Should A Non Eu Boat Sail Across The Atlantic To Sail The Med

[northwestsailor]

I am a US citizen but have my boat flagged in the Isle of Man. The boat has been a British registered boat since it was launched in 1989. I am not sure VAT was invented yet but I personally would not re-flag in the US for any reason. I personally don't know how long I could stay in the EU but I don't think I would have any issue leaving my boat there indefinitely. Malta and Gib are also excellent places but a bit pricey.

[BandB]

Originally Posted by northwestsailor

The boat has been a British registered boat since it was launched in 1989. I am not sure VAT was invented yet .

VAT started on April 1, 1973.

[chuckr]

Customs have asked to see this on occasion. They look at it and then move on to doing other paperwork. So far no-one has required us to fill out temporary import papers, but cruising in Greece, I think that it is only a matter of time; they love bureaucracy.



I agree that it is not a good idea to do business in Tunisia. There is a very significant refugee issue around Lampedusa and I would not want to take the risk of being alone at sea there.
Valetta, Malta is one of the prettiest ports and interesting towns we have come across in our journeys although that was by big cruise boat.[/QUOTE]

Not sure what you are talking about on the temporary import as we have been to least 8 different foreign countries and never had to or least do not think we did any paperwork associated with a temporary import - but we have not been to Greece yet - next summer

Now as for Lampedusa - we sailed there this summer on our way to Tunisia and we sailed alone. The sea is crawling with Italian ships trying to find the refugees and we had a talk with them of what to do if we saw some. I have never heard of an attack in that area of the world but then again i may have missed something. Oh and the folks at Lampedusa were just great guys and very helpful in checking us out of the EU.

As for Valletta, you may want to go in on a small boat and pay the cost of the marinas there and the experience the swell from the mistrals - can get a bit rolly at times. And of all the cities we visited this summer, 31 total, Valletta was nice but not that nice with the only thing really going for it was they spoke English. We were certainly not impressed with it.

If you are not an EU citizen I am not sure what the advantage is of keeping the VAT status unless you are going to sell the boat in the EU with the VAT paid and are not going to live on it full time but park it in the EU for 6 months and then sail the summers.

[goboatingnow]

Originally Posted by jckb

Any VAT paid boat can stay within the EU indefinitely.

What VAT paid boats can not do is stay within one or two individual EU countries longer than 180 days in a year without being "imported" into that country. Spain is an example.

Most others don't care, and will host other EU flag boats, or non-EU flag boats (if they are VAT paid) for as long as they wish to stay. You have to check directly with your host country what rules may apply.

JimB

Could I correct this. Vat paid boats may stay as long as they like in the EU.

There is no 180 days limit on the boat. The 180 day issue is on the Owner of the boat. If the owner becomes a tax resident of the county. ( irrespective of income) then they MAY be subject to all that countries taxes including in some cases boat tax, light dues etc.

Note ; RTR ( returned goods relief) is a relief open to EU tax residents , which allows then to re import goods that were exported without repaying vat ( subject to certain conditions ). It's nominally set at 3 years but can be extended indefinitely with agreement with customs ( usually by filling out a carnet)

Since the authorities don't track destinations in practice it can never be established that the boat was outside the EU.

TIR ( Temporary import relief) as it applies to private yachts allows a non EU tax resident to bring the boat into the EU for 18 months , extendible to 24 months, without incurring vat Liability. The clock can be restarted by going outside the customs union of the EU, no minimum time for this away time is specified so simple proof of sailing to another non EU port would be sufficient

Note there is no application , or " permit " for this. It is merely claimed. In reality it's not an issue.

For Channel island boats. Again it's the tax status of the owner that's important. If you are EU tax resident vat will become due immediately upon arrival in the EU customs union.


Remember : there is actually no such thing as VAT status. VAT is a transaction tax accountable ( subject to reliefs ) on all sales , purchases, import or export of all goods by any person private or business on all goods new or secondhand

There are many cases where vat can be paid multiple times on goods over their lifetime
Dave

[jckb]

Originally Posted by CookiesnTequila

My preference would be to flag it Canadian, but I'd like to keep the VAT status as long as possible.

