VAT status post Brexit.

[grumpygit]

Why would you be asked about the amount of time you've spent in an EU country or for IDPs? It's only after Brexit that the 90 in 180 and new driving rules will become active.

Sorry but I'm for sure that you are misguided with this. A UK car can only be used in another EU country for 6 months out of a twelve period. Otherwise the car must be registered in that country.

 

[nortada]

I am alert to any news on this too.

It would seem that for those of us that are doing just this, cruising the Med with a British VAT paid boat (of a significant value) and staying on our boats for more than 90 days in any 180, life will not continue unchanged and we may wish to make strategic decisions regarding the future value of our boats.

For most in this situation Brexit will cause us to change lifestyle. Sadly there aren’t many of us so I doubt that we will get a clear picture until pretty late in the day. But some of us would like to groom our plans to best advantage.

Garold

Hi Garold, as always see we agree.

Good to see you posting. A lot of water has flown under a lot of bridges since you and I got together to float the original ‘What to do about Brexit’ Thread, last summer in Liveaboard Link.

For me, tons of useful information has been forthcoming and we have acted accordingly. As a consequence, we feel we have done all we can to insulate ourselves against Brexit - if it ever happens!

As Liveaboard Link is the obvious place for all of this debate, I am surprised to see much of the discussion duplicated on this sub- forum.

Makes for a bit of a pain switching between the two.

 

[lw395]

The eU said:
"Where the recreational boat has been released for free circulation at import in the EU or has been manufactured in the EU, it has obtained the customs status of Union goods.
After the UK's withdrawal from the EU or the end of the transition period in case a Withdrawal Agreement with a transition period is concluded, in general, any goods in the customs territory of the UK will lose their Union status and will become UK goods."

To my mind it is a bit of a leap to make that mean 'where your boat is at 0001hrs on B'day is the main thing'.

I think that many yachts belonging to EU nationals, based in the EU, but visiting the UK at that time would be treated as EU VAT paid goods, the same as if they are visiting Turkey at that moment.
And a UK owned boat, predominantly based in the UK will be treated as UK VAT paid goods. Even if it is temporarily in the EU at that time.
The same as if I'm over there in my car at the key moment, or a Polish lorry is delivering something here.

 

[GTom]

The eU said:
"Where the recreational boat has been released for free circulation at import in the EU or has been manufactured in the EU, it has obtained the customs status of Union goods.
After the UK's withdrawal from the EU or the end of the transition period in case a Withdrawal Agreement with a transition period is concluded, in general, any goods in the customs territory of the UK will lose their Union status and will become UK goods."

To my mind it is a bit of a leap to make that mean 'where your boat is at 0001hrs on B'day is the main thing'.

I think that many yachts belonging to EU nationals, based in the EU, but visiting the UK at that time would be treated as EU VAT paid goods, the same as if they are visiting Turkey at that moment.
And a UK owned boat, predominantly based in the UK will be treated as UK VAT paid goods. Even if it is temporarily in the EU at that time.
The same as if I'm over there in my car at the key moment, or a Polish lorry is delivering something here.

American tax resident owns a boat in the Solent, EU VAT paid, planned to visit Brittany next year. Canadian tax resident owns an EU VAT paid boat in Turkey, visiting Greece in half a year (neither are away from the EU customs area longer than 3 years). Both spending the night of B-day outside the EU customs area. What's the story?

 

[sailaboutvic]

So taken what has been written , what the score with UK boats that's not in the UK or EU as the sh@t hits the fan? Are they Eu vat paid ? UK vat paid ? Or nether ?
Too many ifs and buts for my liking .

 

[sailaboutvic]

American tax resident owns a boat in the Solent, EU VAT paid, planned to visit Brittany next year. Canadian tax resident owns an EU VAT paid boat in Turkey, visiting Greece in half a year (neither are away from the EU customs area longer than 3 years). Both spending the night of B-day outside the EU customs area. What's the story?

Just got your question in before me

 

[lw395]

American tax resident owns a boat in the Solent, EU VAT paid, planned to visit Brittany next year. Canadian tax resident owns an EU VAT paid boat in Turkey, visiting Greece in half a year (neither are away from the EU customs area longer than 3 years). Both spending the night of B-day outside the EU customs area. What's the story?

I would guess there is no story.
UK is not involved.
All that happened as far as these people are concerned is that the EU got a bit smaller.

 

[GTom]

I would guess there is no story.
UK is not involved.
All that happened as far as these people are concerned is that the EU got a bit smaller.

UK is involved if that "EU VAT" was paid on their boats in the UK. Also, subject #1's boat is (maybe have been for many years/purchased) in UK waters with UK/EU VAT paid.

