Workable VAT Plan ?

[v89122]

OK so here's the hypothetical proposition - of course I wouldn't actually do this, you understand
1. Buy new Bav and keep it in Croatia
2. Get separate billing for the basic boat and for the extras which add about 20% or more to the price
3. Keep the boat in Croatia a couple of years to get depreciation
4. Approach the accommodating Spanish ( without taking the boat to Spain ) and negotiate a favourable depreciated value using the bill for the basic boat only
5. Pay VAT to Spain and sail the EU freely thereafter with VAT-paid papers
Is this workable ? Can the boat be UK-registered throughout ?

 

[thefatlady]

Yes.

A few years ago, I bought an 18 month old Sunseeker which was:
bought by a Dutchman
free of VAT via a Guernsey company
British registered throughout
kept in France
at 11 months old was VAT paid in Spain on agreed price.

No problems with EU-wide valid paperwork.

 

[Sailfree]

Like most tax reduction schemes a minority can get away with it but when the numbers become large enough Greedy Gordon will want his slice.

The UK VAT can always check that the sale price was a fair reflection of the value and surcharge you if it was not.

Trust you are not tracable through this posting as they all have financial targets now.

 

[Oliveoyl]

But can an EU member question a VAT transaction which was perfectly valid in another EU state? I think not.

 

[jonic]

UK VAT office is now actively targeting avoidance on large yachts, won't be long until thay are after the smaller ones too.

 

[pmyatt]

You could even use Cyprus where VAT is 15% and yacht depreciation is 5% per annum on purchase price.

 

[wotayottie]

[ QUOTE ]
But can an EU member question a VAT transaction which was perfectly valid in another EU state? I think not.

[/ QUOTE ]

Very much so. Ask the French! As the UK resident owner bringing back a UK boat into the UK your tax liability is to the UK. Whetther they would (if they ever bothered) charge you the full vat or just the extra I do not know.

 

[thefatlady]

Alternatively, you can use French, Italian or Maltese leasing schemes to effectively halve the amount of VAT paid. There are also IOM schemes run by the likes of Ernst & Young, Anglo Irish Bank, etc. and the boat can be UK flagged.
A Google search will bring up a number of sites.

 

[Oliveoyl]

If the UK try this, it's a contravention of the 6th directive, where VAT is paid only once per tranassaction in the EU. So if you bought your boat in Cyprus, and paid 15%, then it's an EU VAT paid boat, end of story. If Mr Brown + co try otherwise, take 'em to court!

 

[Oliveoyl]

But beware IOM (and Channel Islands) - not part of EU for VAT

 

[thefatlady]

I believe you are correct.
AFAIK the only time an EU VAT paid boat can be charged VAT again is if it has been taken out of the EU for more than three years or sold outside the EU and then brought back in.

 

[thefatlady]

I believe the IOM is a special case.
See here or here for EU VAT paid certification.

There are others.

 

[wotayottie]

[ QUOTE ]
take 'em to court!

[/ QUOTE ]

Really practical!

 

[saxonhouse]

Hi, may i butt in with what is probably a dumb question .... what is the cut off date for the age of a boat when you do not have to prove its VAT status - I understood this was pre 1985 boats ?
Anyone know for sure ?

 

[saxonhouse]

Anyone know the age / year a boat was built when you don't have to provide proof of VAT status ? I heard this was pre 1985 boats ??

 

[EME]

15 posts and most 10 yo-s could have provided better information. ( Sorry, I've had a bad day)

VAT is recognised EU-wide ... it is only paid once.

IOM-schemes have little to do with residence or domicile --- dodgy. Ask a marine lawyer or 2 !

Spain is no longer a sleepy 'EU' marine community.

If you own a boat pre-1985, VAT is the least of your problems !

UFO - it isn't about 'proof' it's a question of whether VAT is actually payable or not ...

 

[thefatlady]

16 (now 17) posts and yours has provided less information than any other offer of information. Do you have a contribution to make?

Perhaps you are aiming at the 5 year-old level?

 

[Sailfree]

A few points,

The VAT amount can vary between countries and the UK cannot impose a higher rate on returning to the UK but I get the impression people on here think the IR are idiots. THe IR are governed by UK lawe though and are often limited to playing catch up on tax avoidance schemes. Interesting to note though that in a recent budget GB ruled that any scheme to avoid tax is illegal allowing the IR to decide instantly but risk the possible court challange. (NB most other EU countries already have a similar law)

Its such an obvious tatic for one EU country to gain extra revenue by being kind on a yacht valuation that all countries reserve the right to reassess that value if it is obviously a way of avoiding tax. However if one countries rate is lower than another using that country (eg the comment on Cyprus is correct but only if it the place where you are buying the boat or your 1st port of entry into the EU- your cannot hawk your boat round every EU country to get them to bid on value x their VAT rate!!) it is legitimate to pay VAT in that country that is legal tax reduction!

Therfore ist is legal to buy a boat in France and pay French VAT or you can buy it in any EU country for export and get it VAT free but cannot keep it in the EU. This however enables you to buy say in France VAT free but declare it on arrival and pay the lower UK VAT rate.

At present the leasing schemes seem to work (50% VAT) but the boat must be registered in that country. providing only a few do it and keep their heads down it will be OK but I met one in Brest that normally keeps his boat in the UK. I suspect if enough do it then the IR will look at whether its worth the bother to chase these individuals.

I think GB's attitude is being taken up by the IR - anyone that owns a yacht has an excess of money and should be taxed more to help the needy. THe French are more friendly if you do anything that supports French Industries/businesses hence the many schemes they start to promote French boatbuilding. I am convinced it won't be long before more of us buy our boats in France and keep them in cheap French Marinas.

I seriously looked at it last time and the thought of placing the next boat with a French Charter company is bnecoming more attractive due to the IR's attitude.

 

[thefatlady]

Agree with all you say, except [ QUOTE ]
At present the leasing schemes seem to work (50% VAT) but the boat must be registered in that country.

[/ QUOTE ]
From here
[ QUOTE ]
In summary, whether you are looking to save VAT on your boat or yacht using a French or Italian lease, retain equity by negotiating a marine mortgage, or buy a berth in Spain using a Spanish bank mortgage, Marinablu has the solution. And finally, remember that with a leasing finance solution, your boat can still be registered in the UK.


[/ QUOTE ]
If using the Maltese scheme, at one point in the transaction, the boat must visit Malta. I have a suspicion that in that particular case, it must be Maltese registered.

Looking at the figures, it seems to roughly work out that the bank soaks up the VAT saving in interest, so that the total paid is almost as much as it would have been with full VAT, but the financing enables the purchaser to keep a chunk of his money in the (UK) bank and earn interest (which the IR will tax, of course). Thus, the IR gain some tax which they otherwise would not get from a boat purchased abroad.

As you say, IR are not idiots. In fact, they are normally up with all the tricks. However, there are still legitimate schemes in which they have no power to interfere, mainly run by foreign governments to boost their boating industry.

 

[wotayottie]

Mind you, if you are buying a new Bav with all that implies for depreciation, why worry about a percent or two in vat? You could save much more by buying a different brand of boat, surely.