EU citizens - non EU registered but VAT paid boat - Are we crazy?

[CookiesnTequila]

We are Dual Canadian/EU citizens, in the process of purchasing a VAT paid EU registered boat. We want/plan to reflag it Canadian and cruise around the EU under our EU passports, thereby eliminating the pain in the... of Shengren's 90-day limit.

We could register it UK and be done with it! But since I was born in Canada and both of us were raised and lived our whole lives in Canada, we would really like our new home to fly the Canadian flag!! ...Actually, that's not entirely true - the real reason is we want to look out over our transom every day and be reminded of the snow and sleet and ice and slush we left behind!!!

Is anyone in a similar situation? How difficult is it really, checking in and out of EU countries (assuming of course that we have the appropriate documentation!)? How often is VAT-paid status challenged?

Thank you all in advance - You guys have been incredibly helpful!!!!

[bobnlesley]

Are we crazy? Probably, it's going to add 20% to the cost and if you intend finishing up back in Canada, that'll surely just be lost/dead money?


We've heard a few and read lots more, third-hand or worse 'stories' about VAT checks on yachts in the EU, but in eight years of sailing from England around Portugal/Spain and all through the Mediterranean, we only KNOW, of two boats that got pulled and both had it seemed gone out of their way to annoy, irritate and completely p1ss-0ff the Authorities, as an unsurprising result, said Authorities (one in Spain and one in Italy) checked on everything, including VAT status. Provided that you don't intend to sit in one harbour for several months, I just don't see why you'd throw that money away, especially if you're flying a Maple Leaf on the stern, the Authorities are probably even less likely to enquire as they'd not actually expect the boat to be VAT-paid

[CookiesnTequila]

I think you may have misunderstood. The boat we are purchasing is already VAT paid. We are not paying VAT, we are inheriting it!

Our concern is that we will be EU citizens that own and cruise on a non EU flagged boat (but it will be VAT paid).

You are the example of what we could be if we register it in the UK - And, you seem to be not having any problems!!!

Originally Posted by bobnlesley

Are we crazy? Probably, it's going to add 20% to the cost and if you intend finishing up back in Canada, that'll surely just be lost/dead money?


We've heard a few and read lots more, third-hand or worse 'stories' about VAT checks on yachts in the EU, but in eight years of sailing from England around Portugal/Spain and all through the Mediterranean, we only KNOW, of two boats that got pulled and both had it seemed gone out of their way to annoy, irritate and completely p1ss-0ff the Authorities, as an unsurprising result, said Authorities (one in Spain and one in Italy) checked on everything, including VAT status. Provided that you don't intend to sit in one harbour for several months, I just don't see why you'd throw that money away, especially if you're flying a Maple Leaf on the stern, the Authorities are probably even less likely to enquire as they'd not actually expect the boat to be VAT-paid

[Dockhead]

Don't confuse the boat's status with the crew's. These are completely and totally separate issues. Where the boat is flagged has nothing to do with how long the people are allowed to stay in any country. If you have EU passports, you can stay as long as you like.

But don't get caught in this trap -- EU citizens are not allowed to sail a non-VAT paid boat in EU waters. So if the sales transaction takes place outside of the EU, even if you flag the boat in an EU country, you lose the VAT status, and you will be obligated to pay VAT as soon as you arrive. This is different from what happens when Canadians (who don't have EU passports) arrive in a non-VAT paid boat -- they can stay 18 months at a time under the temporary importation regime.

An interesting question I don't know the answer to is whether you can buy a VAT-paid EU boat and flag it Canadian, and keep the VAT status. Goboatingnow might know the answer to this.

But in any case, since you plan on sailing in European waters -- that should be your priority -- preserving the VAT paid status. If that means flagging it UK, then you need to do it. And for God's sake make sure the transaction takes place inside the EU, and gets properly documented so that you have proof of VAT status.

[beneteau-500]

Yes you are stupid and crazy if you have the ability to flag the boat as a EU boat i.e UK then do IT , if you wish to flag it as a Canadian yacht then regardless weather vat as been paid in the E U you will lose that status

[rivonia]

Originally Posted by beneteau-500

Yes you are stupid and crazy if you have the ability to flag the boat as a EU boat i.e UK then do IT , if you wish to flag it as a Canadian yacht then regardless weather vat as been paid in the E U you will lose that status

Took the words out of my mouth.

