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Old 21-05-2015, 21:55   #1
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Boats bought in Eurozone and sailed to US, VAT?

Okay.

This whole VAT thing has me befuddled. Here in the States, we just charge a state sales tax on stuff and call it a day.

Question: My question is simple, if I buy a non VAT paid boat in Eurozone and sail it to the states, does anyone [myself or seller] need to pay VAT?

I can't help but notice that there are some potentially bangin' deals on boats coming from Turkey, Croatia, Malta, etc. Seems too good to be true but best I can tell, VAT doesn't apply unless you want to keep your boat in EU waters. So why aren't Americans buying boats cheap over there, sailing them here and selling them for more? Or are they??

Here is an example--this boat would cost pretty much double here in Florida 2005 Bavaria 42 Match Sail Boat For Sale - www.yachtworld.com
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Old 22-05-2015, 03:22   #2
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Re: Boats bought in Eurozone and sailed to US, VAT?

Looked at doing this for Australia.here are some negatives:
You pay GST (VAT)
You pay import duty
The boat has to be fumigated for termites
The sail over is risky and way out of my league
Insurance costs are higher

For the US
The wiring is for 220 volts and might need to be replaced because 110 volts needs heavier wire.
Every single thread is metric.

Buying an ex charter boat in the Med can be risky. You have to come over and be there for the sale and survey if you want a good boat. Cheap exchartercan have issues; worn out motor, hidden impact damage, water stained wood. Charter boats are not equipped for blue water; no spinnaker, dinghy, maybe no life jackets,harnesses,tethers jacklines. Some people think that charter boats are not built for blue water.

So we considered all this and decided that the risks overall were too great for anettt return of way less than 20% on purchase let alone the time you take to get it back to home. Last year a local fellow ,highly skilled and qualified bought a boat in Florida for his retirement. He and his best mate sailed it back to Australia. They found the wreckage on an island near Fiji.
Consider buying the boat and sailing the Med. We did and it is the best fun and experience ever.
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Old 22-05-2015, 05:15   #3
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Re: Boats bought in Eurozone and sailed to US, VAT?

First VAT is the equivalent of sales tax, just a higher percentage than we are used to for state sales taxes. You always have the option to just pay it (if the previous owner paid it and has documentation, it is paid and you don't have to pay it again. Getting that proof can prove more difficult than it should be as there is no official record keeping system if the owner loses it)


As a non-EU resident, you can buy in Europe and there is no need to pay VAT as long as the boat leaves the EU before 18months (extendable to 24month in most cases).


Issues with doing it:
- You are buying remotely and that comes with costs. If you are buying in florida or the east coast, you may be looking at a $300-500 air ticket or you can drive. If you buy in the EU, you are probably looking at $1200-1500 air ticket. If you go thru 3-4 boats before finding the "one", you can easily spend an extra $5-10k on purchase trips.
- You may be dealing with language issues and foreign burecracy. Not the end of the world but a hassle.
- As someone else mentioned, the boat will be set up for 220v-50hz power. That means you either live with permanent compromise to accommodate the electrical system or you pay a nice chunk of cash to convert the boat systems over.
- If you aren't up for a transatlantic crossing yourself, shipping is expensive. We checked and for our 34' boat we were getting quotes of $12-20k.


All this said, people are doing it but probably not enough to really impact the larger markets. We are currently in the process of buying a small cat in Spain but our intent is to leave it in the EU as it works out cheaper long term rather than shipping our current US boat.
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Old 22-05-2015, 06:31   #4
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Re: Boats bought in Eurozone and sailed to US, VAT?

We purchased our boat four years ago in Europe and saved a fortune and never paid VAT, nor do we intend to. It's easy for a non EU citizen to purchase a boat without paying VAT and either leave the EU and take delivery in a non VAT country and then either stay out of the VAT zone or remain in the EU indefinitely. But it's almost impossible for a VAT country resident to do the same.

