Warning, think you are VAT paid in the EU? ... Think again - both Slovenien and Croatian port authorities refuse to recognise VAT paid status of boat.

[Baggywrinkle]

I'm selling my boat in Croatia to buy a newer one. It has always been in Croatia, it is VAT paid and has the EU declaration to show this with MRN number and official customs documentation - completed by the port authority in Pula. I have a buyer who lives in Slovenia, and the boat was advertised as VAT paid.

The Pula authorities say that because it is on the British Ship Register, and because of the word we can't mention here, it is no longer a VAT paid boat and the new owner will have to pay VAT and import costs.

Here is the E-Mail from the yacht broker ...

Dear Mr. xxxxxxx,

First I would like to apologize for the delayed reply, but I have been out of the office due to a business trip.

Thank you for the all documentation which you sent to us.

This morning I have been in the port authority office in Pula, and actually, I got the same answer as the buyer, Mr. Bojan, from the Slovenian port authority office.

The boat is registered under the UK flag, and that is what they will look for. To register the boat in any other country, for any other customer, you will have to delete the boat from the UK register. That document shows that the boat is under the UK register, and after the Brexit, the port authority will not accept it as a customs-cleared boat.
In case that someone would like to register the boat under the Croatian flag, the customs procedure needs to be done, therefore the VAT and customs fee need to be paid.

I spoke to Mr. Bojan and despite of that, still would like to buy your boat. Considering that the boat is offered as VAT paid boat, and actually, the market price is for the boat as VAT paid, there are a few other solutions in this situation:

1. With all documentation which you sent to us, you could ask in Germany, considering that you have a residence there if you are able to re-register the boat under the German flag without customs clearance procedure.

Actually, the same question as for the port authority offices in Croatia and Slovenia.
If you will be able to register the boat, then you will have to do the German registration and the boat will be sold as the boat registered in Germany, where you will get the deletion certificate from the German register, country member of EU.

1. I have discussed the option of re-register under the Polish flag. I will get an official letter from the agent where will be written that you will be able to re-register the boat under the Polish flag. Later, like with the German register, you will get a deletion certificate from the Poland register, country member of EU.

1. Considering that the boat is offered as VAT paid boat and because it is registered in the UK, meaning that Croatia nor Slovenia will accept the deletion certificate and customs clearance documents as VAT paid boat, Mr. Bojan would like to buy the boat as the boat without VAT, meaning that he will buy the boat but the price needs to be reduced for those costs.

Please, check the first option, considering that you are a resident of Germany, and that option could be the best for now.

Looking forward to your reply.

Yours sincerely,

xxxx xxxxxxx

.... anyone got an ideas how this can be escalated and cleared up because it does not seem to match up with what the CA and the RYA have been telling us ...

 

[Sandy]

I'd write to your MP and ask if HMRC could comment.

 

[Tranona]

.... anyone got an ideas how this can be escalated and cleared up because it does not seem to match up with what the CA and the RYA have been telling us ...

Exactly a similar thing happened in Greece. It is the local authorities incorrectly applying EU law which changed as a result of the withdrawal agreement which made boats in the EU on 31/12/2020 VAT paid.. The way forward is to present a complaint to the Commission. Chris Robb who posts here went through this process in Greece, who also initially refused to implement the law correctly and successfully got the complaint upheld. Greek authorities now accept that UK boats there on the date are VAT paid in the EU. VAT payment is nothing to do with state of registry and that was the reason the Greeks used to get it wrong!

However your situation is rather different as you actually paid VAT in Croatia so they are getting it totally wrong. Your boat has always been EU VAT paid.

If you search down the liveaboard forum you will find Chris's account of the saga including the complaint process. The CA know all about it as Chris is their representative for Greece.

Good luck.

 

[Wing Mark]

I'd write to your MP and ask if HMRC could comment.

Not really anything to do with UK parliamentarians or tax people if the OP lives in the EU.
Why is it registered in the UK?

Ships have a whole wrold of weird tax status.
Yachts are sometimes a funny grey area between ships, vehicles and 'chattels or goods.

I suspect the OP has been caught out and lost the 'flag of convenience' game.

 

[Sandy]

Not really anything to do with UK parliamentarians or tax people if the OP lives in the EU.
Why is it registered in the UK?

HMRC should have the answer, the access route is via the MP nothing to do with parliamentarians.

 

[Wing Mark]

HMRC should have the answer, the access route is via the MP nothing to do with parliamentarians.

Whoosh!

 

[Sandy]

Whoosh!

Oh well it has worked well for me in the past on technical questions that the local office were struggling with. You could always go to the media.

 

[Daydream believer]

You could always go to the media.

Will the problems of a wealthy yachtsman, in a far away country, sell newspapers to the people in darkest Grimsby etc.