[Paul L]

I thought the restriction of VAT due on entry was for EU residents, not for EU passport holders. Also, for residents their can be an exemption for boats that are your home. See the comments here
SSCA Forum • View topic - EU VAT FAQ's.... for private boats

[Dockhead]

Originally Posted by Paul L

I thought the restriction of VAT due on entry was for EU residents, not for EU passport holders. Also, for residents their can be an exemption for boats that are your home. See the comments here
SSCA Forum • View topic - EU VAT FAQ's.... for private boats

You are correct that the VAT problem applies to EU residents, not necessarily citizens. See: http://www.yachtinglawyers.com/downl...awyers.com.pdf

But for an EU citizen who spends a few years cruising in EU waters to avoid being an EU resident, and to be able to prove it, must be tough. There is certainly active enforcement against EU citizens trying to avoid paying duty and VAT by flagging their boats in company names outside the EU and trying to bring in the boat under the temporary importation scheme -- they get slammed.

So you would have to be extremely careful with this -- and why bother if the boat was VAT paid in the first place??? If you just preserve the VAT status, then you don't have all these problems.

Concerning the vessel's "being your home" -- the exemption from VAT and customs duty is not because it's your "home", but because you have the right to bring back certain personal goods, including boats, VAT and duty free if you have been resident outside the EU and then move permanently to the EU. There are restrictions (no sale in two years, etc.) and there is bureaucracy involved.

And why would someone go through this whole rigamarole if the boat was VAT paid in the first place??? Seems crazy to me. I would in this case do the following:

1. Make sure the sale takes place on the territory of the EU.
2. Flag it in the UK.
3. Carefully document the sale (use a qualified lawyer!) so that you have the correct package of VAT documents.

Then you won't have any of these problems. Besides that, VAT-paid status makes the boat more valuable if you ever want to sell it in the EU.

[TeddyDiver]

Let's make this a bit more complicated. Let's say you buy newish EU-VAT paid boat, from a broker in France with an invoice stating the amount VAT and then register the boat in the name of a company you have established in another EU country, like in GB. Then you can get all the VAT paid back and sail legally in the EU. Have the mapple leaf as a courtesy flag for the other one of you, in turns of course :-D
Kidding of course but possible..

[CookiesnTequila]

We are not EU residents - we are Canadian residents - we may give up Canadian residency, but for now we are very clearly Canadian residents. We are also EU citizens, and we each have two passports.

We are purchasing a French boat with clear evidence that the VAT has been paid, and then reflagging it Canadian.

My understanding is: VAT stays with the boat, regardless of where it is flagged (IE - an EU resident can own a non EU flagged boat, but can only use it in the EU if VAT has been paid). And, a non EU resident can purchase a VAT paid boat, reflag it to the country of their residence, use it for X years and then sell it VAT paid to an EU resident, who will see value in it being VAT paid, and will then reflag it again to his/her country of residence. (subject to some rules like max 3 year out of EU, etc)

So in our case, we would be Canadian residents, cruising on a Canadian registered (VAT paid) boat, under our EU passports. (therefore, our boat is not subject to the 18 month permit, and we are not required to leave the EU after 90 days - agreed, people and boat are separate issues!)

Originally Posted by Dockhead

You are correct that the VAT problem applies to EU residents, not necessarily citizens. See: http://www.yachtinglawyers.com/downl...awyers.com.pdf

But for an EU citizen who spends a few years cruising in EU waters to avoid being an EU resident, and to be able to prove it, must be tough. There is certainly active enforcement against EU citizens trying to avoid paying duty and VAT by flagging their boats in company names outside the EU and trying to bring in the boat under the temporary importation scheme -- they get slammed.

So you would have to be extremely careful with this -- and why bother if the boat was VAT paid in the first place??? If you just preserve the VAT status, then you don't have all these problems.

Concerning the vessel's "being your home" -- the exemption from VAT and customs duty is not because it's your "home", but because you have the right to bring back certain personal goods, including boats, VAT and duty free if you have been resident outside the EU and then move permanently to the EU. There are restrictions (no sale in two years, etc.) and there is bureaucracy involved.

