Yachts / VAT / Croatia

[Danny_Labrador]

There are quite a few yachts for sale in Croatia at the moment.

Many are excluding VAT - (Croatia not in EU at the moment).

However there is a date for the accession of Croatia to the EU of July next year, (2013)

I wonder what will happen to the yachts at that time ?

Will they be forced to add VAT to the price?

Or even have a tax levied on the date (even though the yacht remains in the same ownership) ?

 

[macd]

There was a thread a while back about precisely this. Might be worth your doing a search.

What happened in much of the rest of the EU was that existing boats became 'deemed VAT paid' if they met certain qualifying conditions. For the UK, one such condition was being manufactured before 1985. For some other countries which joined the EU later (such a Finland), a later date applies. In neither case was VAT levied on boats which remained in the same country and ownership.

Whether a parallel situation would apply with Croatia, I've no idea but I certainly can't see Croatian resident nationals sitting still whilst being told to stump up 20% (or whatever) of their boat's value.

Clearly you need authoritative advice.

 

[BrianH]

There was a thread a while back about precisely this. Might be worth your doing a search.

One of many is here.

Basically, at accession in July 2013, all EU-registered (which will include Croatian), non-VAT paid vessels, constructed less than nine years before accession, will be immediately charged 23% VAT of current value.

 

[Danny_Labrador]

One of many is here.

Basically, at accession in July 2013, all EU-registered (which will include Croatian), non-VAT paid vessels, constructed less than nine years before accession, will be immediately charged 23% VAT of current value.

Good you seem to have knowledge - what happens to boats older then the 9 years you mention ? - sliding scale ?

Also thinking about it 23% at day one is going to be harsh - do you reckon they will get some form of relief ?

 

[BrianH]

what happens to boats older then the 9 years you mention ? - sliding scale ?

My understanding is that they will be deemed VAT-paid.

Also thinking about it 23% at day one is going to be harsh - do you reckon they will get some form of relief ?

The Croatian Finance Ministry informed the author of the 888 Hafen Handbuch that there will be no relief from full and immediate VAT imposition on July 2013, when eligible.

And a correction to my first posting: "The Croatian government has agreed to a 2% VAT rise in the standard rate to 25%. The implementation date is set for 1 March 2012." (International VAT & GST Services)

 

[nigelmercier]

However there is a date for the accession of Croatia to the EU of July next year, (2013)

And before that it was 2007, 2008, 2009 ...

Didn't stop the thieving bar stewards charging VAT at the marina.

 

[jimbaerselman]

Didn't stop the thieving bar stewards charging VAT at the marina.

Of course not. Value added tax in Croatia was first "gazetted" in 1995. VAT isn't peculiar to the EU, and has long been established as a consumption tax in Croatia. I'm not sure which was the actual year of introduction, but it would have been then or soon after.

In 2002 agreements with the EU were established as part of accession process.

It is therefore likely that most boats built after 1995 (or soon after) were VAT charged. Those built before VAT was charged will be deemed VAT paid. Same process UK went through.

So there should be no problem . . . obtain a VAT receipt for boats younger than whenever, and older boats - check proof of age. Tough luck on recent home made boats if you didn't keep all the receipts . . . just like UK.

 

[RupertW]

I wonder whether Croatia will issue some kind of "VAT paid" documentation to boats which are leer than 9 years old and resident in Croatia. If not then when going to another EU country the boat may then become liable.

We are also thinking of basing the boat in Greece next year which raises another dilemma - should we wait in Croatia for EU accession first?

 

[Baggywrinkle]

The following was published in the German yachting press in April. (lots of Germans keep VAT unpaid boats in Croatia as do I).

http://www.boote-magazin.de/test_te...tsteuer-was-eigner-wissen-muessen/a39985.html

Put it through Google translate if your German isn't up to it.

The salient points are ...

No-one knows for sure but the assumption is....

You will be charged VAT at the Croatian rate based on the current market value of the boat. (23% or 25% depending on what they get away with)

If the boat was in service in Croatia before 1st July 2005 then it will probably be deemed VAT payed (need proof). - I'm really not sure about this one.