<snip>

So I guess my questions is: Would an EU flagged, VAT paid boat loose its VAT status after 3 years, or is that just for non EU flagged VAT paid boats?

Any VAT paid boat, whether EU flagged or foreign flagged, has the right of free circulation within the EU.

Any boat (EU flagged or Non-EU flagged) loses its VAT status if it has been outside the EU for a continuous period of 3 years or more.

However, there are no obvious means for tracking that a boat has been absent from the EU, and there are many means whereby a boat can be legally imported (without having to pay VAT) by citizens taking up residence in the EU. The result is that EU citizens are rarely questioned about absence.

For reference to the UK take on these matters, see https://www.gov.uk/government/public...united-kingdom , and in particular, para 3.4 and 3.15.

UK HMRC do make it clear that this is their interpretation of the EU regulations, and this could be challenged (like any interpretation of "the law"!).

JimB

[goboatingnow]

JIMB

no one I have ever met is questioned about their boats absence.

Secondly 3 years is merely a default option. You can apply in the UK or an extension ( the office is now devolved to Northern Ireland ) that extension will be readily granted.

In practice its never done for private vessels. The only place you'd need to have appropriate documents is it the boat was coming in on a ship and being processes by commercial freight forwarders. A simple customs carnet filled in advance and agreed is all that's needed

Just a point that the each EU countries implementation of the EU vat law has differences in application and execution

RGR and OPR ( onwards processing relief ) etc are quite complex vat subjects but thankfully have little interest to the vast majority of boat owners.

Note that TOR does not apply to EU residents. EU tax residents both VAT registered business or private individuals have virtually no ability to escape vat on import( from outside the E U ) , even if that vat is subsequently reclaimed. Its a major cash flow consideration for companies importing from outside the EU. I know this !

Dave

[savoir]

Originally Posted by northwestsailor

I am a US citizen but have my boat flagged in the Isle of Man. The boat has been a British registered boat since it was launched in 1989. I am not sure VAT was invented yet but I personally would not re-flag in the US for any reason. I personally don't know how long I could stay in the EU but I don't think I would have any issue leaving my boat there indefinitely. Malta and Gib are also excellent places but a bit pricey.

The flagging of your boat and VAT status are two different things.

It seems like the boat is VAT unpaid. If that is the case then the boat is subject to the 18 month rule everywhere in the EU including Isle of Man itself. If it is VAT paid then it can stay in the EU as long as you like.

You are personally subject to the various visa rules such as Schengen.

[Prairie Chicken]

So I guess my questions is: Would an EU flagged, VAT paid boat loose its VAT status after 3 years, or is that just for non EU flagged VAT paid boats?

Jim already answered this, but my understanding is the same. The rule applies regardless of the flag.

On the 180 day issue in Spain--I've never heard of such a thing & we've been there a long time & thoroughly explored our responsibilities/restrictions. We were boarded by the Aduanas & they were concerned about our time in Spain (Ours--not the boat!). They made it clear we personally were limited to six months in Spain and sent us on our way. I always wondered why they didn't mention Schengen limitations, but can only assume as they were Aduanas (Customs) Schengen was outside of their authority.

I really think you're in good shape if you buy the boat in the EU & it has a document indicating it is VAT paid. And you have EU citizenships! Your only concern seems to be retaining the VAT paid status after a lengthy absence from the EU. Current info here suggests you could bring her back with no issues but I could point you to The Network Group, a private yacht advisory company in Palma de Mallorca who specialize in providing tax & import/export advice to boat owners if you're still worried about it.

I'd put the Maple Leaf on her & fly it proudly.

[goboatingnow]

So I guess my questions is: Would an EU flagged, VAT paid boat loose its VAT status after 3 years, or is that just for non EU flagged VAT paid boats?

Just a rather esoteric point. VAT is not a asset tax, nor even a sales tax. Its a transaction tax. "goods" do not actually have a "VAT Status", even though the term get used.

