Why not buy a decent boat in a cheaper country ?

[theoldsalt]

Just a point of interest for those more knowledgeable that I.

What happens with VAT if a boat is bought in a non EU country which subsequently joins the EU. Would VAT be payable if it was brought back to the UK ?

 

[simonfraser]

I guess no one is ging to own up, but,

What are the chances of an 'imported' boat receiving a visit from the VAT / EU police ?

'only' a prob when you come to sell ?

 

[Tranona]

Just a point of interest for those more knowledgeable that I.

What happens with VAT if a boat is bought in a non EU country which subsequently joins the EU. Would VAT be payable if it was brought back to the UK ?

If the country joins the EU (as Croatia is about to do) then there are transitional arrangements covering boats in that state. In Croatia it is expected that there will be a charge based on the current value of the boat and on payment a certificate will be issued which will be accepted throughout the EU. If a boat is brought in from Croatia now it will be subject to VAT on its value in the country it enters.

 

[Tranona]

I guess no one is ging to own up, but,

What are the chances of an 'imported' boat receiving a visit from the VAT / EU police ?

'only' a prob when you come to sell ?

Leaving aside the fact that it is an offence not to declare the gooods...... The liability remains both with the person responsible AND the boat. So although a smuggler may choose to ignore the law, they should do so in the knowledge of the penalties, plus the permanent threat of a charge against the boat.

 

[TQA]

Registration per se is completely irrelevant as far as importing a boat into the EU is concerned. VAT is not a tax on boats, but on a transaction, and bringing a boat (or any other asset) into the EU is a "chargeable event" and therefore triggers a Tax liability of 20% (give or take depending on the EU state) of the value, unless it qualifies for one of the (limited) exemptions. In addition the boat has to meet the requirements of the RCd unless it is already exempt, which broadly only applies if it was built in the EEA prior to 1998 or was certified after 1998. Most US boats (or boats built in, say the Far East for sale in the US) are not certified.

So, as I said earlier, if you intend using the boat outside the EU there may be bargains to be had, but as soon as you want to import it into the EU (or Australia and New Zealand) you will find problems and additional costs.

Tranona I was referring to the problem of US State Sales Tax which kicks in shortly after a boat is bought in Florida. Currently 6%.

By registering it SSR you fall off the Florida tax radar but technically I think the boat should be removed from Florida waters within 30 ?? days. Not all do this.

 

[Jim@sea]

I guess no one is ging to own up, but,

What are the chances of an 'imported' boat receiving a visit from the VAT / EU police ?

'only' a prob when you come to sell ?

Exactly, I imported a boat in 1982 from the Channel Islands, 5 years later after I had sold it I had a visit from a VAT Inspector who travelled 250 miles to see me to find out if I had paid the VAT. This was despite the boat having been made and used in the UK BEFORE Vat was introduced in April 1973. It was only taken to the Channel Islands after VAT came in by the second owner.
The point is that the owner I sold it to in the UK was selling it, this is what perhaps triggered the enquiry, or perhaps it was a Customs Officer seeing a boat sailing into their harbour and wondering about its finantial pedigree.

 

[testmonkey]

If the country joins the EU (as Croatia is about to do) then there are transitional arrangements covering boats in that state. In Croatia it is expected that there will be a charge based on the current value of the boat and on payment a certificate will be issued which will be accepted throughout the EU. If a boat is brought in from Croatia now it will be subject to VAT on its value in the country it enters.

When Estonia joined EU in 2004, all boats in Estonia automatically gained EU VAT paid status. This was a time when a lot of profit was made by certain yacht brokers doing business with customers closeby in Baltic basin, i.e. Sweden, Finland etc. Similar opportunity may exist in Croatia when the country joins EU.

Buying in Croatia now may be an opportunity to benefit from the country's entry into EU. Country of registration may play a role so probably better to keep a Croatian flag and registration on the boat if possible...

 

[alant]

This is a very well trod path. Boats are cheaper elsewhere (or not) because it reflects demand. If few people want to buy them the price will fall. The only price that matters is the cost of buying and getting a boat to where you want to use it.