The key is placing the boat in a sealed customs bond when you're out of the country (VAT zone). The time period the boat remains in a customs bond is not counted towards the 18 months. Then when the 18 month period is almost over, you leave the VAT zone for just one day, and the VAT clock starts all over.

All very legal, the customs agents will even assist you. We're in no hurry to return to the U.S. Our boat will spend 3-4 years in the VAT zone continuously before it needs to leave... for just one day. No scheme... nothing illegal... all done according the the law.

The wiring stuff really isn't much of an issue. Our boat was wired for North America 110v, everything is run through the inverter. Right now as I write, I'm plugged into 220v. If buying a 220v boat, you would just keep it that way and have European appliances. There's no need to rewire the entire boat.
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Old 22-05-2015, 07:36   #5
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Re: Boats bought in Eurozone and sailed to US, VAT?

Yup, what Kenomac says is correct. A friend of mine bought a boat in Gibraltar 3 years ago, cruised the Med for a bit and we sailed it over to the Caribbean and up to Bermuda over the last year. It's a lovely transatlantic passage going that way. Far easier than going the other way. No VAT required.
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Old 22-05-2015, 08:52   #6
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Re: Boats bought in Eurozone and sailed to US, VAT?

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Originally Posted by Kenomac View Post
We purchased our boat four years ago in Europe and saved a fortune and never paid VAT, nor do we intend to. It's easy for a non EU citizen to purchase a boat without paying VAT and either leave the EU and take delivery in a non VAT country and then either stay out of the VAT zone or remain in the EU indefinitely. But it's almost impossible for a VAT country resident to do the same.

The key is placing the boat in a sealed customs bond when you're out of the country (VAT zone). The time period the boat remains in a customs bond is not counted towards the 18 months. Then when the 18 month period is almost over, you leave the VAT zone for just one day, and the VAT clock starts all over.

All very legal, the customs agents will even assist you. We're in no hurry to return to the U.S. Our boat will spend 3-4 years in the VAT zone continuously before it needs to leave... for just one day. No scheme... nothing illegal... all done according the the law.

The wiring stuff really isn't much of an issue. Our boat was wired for North America 110v, everything is run through the inverter. Right now as I write, I'm plugged into 220v. If buying a 220v boat, you would just keep it that way and have European appliances. There's no need to rewire the entire boat.
My understanding is putting the boat in bond only extends you out to 24months total not indefinetly. After that the boat must leave the customs area for at least a day.

Yes, there are work arounds for the voltage but if you are going to move it permanently, I would want the boat wiring and appliances to match the local power.
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Old 22-05-2015, 09:56   #7
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Re: Boats bought in Eurozone and sailed to US, VAT?

Hi.

As long as you are not EU citizen, you are not obliged to pay VAT. And Kenomac is right: you restart the 18 months period every time you (re) enter the EU zone. As long as the boat is privately owned by a non-EU citizen, it is OK. If it is owned by a Non EU company, there might be a problem, as certain countries will request the company ownership to be disclosed, as to be sure it is not an EU citizen.

as for the wiring, Kenomac is also right.
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Old 22-05-2015, 10:46   #8
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Re: Boats bought in Eurozone and sailed to US, VAT?

J
Quote:
Originally Posted by valhalla360 View Post
My understanding is putting the boat in bond only extends you out to 24months total not indefinetly. After that the boat must leave the customs area for at least a day.

Yes, there are work arounds for the voltage but if you are going to move it permanently, I would want the boat wiring and appliances to match the local power.
Before using the customs bond method, we checked with Spanish customs authorities and bond agents, then we did the same in Italy. The VAT clock only runs when the boat is not sealed in a bond situation. With an extension out to 24 months, the boat can actually remain in the VAT zone for 5-6 years continuous without leaving depending on how often it's used and out of customs bond. While in Menorca, we saw boats from places like Montenegro which had been in Menorca for over five years without leaving the VAT zone.