And why would someone go through this whole rigamarole if the boat was VAT paid in the first place??? Seems crazy to me. I would in this case do the following:

1. Make sure the sale takes place on the territory of the EU.
2. Flag it in the UK.
3. Carefully document the sale (use a qualified lawyer!) so that you have the correct package of VAT documents.

Then you won't have any of these problems. Besides that, VAT-paid status makes the boat more valuable if you ever want to sell it in the EU.

[Bulawayo]

I can advise our own situation which does not align with some comments. We (wife, and 4x kids, plus self) have dual nationality - Zimbabwean and European. We bought a UK VAT paid cat a number of year ago in South Africa. When we came out of the Suez and into the Med we were concerned about the VAT status. We contacted the UK (where the VAT had been paid) and were informed that the VAT only had to be paid once - regardless of how many times and with whom the boat changed hands. We had the Brit VAT clearance form and did get asked to show it on arrival in Greece. The Greeks were very helpful and pointed out that without it we would only have the right to stay for three months. As we had the right passports and the VAT certificate we had no issue. Two years and many countries later, we were not asked for the certificate again.

[cajucito]

Its an interesting question. Im no expert but here is what I believe (open to correction).
A boats Vat status in EU has nothing to do with the owners nationality
All boats in EU waters are either Vat Paid or being temp imported.
Temp imported can be tricky in some countries if you have not filled the correct paperwork
A visiting boat can stay for up to 18 months in EU territorial waters or even 24 months if the boats importer leaves the EU and leaves the boat in EU waters with no worries. 24 months is the maximum stay without taking the boat out of EU waters. You can leave for a day and return again for another 18 months if you want as long as your departure is registered with an EU imigration authority.
If you overstay you have to pay the full EU vat or have your boat impounded.
Once the Vat is paid on the boat its deemed paid forever in EU as far as I know.
Temp import is only available to persons who are proven Non EU Residents. If you are an EU resident and bring your non vat paid boat into EU waters you are immediately liable for the Vat or you may have your boat impounded until vat is paid.
If you buy an EU vat paid boat I dont believe it matters where the transaction takes place or where the boat is registered.

in the EU Its the boat that has the tax status not the owner.
The owner is liable for any tax due.

To summarise if your boat is EU Vat paid it is entitled to be in EU waters at any time during its life far as long as you want with no incumberances as far as I know.

An Eu Vat paid boat can spend it whole life in Canada under a Canadian flag and come and go to EU waters and stay as long as needed as long as vat paid status can be proved by the owner.
If you are in Eu waters flying a canadian flag it is usually assumed you are here under the 18 month rule. Your Vat status will rarely if ever be checked as long as you don't fall foul of the law for some other reason or you leave your boat for years in the same location.
I dont know what happens in Canadian tax terms if you bring an EU Vat paid boat to Canada.
I hope this helps.

[CookiesnTequila]

That is very helpful!
May I ask where your boat is registered?

Originally Posted by Bulawayo

I can advise our own situation which does not align with some comments. We (wife, and 4x kids, plus self) have dual nationality - Zimbabwean and European. We bought a UK VAT paid cat a number of year ago in South Africa. When we came out of the Suez and into the Med we were concerned about the VAT status. We contacted the UK (where the VAT had been paid) and were informed that the VAT only had to be paid once - regardless of how many times and with whom the boat changed hands. We had the Brit VAT clearance form and did get asked to show it on arrival in Greece. The Greeks were very helpful and pointed out that without it we would only have the right to stay for three months. As we had the right passports and the VAT certificate we had no issue. Two years and many countries later, we were not asked for the certificate again.

[monte]

Unless you have a specific boat in mind I would be shopping for non vat paid boats. They should be 20% less expensive! but will almost all be ex charter. Or buy new and save the 20%
I would guess a 3yr old boat with VAT paid would be priced similarly to a new one ex factory

[CookiesnTequila]

Originally Posted by cajucito

Its an interesting question. Im no expert....

I beg to differ!!

That is pretty much exactly what I have come to understand, however it is so difficult to get legal confirmation! I did have an EU marine lawyer tell me that it did not matter where the boat was when it was sold!

Thanks