 

[Fr J Hackett]

UK is involved if that "EU VAT" was paid on their boats in the UK. Also, subject #1's boat is (maybe have been for many years/purchased) in UK waters with UK/EU VAT paid.

That is correct.

Part of VAT goes to the EU ie if VAT was paid in the UK it is and was EU VAT paid, they cannot legally rescind that unless the yacht stays outside the new EU territories for 3 years. It may require a legal test case but looking at it logically they can only apply the law as it stands today, the law is not retrospective.

 

[lw395]

UK is involved if that "EU VAT" was paid on their boats in the UK. ....

Not really.
What the EU statement does say is that because the UK is currently part of the EU, you can buy something here, pay UK VAT before brexit, freely move it to euroland where it will generally still be EU goods post Brexit.

At the moment there is only the EU. EU VAT paid is the same as UK VAT paid.
At Brexit, the UK leaves the EU, everything that is UK goods becomes UK VAT paid and not EU VAT paid.
Everything that becomes EU VAT paid ceases to be UK VAT paid.
There is uncertainty about edge cases where it's not obvious whether goods 'belong' in the UK or EU.

I've heard it described as a divorce. At the moment everything is 'ours', after, things will be divided into 'hers' and 'mine'. Whether things are located at her place or mine might indicate which way they will go, but it's not the whole story.
There are clearly limits to this simile.

 

[lw395]

That is correct.

Part of VAT goes to the EU ie if VAT was paid in the UK it is and was EU VAT paid, they cannot legally rescind that unless the yacht stays outside the new EU territories for 3 years. It may require a legal test case but looking at it logically they can only apply the law as it stands today, the law is not retrospective.

My boat is in the UK VAT paid. Post brexit, assuming the UK leaves the customs union/(fouled up semi VAT union that we are currently in), my boat will have ceased to be part of the EU and will cease to have EU VAT paid status. That is what Brexit is, the UK leaving the EU.
Of course we may get some sort of soft Brext where we don't leave the f...d up semi VAT union, in which case it's all moot.

 

[Baggywrinkle]

I had the pleasure of driving down to Croatia with an American friend for a weekend sailing in 2017. There is still a border between Slovenia and Croatia and passports are checked. If it's an EU passport, you usually just get waved through. They spotted the American passport and stopped us. While flicking through the passport they then demanded to see her visa, which was a German Aufenthaltserlaubnis (residency permit). She then got strips torn off her for not presenting it with the passport and there was some confusion if it was valid for travel in the schengen area. There was a moment when we thought we might be turned back but in the end we were allowed through.

Every EU state is sovereign when it comes to third countries so Brussels doesn't really have a say, all it is interested in is the free movement of EU citizens anyway. The theory being that as the EU isn't a superstate how can it regulate who each government lets in, if they did then the UKs arrangements with former colonies would come under scrutiny. Free movement to people on visas or residency permits is simple and any EU state can refuse entry for any reason - just like they can with any third country citizen.

That is the difference and I would imagine post-Brexit UK citizens would be treated much like Americans, Canadians, Australians etc. There is unlikely to be much adverse effect but there are no guarantees any more. EU countries will no longer be legally required to let you cross their borders, and the appropriate rules will need to be followed.

As for VAT status, as a UK citizen with a VAT paid boat in the EU, I would consider exporting the boat for a VAT refund and then re-entering the EU under the temporary import rules. (If this is possible). That is how I bought my boat VAT free as a UK citizen before Croatia joined the EU. I left Croatian waters, renamed the boat, hoisted the red ensign and sailed back in again with a q flag 24 hours later. The difference now is that Croatia will be in and the UK out .... so two separate VAT regimes again. Anyone know if this will work?

 

[Fr J Hackett]

My boat is in the UK VAT paid. Post brexit, assuming the UK leaves the customs union/(fouled up semi VAT union that we are currently in), my boat will have ceased to be part of the EU and will cease to have EU VAT paid status. That is what Brexit is, the UK leaving the EU.
Of course we may get some sort of soft Brext where we don't leave the f...d up semi VAT union, in which case it's all moot.

I think that is wrong you have paid your tax to the EU it was part to the original VAT some of which went to the EU. They cannot now say you have not paid the tax. Unless of course you keep it outside of the EU for more than 3 years which was part of the original taxation regulations.

 

[lw395]

I think that is wrong you have paid your tax to the EU it was part to the original VAT some of which went to the EU. They cannot now say you have not paid the tax. Unless of course you keep it outside of the EU for more than 3 years which was part of the original taxation regulations.