So, some examples. Boats are "cheap" in the US - because generally there are no big taxes on them and US buyers prefer new boats, so anything that is old or unusual will be "cheap". This is great if you want to use your boat in the US or the Caribbean for example. However, if you want to use it in the EU, you first have to get it across the Atlantic (£12k) then you have to get it to comply with EU regulations - anything up to £8k for a reasonable size sailing boat, assuming you can get all the required data. Then possibly duty (depending on boat) and VAT at 20% on top of all that. So a boat that cost you £50k in the US could easily cost you an EXTRA £30k to get it to the EU. The market value will almost certainly be less than a straightforward EU boat. As Eugene says, there are some boats where it is possible to do this economically - usually smallish power boats which are cheap in the US, specs very close to EU, and good demand in UK because of limited supply.

On the other hand you find even within the EU wide variations in price. For example boats are expensive in Italy because of local taxes and bureaucracy, relatively cheap in Greece because of lack of local demand and boats are owned by non-residents. However, it costs anything up to £10k to bring a boat from Greece to UK (I know, I have done it), so only worth buying in Greece if you want to use it in that area.

Other cross border purchases (and sales) can be worth it. For a period post 2008 UK based boats were cheaper (in Euros) than in Northern Europe, so many boats were sold to French/German/Swedish etc buyers. On the other hand, Holland can be a good place to buy, particularly older British boats which are not now so popular there so tend to be cheaper than here.

And so it goes on - just basic economics of supply and demand, with variable exchange rates thrown in for a bit of excitement. You just have to look at each situation, weigh up the pros and cons and see how they fit in with your needs.

Don't forget that some 'european' boats (eg bavaria) are built in the US, so may be a different spec than a true EEC one.

 

[Tranona]

Don't forget that some 'european' boats (eg bavaria) are built in the US, so may be a different spec than a true EEC one.

Yes - don't think Bavarias are, but Beneteaus are, and they do not have a CE mark. However, like some US built boats (Legends and Island Packets for example) have been built to CE so these and the Beneteaus may be easier to get post construction certification.

 

[Tranona]

When Estonia joined EU in 2004, all boats in Estonia automatically gained EU VAT paid status. This was a time when a lot of profit was made by certain yacht brokers doing business with customers closeby in Baltic basin, i.e. Sweden, Finland etc. Similar opportunity may exist in Croatia when the country joins EU.

Buying in Croatia now may be an opportunity to benefit from the country's entry into EU. Country of registration may play a role so probably better to keep a Croatian flag and registration on the boat if possible...

Unfortunately no. The Croatian government has already made it clear that existing boats will have to pay a tax equivalent to VAT based on a valuation - actual method not yet determined. Unlike Estonia there are literally thousands of untaxed boats in Croatia and the government is not going to pass up the opportunity to raise significant revenues rather than allow the increase in value to accrue to owners!

Subject has been covered at great length recently on both Scuttlebutt and Liveaboard as information has come from the authorities.

 

[BrianH]

Unfortunately no. The Croatian government has already made it clear that existing boats will have to pay a tax equivalent to VAT based on a valuation - actual method not yet determined. Unlike Estonia there are literally thousands of untaxed boats in Croatia and the government is not going to pass up the opportunity to raise significant revenues rather than allow the increase in value to accrue to owners!

Subject has been covered at great length recently on both Scuttlebutt and Liveaboard as information has come from the authorities.

The Croatian finance ministry has already made a statement on this. All owners of non-VAT paid boats, eight or less years old, will be taxed at 23% of the 2013 value.

 

[Tranona]

The Croatian finance ministry has already made a statement on this. All owners of non-VAT paid boats, eight or less years old, will be taxed at 23% of the 2013 value.

Anything on older boats? There are quite a lot from the early 2000s when the charter business started up again that could be bargains if they get VAT paid status without paying anything.

 

[BrianH]

Anything on older boats? There are quite a lot from the early 2000s when the charter business started up again that could be bargains if they get VAT paid status without paying anything.

The official statement (that I only have in German from the 777/888 Hafen publisher) specifically states the 8 year cut-off.