 

[lustyd]

Yes but in the past HMRC were in the EU and applying EU laws. Now it’s literally none of their business.

 

[dankilb]

I’d take the broker’s advice and re-flag. It’s only the UK reg that’s the issue, right?

Agree with sentiments above. Welcome to B. land!

 

[Wing Mark]

I’d take the broker’s advice and re-flag. It’s only the UK reg that’s the issue, right?

Agree with sentiments above. Welcome to B. land!

But he might have to pay the VAT to do that, that is the point.

 

[Ink]

HMRC should have the answer, the access route is via the MP nothing to do with parliamentarians.

How is this anything to do with UK VAT?

Ink

 

[dunedin]

How is this anything to do with UK VAT?

Ink

I agree- clearly it is not something for UK / HMRC. As usual, Tranona in post #3 is on the money.
The Croatian official doesn’t understand the EU Directorate guidance.

 

[Wing Mark]

I agree- clearly it is not something for UK / HMRC. As usual, Tranona in post #3 is on the money.
The Croatian official doesn’t understand the EU Directorate guidance.

Keyword there is 'guidance'.
Rules are for obedience by the victims and the guidance of the jobsworths.
Former communist countries full of pen pushers who like to cause pain to affluent foreigners. well there's a thing!
Has the OP actually got a receipt for VAT paid in the EUSSR?

Has he been dodging charges or taxes by keeping the boat under a UK flag?
Is he entitled to a UK flag?

Without the heel-dragging effect of the Uk being in the EU, this sort of thing is only going to get worse.

I don't think we've seen half of it yet, the EU countries will want to tax anything foreign, whether it's google or tourists or piss-taking yacht owners.

 

[Sandy]

How is this anything to do with UK VAT?

Ink

I won't comment as I suspect that my response will take me outside the Forum Rules. But HMRC should have some understand of what was agreed.

 

[Tranona]

I won't comment as I suspect that my response will take me outside the Forum Rules. But HMRC should have some understand of what was agreed.

But it is nothing to do with HMRC, nor anything to do with the withdrawal agreement. The VAT was paid in Croatia when Croatia joined the EU. The only connection to the UK is that the boat is registered in the UK, perfectly legally.

The issue is about how the Croatian authorities are making up their own rules and ignoring the EU rules. There is nothing new about this sort of situation - Croatia (and other EU states) for example demand a form T2l as evidence of VAT payment when although it is an EU form it does not do what they think it does and is legally totally unnecessary. The OP has all the paperwork required to enable him to sell as a private citizen to whoever he wants within the EU without anybody paying VAT. His challenge is to convince the port authorities in Pula that this is the law which will probably mean a complaint to the Commission in Brussels against Croatia.

 

[Wing Mark]

But it is nothing to do with HMRC, nor anything to do with the withdrawal agreement. The VAT was paid in Croatia when Croatia joined the EU. The only connection to the UK is that the boat is registered in the UK, perfectly legally.

The issue is about how the Croatian authorities are making up their own rules and ignoring the EU rules. There is nothing new about this sort of situation - Croatia (and other EU states) for example demand a form T2l as evidence of VAT payment when although it is an EU form it does not do what they think it does and is legally totally unnecessary. The OP has all the paperwork required to enable him to sell as a private citizen to whoever he wants within the EU without anybody paying VAT. His challenge is to convince the port authorities in Pula that this is the law which will probably mean a complaint to the Commission in Brussels against Croatia.

Except he's chosen to register it as a foreign ship.

 

[Baggywrinkle]

Except he's chosen to register it as a foreign ship.

At the time the boat was registered, I was living in Germany on a UK passport. I chose to register the boat in the UK so it would match my passport and when checked there would be no discrepancy between my nationality and the flag state of the boat. All perfectly reasonable IMO.

 

[Irish Rover]

At the time the boat was registered, I was living in Germany on a UK passport. I chose to register the boat in the UK so it would match my passport and when checked there would be no discrepancy between my nationality and the flag state of the boat. All perfectly reasonable IMO.

It's really not the business of anyone on here why you registered your boat in the UK nor should you have to offer an explanation. I don't understand the mentality of posters wanting to have a pop at others for no good reason. Listen to @Tranona and ignore the begrudgers.

 

[Tranona]

Except he's chosen to register it as a foreign ship.

That is completely irrelevant from a VAT point of view - as is the citizenship and residence of the owner. VAT is a tax on transactions and all that EU law requires is that there is evidence that VAT was paid to allow free movement around the EU, including being able to sell it anywhere in the EU without VAT being paid on the transaction.

The problem is that the Croatian authorities are either ignorant of the law or have deliberate policy of ignoring it. Hence the advice to take it to the Commission through a complaint. May be a bit tedious and cost, but as the action by the CA in Greece shows it works.