When the boat is sealed... It's as if it isn't in the VAT zone. Here in Italy, the customs agents actually seal the entire boat with official metal ti wraps on the sails, dinghy, engine, hatches... Everything.... you're not allowed on the boat. It's expected that you've left the country.

Chances are, we'll venture over to Croatia, Greece and Turkey next season and pop out of the VAT zone for a few weeks and start the clock all over again, but it's really not difficult for a non EU citizen to keep a boat here indefinitely without paying VAT. But like I said in an earlier post, it's nearly impossible to do the same if you're an EU citizen.
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Old 22-05-2015, 11:02   #9
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Re: Boats bought in Eurozone and sailed to US, VAT?

Ok, I'm leaving my previous post because it was the way I understand the bonding process. But having re-read the taxation website, there are some discrepancies about the 18-24 month bond periods and overall stays.

So...... I'm currently well within the 24 month period and will make a call Monday or go down to the customs office for clarification.

Thank you for starting this thread and for Valhalla360 for posting. It's better to be safe than sorry, who knows, maybe I'll be heading out of the EU for a day sooner than later. I'll let you know.
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Old 22-05-2015, 11:26   #10
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Re: Boats bought in Eurozone and sailed to US, VAT?

Part of the original question was about importing EU boats to the US. In that case, there is a fee to import the boat into the US (I believe it is $2,000). The next question is where will you keep the boat in the US? If it will be Florida, there are more tax issues. Florida requires that a boat have a state registration in order to stay for more that 6 months at a time. After that, you would need to stay outside the state for 6 months. If you don't have a state registration and want to get one in Florida, they have a 6% tax (up to $18,000). Many states are the same way. On the east coast, New Hampshire and Delaware do not have state sales taxes. You can get a state registration there for a few hundred dollars. However, Florida will require that the boat was in the state of registration for at least 6 months otherwise, they will charge the 6% tax.
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Old 22-05-2015, 14:57   #11
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Re: Boats bought in Eurozone and sailed to US, VAT?

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Originally Posted by tedowens View Post
On the east coast, New Hampshire and Delaware do not have state sales taxes. You can get a state registration there for a few hundred dollars. However, Florida will require that the boat was in the state of registration for at least 6 months otherwise, they will charge the 6% tax.
I've been told that Rhode Island also does not have a state sales tax for boats. Does anyone know if that is true?
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Old 22-05-2015, 15:13   #12
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Re: Boats bought in Eurozone and sailed to US, VAT?

According to US Sectretary of State, John Kerry.... yes that's true. Rhode Island has no State sales tax on yachts. But don't try to bring it back to Massachusetts within a year to show it off to your friends.
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Old 23-05-2015, 08:15   #13
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Re: Boats bought in Eurozone and sailed to US, VAT?

One thing that is missing is the actual purchase. I attempted this once and had a hard time communicating such as with time zones. I have yet to have an effective email conversation with a broker. I feared flying over and seeing a boat that doesn't fit the ad. I guess with enough money and frequent flyer miles, it would be easier. The boats are also cheaper in the VIs. Again, brokers are on island time there.
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Old 26-05-2015, 05:57   #14
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Re: Boats bought in Eurozone and sailed to US, VAT?

VAT, here is the final answer coming from a customs bond agent responsible for many, many mega yachts. So she has to be right 100% of the time or face HUGE liability issues.

Total time in use within the VAT zone is 547 days (18 months)

Total time a boat can be in a customs bond is 24 months

Total time allowance when using a customs bond and part time use is:
18 months (use time) + 24 months (bond time) = 42 months combined before a foreign owned boat would need to exit the VAT zone in order to avoid paying VAT.

The final answer is 42 months maximum.

Ken
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Old 26-05-2015, 06:31   #15
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Re: Boats bought in Eurozone and sailed to US, VAT?

I think it only makes some sense if you intend to also spend an extended time in Europe / the Med, especially if flying home between seasons.

Will also help if you are genuinely not an EU resident and can easily prove it with paperwork......rather than being someone taking the piss.
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