As you point out, there will be plenty of older, ex-charter yachts in Croatia that will look attractively priced, if they don't change the rules up to the July implementation. Unusual for Croatia to miss such a financial bonanza. No doubt the market will adjust to factor in this anomaly.

Edit:
Presumably, a deemed-VAT Paid status for a pre 2005, Croatian-based yacht will only be recognised while in Croatia. Take it to Italy and the Guardia di Finanza may have other ideas.

 

[Tranona]

Edit:
Presumably, a deemed-VAT Paid status for a pre 2005, Croatian-based yacht will only be recognised while in Croatia. Take it to Italy and the Guardia di Finanza may have other ideas.

Maybe not if past history is anything to go by. Depends on how the transition arrangements are worded. As you may know in other accessions there have been criteria included to establish potential "deemed VAT paid" status, and some states have issued certification to that effect, both of which are accepted across the EU.

 

[BrianH]

Maybe not if past history is anything to go by. Depends on how the transition arrangements are worded. As you may know in other accessions there have been criteria included to establish potential "deemed VAT paid" status, and some states have issued certification to that effect, both of which are accepted across the EU.

I agree, it all depends if the subject boats are eligible to apply for a "deemed VAT Paid" document. Without it the owner of a post-1984 built yacht (a common 'deemed VAT-paid' build-year elsewhere in the EU) would be a captive customer paying for the increasingly expensive moorings there.

 

[Boo2]

The point is that the owner I sold it to in the UK was selling it, this is what perhaps triggered the enquiry, or perhaps it was a Customs Officer seeing a boat sailing into their harbour and wondering about its finantial pedigree.

Interesting point. There's basically no way that the VAT man's interest can be aroused on a boat sale between private individuals, and if you were inspected by the UK Border Agency or Customs then your UK passport should be enough to fend them off since ships' papers are not required of a UK boat owner in UK waters.

Boo2

 

[Ben Dockrell 22]

Tell me if im wrong but........

A while ago i noted anything being imported in the present was taxable, however if the product was bought then kept by the owner in the same location for six months or more it would not be taxed ?


Though of course i could be wrong, i saw this some time ago as i say, just thought of it now.

 

[Tranona]

Tell me if im wrong but........

A while ago i noted anything being imported in the present was taxable, however if the product was bought then kept by the owner in the same location for six months or more it would not be taxed ?


Though of course i could be wrong, i saw this some time ago as i say, just thought of it now.

Yes, completely wrong - well almost. If you imported a boat under the returning residence relief scheme it would not be subject to VAT and you could sell it after 6 months. However (and a big however) the number of people who can claim this type of relief is tiny as the conditions are very restrictive.

Suggest if you want to understand the basics of VAT and boats you go onto the RYA site which has a substantial FAQ document on the subject, or you can read the HMRC VAT Notice No 8 which sets out the ground rules.

 

[Tranona]

Interesting point. There's basically no way that the VAT man's interest can be aroused on a boat sale between private individuals, and if you were inspected by the UK Border Agency or Customs then your UK passport should be enough to fend them off since ships' papers are not required of a UK boat owner in UK waters.

Boo2

There are many ways in which HMRC could ask about VAT on a boat, although they do not seem to go routinely snooping.

However, the liability for paying VAT never leaves the person who was responsible for importing the boat, and HMRC can always register a charge against the boat, even though a subsequent owner has not broken the law, nor is responsible for paying VAT. The first owner would also be potentially guilty of fraud by declaring the boat was free of all charges, when it was not.

If all parties are happy with that scenario - seller still liable, and guilty of fraud and buyer owning an asset that is not free of a potential charge against it, then they could carry on as if nothing has happened.

Not sure many people are prepared to take that sort of risk if they know the consequences.

The reality is that there are probably very few smuggled boats and it is relatively easy to spot if there is something wrong.

 

[alant]

Yes - don't think Bavarias are, but Beneteaus are, and they do not have a CE mark. However, like some US built boats (Legends and Island Packets for example) have been built to CE so these and the Beneteaus may be easier to get post construction certification.

Saw some Bavaria's in Vancouver, which I was told, were built in US.