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Old 23-11-2015, 04:30   #1
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Avoiding VAT in Europe

I am considering moving myself and my boat to Spain from the US. I am thinking that it is possible I may decide to become a Spanish resident but would like to avoid VAT tax on my boat. I understand that I could retitle the boat into a Corporation, but I prefer not to do that. I would like to transfer the title to a US Living Trust, and am wondering if that would get me the same desirable results. Also, I am concerned what that would do to my insurance rates and the mortgage on the boat. Would I have to refinance it? Has anyone done that?
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Old 23-11-2015, 05:19   #2
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Re: Avoiding VAT in Europe

It shouldn't make a difference with your existing mortgage, but will if you refinance.

If you become a resident of Spain, then the VAT will need to be paid. VAT avoidance only works for non-residents of the EU. Some EU residents will document their boats in tax free countries, but those boats are carefully monitored by the tax authorities and need to be on the move. They don't tend to remained docked in one location.

Example: A boat owned by a UK resident VAT free flagged and docked in Guernsey, tends to remain docked in Guernsey rather than England. Otherwise, the owner will eventually get caught and need to pay VAT. The 18 month rule doesn't apply to this situation.

The tax authorities in the EU are quite vigilant and in Spain where we spent nearly three years, the tax men visit the marinas and boat yards a couple of times per week taking inventory.
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Old 23-11-2015, 06:02   #3
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Re: Avoiding VAT in Europe

Off the topic of boats, and perhaps you know this already, but in today's world you can't just "decide" to become a resident of a country. Almost all have immigration limits and controls, and Spain definitely does. You can only become a resident if you meet the qualifications for one or another type of long-term visa.

I would suggest searching for the Spanish consulate's website, or for expatriate information. Good luck.
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Old 23-11-2015, 06:23   #4
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pirate Re: Avoiding VAT in Europe

If the boat is your home.. your only address blah blah blah.. then the boat is not liable for VAT..
However.. if you get a shoreside address and all that comes with it.. you'll get hit.. and when you come to sell you will need her CE listed.. not a cheap proceedure
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Old 23-11-2015, 09:24   #5
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Re: Avoiding VAT in Europe

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Originally Posted by boatman61 View Post
If the boat is your home.. your only address blah blah blah.. then the boat is not liable for VAT..
I never heard that before but it sounds like something worth investigating to be sure all conditions are met.

In the USA it is almost impossible NOT to have an address and get insurance, pay your taxes, etc. so interested in how it would work in EU.
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Old 23-11-2015, 09:25   #6
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Re: Avoiding VAT in Europe

If one attains residence status in a country in the Schengen region, one becomes liable for VAT in 30 days. Technically, one should pay VAT in the first country in which one lands.

If one is not a resident, the boat can stay in the Schengen region for 18 months, but the owner/captain would most likely get a 90 day tourist visa.

These rules are constantly changing. The idiots in Brussels really don't know what to do but make more rules and regulations. If these rules are illogical, all the better.

Don't get me started...

I imported my 1973 Pearson 36, paid the VAT after 4 years in The Netherlands and then put my boat through a Post Construction Assessment survey. I was able to find a reasonable fee for that process, but it took some looking. I can give tips if you contact me by PM or buy my book "Renovate a Sailboat and Cross the Atlantic". I give details on the whole process.

Just another hoop to jump through. Brussels loves it.
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Old 23-11-2015, 09:33   #7
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Re: Avoiding VAT in Europe

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Originally Posted by boatman61 View Post
If the boat is your home.. your only address blah blah blah.. then the boat is not liable for VAT..
However.. if you get a shoreside address and all that comes with it.. you'll get hit.. and when you come to sell you will need her CE listed.. not a cheap proceedure
Nope. Still have to pay VAT. The use of the boat is not relevant to the payment of VAT.
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Old 23-11-2015, 09:47   #8
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Re: Avoiding VAT in Europe