One thing is certain. There will be an exodus of EU boats from Croatia if there is not some kind of concesion. 23-25% is way above all neighbouring countries VAT rates, and they're only a day sail away.

Nearer the time it will probably become more concrete.

 

[RupertW]

The following was published in the German yachting press in April. (lots of Germans keep VAT unpaid boats in Croatia as do I).

http://www.boote-magazin.de/test_te...tsteuer-was-eigner-wissen-muessen/a39985.html



If the boat was in service in Croatia before 1st July 2005 then it will probably be deemed VAT payed (need proof). - I'm really not sure about this one.

.

And this where we will get caught, I'm sure. The boat was built in 1999 but spent its chartering life in Croatia and has never moved from there....except when it was exported from Croatia and imported back in again on the same day in 2010 when we bought it. At that point it moved from Croatian registration to SSR. So I'd love to know what the definition of "in service" is.

 

[BrianH]

One thing is certain. There will be an exodus of EU boats from Croatia if there is not some kind of concesion. 23-25% is way above all neighbouring countries VAT rates, and they're only a day sail away.

More important than competing VAT rates will be the assessed values. From other countrys' examples they could be generous (to the owners). However, from thirty years of cruising Croatia (and its predecessor, Yugoslavia) and paying their exorbitant fees, I would not be too optimistic.

 

[Danny_Labrador]

Done quite a lot of reading trying to get up to speed on this.

Can someone explain please what the Delaware Flag is ? and what it does for the owner ? - what nationality would the owner likely be ?.

Also I would like to keep right up to date with news as it develops - you guys seem to be in the know (and you have to be really careful who you listen to on this subject).

Will you all be deviating the dedicated forum as you learn more - I notice that activity ceased around January of this year.

Many thanks

 

[Tranona]

All "Delaware flag" means is that the boat is registered in the state of Delaware USA. Very common place for people to register their boat if they don't want to, or can't, use their own state registry. Owners could be any nationality, but commonly Israeli, Turkish, Croatian and other countries where the owner might not want to advertise his nationality.

 

[BrianH]

Can someone explain please what the Delaware Flag is ? and what it does for the owner ? - what nationality would the owner likely be ?.

After their successful breakaway from the crumbling Yugoslavian Federation but before acceding to the EU, Slovenia introduced a swingeing tax on all imported leisure boats as protectionism for the local Elan range. I wondered then at the profusion of US ensigns and DLxxx registrations throughout the Adriatic.

Chatting by chance to a Slovenian on the island of Ilovik one year I learned that he too had a Delaware-registered boat to circumvent the import tax. He told me that the boat was registered by a Delaware company to whom he paid $100 a year.

Of course, the tax had to be rescinded as illegal protectionism on EU accession.

As Tranona points out, there are many who need a flag of convenience - the latest rash of Delaware-registered yachts I met in the Adriatic this year were Israelis.

 

[BrianH]

One thing is certain. There will be an exodus of EU boats from Croatia if there is not some kind of concesion. 23-25% is way above all neighbouring countries VAT rates, and they're only a day sail away.

Italy has again become a candidate. After enormous lobbying from the leisure boating industry Mr Monti has again amended his new boat tax. Only Italian registered boats on the official registry will be eligible for the tax.

The collective sigh of relief in my Italian marina from the large number of German and Austrian boat owners was almost audible.

 

[BrianH]

Flags of Convenience

As I commented above, I have met some Delaware-registered yachts cruising the Adriatic this year. Other than the short spate of Slovenian tax-dodgers mentioned, the numbers of such over the past few years had fallen, but this year I saw more.

Perhaps that had something to do with what a charming couple with whom I shared a Croatian anchorage with in July, told me. They were a genuinely-flagged US yacht now on their 21st year of world cruising and said how much better was their international reception since the departure of a certain Texan president. They did say though that they avoid the middle-eastern countries.

And before anyone gets sniffy about countries that offer flags of convenience, don't forget that the red duster is about the most common of them. Anyone can use a UK agency to Part I register their yacht, irrespective of nationality or residence; all you need is money -quite a lot of it.