Wishful thinking.
My boat will have been exported from the EU, along with the whole of the UK.
Subject to any customs union type of arrangement which still might happen.

 

[lw395]

...

As for VAT status, as a UK citizen with a VAT paid boat in the EU, I would consider exporting the boat for a VAT refund and then re-entering the EU under the temporary import rules. (If this is possible). That is how I bought my boat VAT free as a UK citizen before Croatia joined the EU. I left Croatian waters, renamed the boat, hoisted the red ensign and sailed back in again with a q flag 24 hours later. The difference now is that Croatia will be in and the UK out .... so two separate VAT regimes again. Anyone know if this will work?

I don't think a private individual can reclaim the VAT when exporting goods?

If you are an EU resident, you shouldn't be sailing a TI boat in the EU, but I imagine lots of people are getting away with it. For now.

 

[Fr J Hackett]

Wishful thinking.
My boat will have been exported from the EU, along with the whole of the UK.
Subject to any customs union type of arrangement which still might happen.

Well there you have it EU VAT paid but exported out of the EU on the 29th provided you return to the EU within 3 years your boat should retain its EU VAT status, it can then disappear for another 3 years.

 

[Baggywrinkle]

I don't think a private individual can reclaim the VAT when exporting goods?

If you are an EU resident, you shouldn't be sailing a TI boat in the EU, but I imagine lots of people are getting away with it. For now.

I'm not sure a private individual can reclaim VAT either, but as a non-EU citizen shopping in europe you can reclaim your VAT at the airport on exit or avoid paying it in the first place if the shop allows VAT free shopping.

I bought my boat in Croatia VAT free as I was an EU citizen but Croatia was not yet in the EU. On handover I had to immediately export the boat which meant going through customs and passport control in Split and leaving Croatian waters. I had already prepared the UK registration documents, insurance etc. in advance. We sailed 12 miles off shore and had a renaming ceremony, took down the croatian flag, put up a red ensign, changed the boats name on the transom and hoisted the Q flag. We then sailed north to Mali Losinj where we checked back in as a UK registered boat 36 hours later. Everything went fine and the boat lived in a croatian marina under temporary export until Croatia joined the EU in 2013. I knew this was going to happen and had read up on the EU laws for accession which stated that a boat older than 8 years was VAT exempt when the country it was in joined the EU. My boat was older than 8 years but I had to dig up all the paperwork right back to the builders original sales documentation from Bavaria in Germany, it then went through a leasing company in Austria and a charter company in Croatia - I was able to prove both its history and continuous residence in Croatia. The Croatian governemnt ran a scare tactic to get owners to register in Croatia and pay a reduced 5% VAT but for older boats this could not have been enforced so I didn't pay any VAT and waited until Croatia joined the EU. I then got VAT paid status for a few hundred euros using a Croatian notar and an agent, SeaHelp, so I have the necessary documents for the boat to remain in the EU VAT paid.

So in summary, it's all legal, the question was hypothetical as these sorts of things interest me.

 

[Joker]

"In all this time, I have never been asked (nor anyone else I know) any questions in the UK or the EU about VAT on any of the 3 boats I owned within the EU."
A year or two ago, I got boarded by Dutch Customs in Oostvlieland. They wanted to know whether I had paid VAT on the boat. I had a copy of the original Bill of Sale as a PDF, and showed it to them. Although VAT was itemised on the Bill of Sale, they were still not satisfied. There was an invoice number on the Bill of Sale, and they demanded to see a copy of that invoice. I didn't have it with me. They were not very happy about that, and continue to pursue me by email over the next few months.
Fortunately, when I got home, I did find a copy of the invoice deep in the recesses of my computer, and emailed it to them. I got a reply to say that this was satisfactory and they would not pursue the matter further.

If that happened to me way before Brexit, imagine what might happen after Brexit.

 

[lw395]

Well there you have it EU VAT paid but exported out of the EU on the 29th provided you return to the EU within 3 years your boat should retain its EU VAT status, it can then disappear for another 3 years.

In the fine print of the current rules, does that work for a non-EU national taking a boat out of the EU for three years?
AIUI it's a concession intended for EU nationals who trot off on a world cruise in a boat notionally based in the EU.

We should bear in mind that even now it is sometime possible for EU nationals to permanently import stuff VAT free. For instance returning ex-Pats. Not sure of the detail or if it's the same EU-wide.

 

[Graham376]

A year or two ago, I got boarded by Dutch Customs in Oostvlieland. They wanted to know whether I had paid VAT on the boat.

Did they give any reason for this? I've heard of new boats being pulled if suspected of having been zero rated for export but not old boats.