The basic tenant of VAT is that it is "accounted" for every time a sale, purchase, import into the customs union or export from the customs union, on very such transaction, whether its private, business, new or secondhand goods or services.

However there a myriad, zillions of reliefs, special cases, zero rating, Vat registered versus not Vat registered persons, VAT free areas, situations where special case laws are applied. The VAT law would fill your bookcase in its entirety.

Hence the necessity to try and focus on the specific cases and also why you can get uninformed officials that may mislead.

As for the 180 day issue in spain. Several provincial authorities have claimed that a boat in spain is the same as a house. If you own a house in spain, even though you are not a tax resident by virtue of not living there, you still have to register for Spanish taxes and pay various property and local taxes.

Various attempts have been made to apply this to boats, However there seems to be no legal basis for doing so, especially if you are not a live-aboard. My understanding is that the practice has stopped.But I now there were people who got caught up in the attempts to extract tax

dave

[CookiesnTequila]

Perfect! It all seems to make sense - as dangerous as that might be!

So, it looks like we'll move the boat from Tunisia to the EU for the closing of the sale transaction, and proudly flag her Canadian!

You've all been very helpful.

[svlamorocha]

Originally Posted by goboatingnow

Could I correct this. Vat paid boats may stay as long as they like in the EU.

There is no 180 days limit on the boat. The 180 day issue is on the Owner of the boat. If the owner becomes a tax resident of the county. ( irrespective of income) then they MAY be subject to all that countries taxes including in some cases boat tax, light dues etc.

Note ; RTR ( returned goods relief) is a relief open to EU tax residents , which allows then to re import goods that were exported without repaying vat ( subject to certain conditions ). It's nominally set at 3 years but can be extended indefinitely with agreement with customs ( usually by filling out a carnet)

Since the authorities don't track destinations in practice it can never be established that the boat was outside the EU.

TIR ( Temporary import relief) as it applies to private yachts allows a non EU tax resident to bring the boat into the EU for 18 months , extendible to 24 months, without incurring vat Liability. The clock can be restarted by going outside the customs union of the EU, no minimum time for this away time is specified so simple proof of sailing to another non EU port would be sufficient

Note there is no application , or " permit " for this. It is merely claimed. In reality it's not an issue.

For Channel island boats. Again it's the tax status of the owner that's important. If you are EU tax resident vat will become due immediately upon arrival in the EU customs union.


Remember : there is actually no such thing as VAT status. VAT is a transaction tax accountable ( subject to reliefs ) on all sales , purchases, import or export of all goods by any person private or business on all goods new or secondhand

There are many cases where vat can be paid multiple times on goods over their lifetime
Dave

I thought twice before concluding I can add something to a post by Dave on VAT, but here it goes.

There is also "Transfer of Residence" relief that can be used by a non-EU resident that is moving to the EU to import his/her boat tax free. I can assure you it works perfectly in the UK version of harmonized VAT. Some people think this is only open to EU citizens, but that is not true. You need to have the right to move to the EU, which is almost but not quite exclusive of EU citizens. It does not matter where the boat was made or if it was in the EU before. This relief can be used by

a) people/boats who are moving to the EU for the first time;
b) someone who went out of the EU and is going back back but did not do what was required to maintain right to RTR; or
c) someone who spent a few years out of the EU, bought a boat and now goes back to the EU with that boat.

[jckb]

Originally Posted by goboatingnow

As for the 180 day issue in spain. Several provincial authorities have claimed that a boat in spain is the same as a house.

Various attempts have been made to apply this to boats, However there seems to be no legal basis for doing so, especially if you are not a live-aboard.

The claim in law is that boats are vehicles - "Means of transport". An EU directive permits that EU cars and boats (and horses!) spending more than 180 days continuously in another country can be required to be "imported" into the host country. Import, in this sense, means that all the host country's regulations have to be met - inspections, surveys, circulation charges, licencing for drivers/skippers, equipment to be carried.

It's the same as re-registration, but actual plate change cannot be enforced if the car/boat is likely to leave again.

Most EU countries have not brought this directive into effect for EU boats. Spain has, but defines it as 180 days in a tax year (calendar year in this case).

