Boats.... Tax paid and tax unpaid
Discussion
A cut and paste jobbie but worth reading :-
I am buying a boat outside of the EU, eg Turkey, USA, Channel Islands, what is the VAT position?
'ANY yacht purchased outside the EU will be liable for VAT, regardless of age or previous tax history. There may also be Import Duty unless the boat is more than 12 metres length overall, or built in the EC. Charges become due at the first port of call.' (source: HM Customs & Excise)
One of the most common VAT pitfalls seems to be a misunderstanding about VAT status and the fact that it can change throughout a boat's life. For example, if a boat has been bought in the UK VAT-paid and is then taken outside the EU to Turkey or the USA where it is eventually sold, it has LOST its original VAT-paid status. This means that VAT will again be payable on the boat if it is brought back by the new owner, who is an EU citizen, into the EU. VAT must be paid in the first port of call within the EU.
This also means that if a boat is owned by an EU citizen in a non-EU country and is VAT-unpaid, it may not be used to visit the EU even for a day unless VAT is paid on it immediately on entry to the EU.
Countries that are currently outside of the EU or the EU VAT area include: Turkey, Croatia, Channel Islands, Gibraltar, USA, South Africa, New Zealand, Australia. Please note that the list is not exhaustive.
Please note that this FAQ is intended a guide only.
Further information can be found at:
National Advice Service Tel: 0845 010 9000
HMCE Notice 8 "Sailing your pleasure craft to and from the United Kingdom". Click here to visit the HMCE website and view a copy of Notice 8.
HMCE Information Sheet "UK Guide for Yachts". Click here to visit the HMCE website and view the information sheet "UK Guide for Yachts".
http://www.hmce.gov.uk
I am buying a boat outside of the EU, eg Turkey, USA, Channel Islands, what is the VAT position?
'ANY yacht purchased outside the EU will be liable for VAT, regardless of age or previous tax history. There may also be Import Duty unless the boat is more than 12 metres length overall, or built in the EC. Charges become due at the first port of call.' (source: HM Customs & Excise)
One of the most common VAT pitfalls seems to be a misunderstanding about VAT status and the fact that it can change throughout a boat's life. For example, if a boat has been bought in the UK VAT-paid and is then taken outside the EU to Turkey or the USA where it is eventually sold, it has LOST its original VAT-paid status. This means that VAT will again be payable on the boat if it is brought back by the new owner, who is an EU citizen, into the EU. VAT must be paid in the first port of call within the EU.
This also means that if a boat is owned by an EU citizen in a non-EU country and is VAT-unpaid, it may not be used to visit the EU even for a day unless VAT is paid on it immediately on entry to the EU.
Countries that are currently outside of the EU or the EU VAT area include: Turkey, Croatia, Channel Islands, Gibraltar, USA, South Africa, New Zealand, Australia. Please note that the list is not exhaustive.
Please note that this FAQ is intended a guide only.
Further information can be found at:
National Advice Service Tel: 0845 010 9000
HMCE Notice 8 "Sailing your pleasure craft to and from the United Kingdom". Click here to visit the HMCE website and view a copy of Notice 8.
HMCE Information Sheet "UK Guide for Yachts". Click here to visit the HMCE website and view the information sheet "UK Guide for Yachts".
http://www.hmce.gov.uk
If you want to avoid paying the VAT, you can transact the sale 12 miles offshore, or better still outside the EU such as the Channel Islands. What you choose to do thereafter is entirely up to you, but obviously, should you bring the yacht back in to EU waters amd you are owning it a s private EU citizen, VAT will be due on the value at the time of importation.
You can of course decide where you wish to pay the VAT (Spain for instance calculates VAT payment in slightly different way and may be cheaper for you), and you should be given the freedom to make direct transit to that nation (you can stop to take fuel and supplies, but do be aware that you may have to convince a customs official of your intentions).
Last but not least, you cannot pay VAT in a country where the yacht is physically not present. This has caught out some of my own clients who have had British registered boats in other EU countries where they are resident, but the local authorities refuse to collect VAT on account of the yacht being British Registered, thereby leaving them in a state of limbo and nervous to leave their Marina (the VAT status 'should' only be the concern of the yachts' flag nation and not that of the country where the yacht happens to be).
You can of course decide where you wish to pay the VAT (Spain for instance calculates VAT payment in slightly different way and may be cheaper for you), and you should be given the freedom to make direct transit to that nation (you can stop to take fuel and supplies, but do be aware that you may have to convince a customs official of your intentions).
