TBH - a long way off from OP's original question ..

 

[pandos]

It's all about risk of hassle and the nagging doubt in the back of your mind every time you see a customs/revenue boat or official.

Simply handing a customs man proof that a token amount was paid on the boat may need some knowledge of the back story.

In theory you are a stranger to the transaction between the company and the seller, but to defend your position if challenged you will need to display some credible knowledge of the history, if you are challenged to prove that vat is paid on the boat.

You are not a third party purchaser for value without notice...you know the story and are considering taking a chance that there is no illegality involved.

It seems you are carrying the risk that the boat might be deemed not vat paid. So the question for me would be "is the boat so cheap that I am willing to take the chance on being made pay the vat on the true value when sold by the company, that is, on the price that I had paid for it".

If you are chained up to a dock somewhere pending the resolution of an issue, even if it is resolved in your favour, will you ever again enjoy the boat.?

Also bear in mind that should you go to sell you will have all of these questions asked by a potential purchaser.

If you want to go ahead you could ask the vat authorities where you reside for confirmation that, notwithstanding the small amount paid, that the boat is deemed EU vat paid,