I confirm that if you become EU resident then VAT is payable on your yacht. Although there are schemes to avoid VAT, they tend to be expensive, with ongoing annual costs, probably only worth it if you have a super yacht, if this was the case you wouldn't be asking for advice here. On the positive side VAT does not have to be paid in Spain, you can chose to enter Europe at a country with a lower VAT rate and pay the tax in that country. Luxemburg has a much lower VAT rate than most EU countries and i have come across Luxembourg flagged vessels, although how you get your yacht there is another matter.
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Old 23-11-2015, 10:01   #9
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Re: Avoiding VAT in Europe

We are US citizens and residents. However our boat is registered in the Isle of Man. I am now curious what the boat's legal status would be traveling EU countries would be? Most likely we would not be in any one country that long and usually anchored out (since alloy boats don't much care for marina life.)

I do realize, we as US citizens, would only be allowed 90 days in EU but that could be renewed by moving about a bit, I suppose. Or in and out of EU?

My sister and her husband are living in NL as residents and love it there. Proximity to so much ancient culture and architecture is a big attraction. They are an hour from Dusseldorf where they can catch a flight to London, Rome, Paris (whoops) or Las Palmas for really reasonable rates is a big plus.
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Old 23-11-2015, 10:26   #10
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Re: Avoiding VAT in Europe

As non-EU citizens, your boat although registered in the Isle of Man, can quite legally stay in EU waters up to the maximum period, after which it must be moved to a port outside of EU waters before it can re-enter again. I am a Channel Island resident and my boat is registered in Jersey, it is of course non-VAT paid. We spend between 5 and 8 weeks on the French Normandy/Brittany coast each year. It is some years since I have received a visit from the Douannes, but when I have, they have always been polite, simply examined our registration papers and passports and once satisfied that we are resident outside of the EU, they are on there way. If you are leaving EU citizens on your boat without you being present, then it is probably a good idea to leave them with a document, stating that they have a free loan of the boat and that it is not on charter, have the document in the local language as well as in English and have it notorised, that is signed in front of a Notary Public, Continental officialdom seems to like documents with official seals etc.
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Old 23-11-2015, 10:51   #11
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Re: Avoiding VAT in Europe

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Originally Posted by northwestsailor View Post
In the USA it is almost impossible NOT to have an address and get insurance, pay your taxes, etc. so interested in how it would work in EU.
I'm from the Netherlands, and same here. No address on land means you're homeless as far as the government is concerned.

Not the best 'administrative state' to be in. Can't get insurance or pay taxes etc., which may sound good to some but it just means they'll hit you the minute you turn op somewhere. And you will, cos you need a passport etc. so sooner or later, you'll find yourself at some civil servant's desk.

Pretty much every liveaboard has a land address with a family member / friends etc. to avoid all that. Not an ideal solution cos it's usually a postal address which is only good for 6 months, but you can make it work. It's a bit of a headache tho.
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Old 23-11-2015, 10:56   #12
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Re: Avoiding VAT in Europe

If your boat is oldish or a one off design and they have nothing to price it against then grab a bill of sale and sell it to yourself from your brother/sister for 10 thousand euros/dollars etc and then the VAT will be minimal.
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Old 23-11-2015, 11:15   #13
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Re: Avoiding VAT in Europe

Pay the tax, and keep our taxes down Why do people think it's OK to avoid tax?
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Old 23-11-2015, 11:15   #14
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Re: Avoiding VAT in Europe

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Originally Posted by nauticalnomad View Post
If your boat is oldish or a one off design and they have nothing to price it against then grab a bill of sale and sell it to yourself from your brother/sister for 10 thousand euros/dollars etc and then the VAT will be minimal.
The tax authorities are vigilant..... Not stupid.
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Old 23-11-2015, 11:26   #15
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Re: Avoiding VAT in Europe

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The tax authorities are vigilant..... Not stupid.
Nor do they appreciate people breaking the law

There are legal ways to make sure you don't pay "too much", but avoiding taxes and even making up sales documents is probably fraud under the (Spanish) law. It would be here in the Netherlands, methinks.

You don't HAVE to import your boat. If you choose to do so, pay what you legally have to pay.
Don't want to pay? Than stay where you are
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