Last but not least, you cannot pay VAT in a country where the yacht is physically not present. This has caught out some of my own clients who have had British registered boats in other EU countries where they are resident, but the local authorities refuse to collect VAT on account of the yacht being British Registered, thereby leaving them in a state of limbo and nervous to leave their Marina (the VAT status 'should' only be the concern of the yachts' flag nation and not that of the country where the yacht happens to be).
smifffymoto said:
So basically the owner is liable for tax if either(owner or boat) are located in the EU.Right?
VAT is due if the owner is an EU national and if the yacht is in EU waters. Alternatively, VAT is also due if the owner is a non EU-national and they choose to keep the yacht within EU waters for longer than 18 months in a 24 month period....or buy the yacht through some form of VAT-registered vehicle (ie. a company) and then reclaim the VAT. This should of course only be done with the advice of a good accountant as HMRC do tend to take fairly close interest in such activities and the nature of usage that the yacht subsequently sees.
Does Malta still have some silly low VAT dodge for yachts?
When I bought mine, I used the accession of Croatia to the EU to get a bargain on the vat. Paid 5% a month before accession, which then means it's now 'eu vat paid' status.
Croatia was an odd one, they realised with all the 'tourist' temporary import yachts (mostly owned by Germans), becoming part of the EU would mean making all these Germans would have to pay 20-odd % just to keep their boats in the same place. They were worried a lot would simply move down the coast to Montenegro or something, so they had a temporary super-low vat rate for six months before they joined the EU. This applied to any boat registered in Croatia at the time of accession, so loads of people took the chance to upgrade to a new boat, pay the super low vat rate, and then have the flexibility of being able to come to Europe too. The broker told me people were having new boats trucked over the border, registered, vat paid, and then waiting for accession before de-registering and moving somewhere else almost immediately. It created a mini paperwork industry for a few months! On a million euro motor yacht, that saving was well worth the paperwork and hassle.
When I bought mine, I used the accession of Croatia to the EU to get a bargain on the vat. Paid 5% a month before accession, which then means it's now 'eu vat paid' status.
Croatia was an odd one, they realised with all the 'tourist' temporary import yachts (mostly owned by Germans), becoming part of the EU would mean making all these Germans would have to pay 20-odd % just to keep their boats in the same place. They were worried a lot would simply move down the coast to Montenegro or something, so they had a temporary super-low vat rate for six months before they joined the EU. This applied to any boat registered in Croatia at the time of accession, so loads of people took the chance to upgrade to a new boat, pay the super low vat rate, and then have the flexibility of being able to come to Europe too. The broker told me people were having new boats trucked over the border, registered, vat paid, and then waiting for accession before de-registering and moving somewhere else almost immediately. It created a mini paperwork industry for a few months! On a million euro motor yacht, that saving was well worth the paperwork and hassle.
village idiot said:
...or buy the yacht through some form of VAT-registered vehicle (ie. a company) and then reclaim the VAT. This should of course only be done with the advice of a good accountant as HMRC do tend to take fairly close interest in such activities and the nature of usage that the yacht subsequently sees.
The boat would need to be used only for business use through the limited company. That might be very hard to prove.Fishtigua said:
Eric Mc said:
The boat would need to be used only for business use through the limited company. That might be very hard to prove.
You charter it to yourself/wife/child as a loss making holiday company.If the company is set up to make a loss, under HMRC's own definition of trading, the company is not trading and therefore any claims that it is trading may be viewed as fraudulent. And any VAT reclaimed would also be fraudulent.
Also,. if the only customers are family, then there is whole heap of tax implications regarding use of company assets and taxable Benefits in Kind - ESPECIALLY if the sales levels being charged to the "customers" (i.e. the directors and their family) would obviously be at less than market value.
I cannot anybody would be so naive as to believe that such a simplistic ruse would work.
Very, very surprised if HMRC aren't curious about all these loss making, family owned companies that don't seem to have any "customers" apart from those self same family members.
If it is happening, perhaps it's just because HMRC hasn't woken up to the fact that there is a massive tax deception going on.
If this is indeed, common practice, then it is pretty disgraceful.
At no point did I accuse any poster of telling lies . I was just expressing surprise at the naivety of such a scheme. It has so many blatant holes in it that I'm surprised it hasn't been sunk ages ago (I thought I'd throw in a nautical reference).
If it is happening, perhaps it's just because HMRC hasn't woken up to the fact that there is a massive tax deception going on.
If this is indeed, common practice, then it is pretty disgraceful.
At no point did I accuse any poster of telling lies . I was just expressing surprise at the naivety of such a scheme. It has so many blatant holes in it that I'm surprised it hasn't been sunk ages ago (I thought I'd throw in a nautical reference).
smifffymoto said:
I don't think the French authorities are daft(but sometimes stupid) and also my business is selling horse care products,again,not going to work. Looks like I will have to pay tax when I eventually begin life on the ocean waves.
You could be researching the market for products for sea horses.Could take years.
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