This is a customs issue, completely separate from tax residency issues. If tax residency also applies to the owner, monitoring of the amount of time the boat spends in Spain is far more strict, and deviations from procedures call up a "pollution tax" - effectively, a fine - which may reach 20% of the boat's value.

The Cruising Association has publicised this issue widely, so relatively few people are now caught out.

I agree your earlier point about the flexibility with which three years absence from the EU is monitored. No one bothers . . . and thanks for the other clarifications on VAT. You're a great source of definitive information on this stuff!

JimBsail.info

[CookiesnTequila]

Originally Posted by dlymn

......
I might be wrong,but I think that when you deflag, the clock starts counting about official VAT status anyway, whether you're cruising in the med or in Canada.

The above confused me a bit! Any one know if the above is correct - that once a VAT paid EU flagged boat is re-flagged non EU (in our case Canadian), that the clock starts ticking on the VAT status? I thought where it was flagged didn't matter - only if it's out of the EU for more than 3 years, or if it changes ownership outside of the EU??

And one more quick question related to a slightly different topic: Am I correct in my understanding that (since we both carry EU passports) once we check into the EU under our EU passports, we can move freely among EU countries, and only have to clear out if we are heading to a non EU country?

We're off to the Med for survey and sea trials this weekend...

[K_V_B]

Originally Posted by svlamorocha

c) someone who spent a few years out of the EU, bought a boat and now goes back to the EU with that boat.

I'm a EU citizen living in Switzerland (hence outside the EU). Now suppose that I do the following:

- Buy a new boat in France, "export" it and put it under TIR. Apparently this is possible without even needing to move the boat.
- Flag it under a convenient flag, for example Jersey.
- In about a year and a half do a quick jaunt to Heligoland to reset the VAT clock.
- Then a year later just move back to Belgium for a while, and import the boat.

I'm currently building up a company that hopefully we will sell in about three years, hence the real cruising is on hold a bit. But I might already buy a boat before that. It would be nice to be able to use my current out-of-EU status to reduce the tax bill...

[kas_1611]

Originally Posted by CookiesnTequila

And one more quick question related to a slightly different topic: Am I correct in my understanding that (since we both carry EU passports) once we check into the EU under our EU passports, we can move freely among EU countries, and only have to clear out if we are heading to a non EU country?

We're off to the Med for survey and sea trials this weekend...

As you have EU passports and are therefore deemed to be EU Citizens not only do you have the right to Freedom of Movement within the EU you also do not need a work permit to take employment should you wish. However there is a slight complication with the clearing in/out inside the EU due to the Schengen Accord and the fact that certain countries are not in it, UK, Ireland, Croatia for example.

When travelling from France to UK, for example, you have to pass through Immigration as normal, showing your passport. This also applies to vessels arriving in and departing UK waters. There is a Common Travel Agreement between UK and Ireland, which actually prevents Ireland joining Schengen even though they'd like to, this may or may not apply to vessels so you should still be prepared to clear in. Croatia should be joining Schengen in 2015 but at present as soon as you arrive in Croatian waters you have to head for the nearest immigration port and clear in.

This applies to EU and non EU flagged vessels entering and leaving the Schengen area.

You may still need to present your documents on arrival when travelling between Schengen states, if only to prove where you departed from. Like everything in the EU it depends on the interpretation of the rules by the member state. So what happens in one country does not necessarily mean the same will happen next door. When travelling by road, rail or air this is not an issue as they know where you have come from but sea going vessels can come from anywhere. I have heard in Greece you have to clear in at every single harbour/port/marina on arrival regardless of how long you have been in country - needs to be confirmed but if true it sounds like a nightmare.

One thing to consider is that if you are going to be in country for less than 30 days you need to report your presence, this is normally done by hotels when you arrive but if you are coming in by boat you will need to do this yourself - basically clearing in I suppose. If you plan to be in country for more than 30 days you have to register with the authorities as you may be considered to be resident and not just visiting. This does not affect your right to stay in any EU member state but you may need prove of ability to support yourself, residence etc.

Keiron