Canadian citizen, VAT paid vessel and cruising

[Lokiyawl]

Hello,

I am looking at purchasing a VAT paid ketch in Italy. I am a US/Canadian dual citizen. I would like to cruise the vessel in the Med for two to three seasons before sailing her back to Florida. Will I have any problems with owing VAT again on the boat during my 2-3 season stay there? Any other gotcha's that I should be on the lookout for?

Thanks,

James

[boatman61]

Make sure you get proof of VAT/IVA having been paid and you should be fine with the boat.
You however will be subject to the 90day rule.. unless you can get it extended.

[Prairie Chicken]

As Boatie says, as long as you have evidence the VAT/IVA has been paid, the boat should be fine. In Europe, unlike Canada, the VAT is typically only paid once & not with each change of ownership, so keep that evidence safe.

The 90-day rule he's referring to is the Schengen Agreement, which prevents us non-EU persons from spending >90 days in the EU during any 180-day period.

What part of NS? As a fellow Nova Scotian with a boat in Spain, I'm well aware of the pit falls.

[svlamorocha]

Originally Posted by Prairie Chicken

As Boatie says, as long as you have evidence the VAT/IVA has been paid, the boat should be fine. In Europe, unlike Canada, the VAT is typically only paid once & not with each change of ownership, so keep that evidence safe.
.

For most European countries this is not true if the sale happens outside Europe (loosely defined). If you want to preserve VAT paid status make sure the transaction happens in Europe.

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[boatman61]

Originally Posted by svlamorocha

For most European countries this is not true if the sale happens outside Europe (loosely defined). If you want to preserve VAT paid status make sure the transaction happens in Europe.

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I believe Italy still qualifies... and if Merkel and Erdogan get their way Turkey will as well in 2020..

[Lokiyawl]

Originally Posted by boatman61

Make sure you get proof of VAT/IVA having been paid and you should be fine with the boat.
You however will be subject to the 90day rule.. unless you can get it extended.

Thanks for the reply and excuse the ignorance but can you explain the 90 day rule?
Best,

James

[Lokiyawl]

Originally Posted by Prairie Chicken

As Boatie says, as long as you have evidence the VAT/IVA has been paid, the boat should be fine. In Europe, unlike Canada, the VAT is typically only paid once & not with each change of ownership, so keep that evidence safe.

The 90-day rule he's referring to is the Schengen Agreement, which prevents us non-EU persons from spending >90 days in the EU during any 180-day period.

What part of NS? As a fellow Nova Scotian with a boat in Spain, I'm well aware of the pit falls.

Hello,
Thanks for explaining the 90 day rule. So the boat should be fine, the question is whether I will be able to use it more than 90 days at a time.. My home is in St. Peters, but I actually spend more time on the South Shore due to work.
Best,
James

[dlymn]

You can stay as long as you like In EU waters BUT if customs check your passport at ANY time (even flying out) the particular officer might choose to make an issue of your overstay. You will be "banned" from entering EU countries unless you make a written plea and it is approved. My advice, don't risk it. The workaround is to spend 3 months in EU waters, 3 months in non EU waters (Turkey, Israel,Egypt, Libya, Albania, Montenegro. The following countries are actually in the EU but not in the Schengen area: Ireland and UK. The following countries Croatia, Bulgaria, Cyprus and Romania are legally obliged to join Schengen but are still having their status assessed.
There is also a requirement for a foreign owned boat to only remain in EU waters for 18-24 months but this can be restarted by sailing to a nonEU country for a brief period. Your VAT status might mean that this is overlooked.
I think that you VAT status might become invalid after some years, but flash the paperwork showing your status and all should be OK. Schengen was designed to control uncontrolled immigration into the EU and not really to stop big spending tourists who might want stay longer. Some countries allow residency that might allow you to stay for many years but you might get caught up in VAT again.

[Lokiyawl]

Originally Posted by dlymn

You can stay as long as you like In EU waters BUT if customs check your passport at ANY time (even flying out) the particular officer might choose to make an issue of your overstay. You will be "banned" from entering EU countries unless you make a written plea and it is approved. My advice, don't risk it. The workaround is to spend 3 months in EU waters, 3 months in non EU waters (Turkey, Israel,Egypt, Libya, Albania, Montenegro. The following countries are actually in the EU but not in the Schengen area: Ireland and UK. The following countries Croatia, Bulgaria, Cyprus and Romania are legally obliged to join Schengen but are still having their status assessed.
There is also a requirement for a foreign owned boat to only remain in EU waters for 18-24 months but this can be restarted by sailing to a nonEU country for a brief period. Your VAT status might mean that this is overlooked.
I think that you VAT status might become invalid after some years, but flash the paperwork showing your status and all should be OK. Schengen was designed to control uncontrolled immigration into the EU and not really to stop big spending tourists who might want stay longer. Some countries allow residency that might allow you to stay for many years but you might get caught up in VAT again.

Thank you, that is very helpful to me. I agree with your suggestion to not risk an overstay and if I need to stay longer I will look into spending time out of the EU as you suggested. Best, James

[Prairie Chicken]

There is also a requirement for a foreign owned boat to only remain in EU waters for 18-24 months but this can be restarted by sailing to a nonEU country for a brief period. Your VAT status might mean that this is overlooked.

That is the VAT issue. A non-VAT paid boat may only remain in the EU for 18 months before having to leave. The departure need only be for a few hours, but sufficient to obtain proof the boat was out of the EU, in order to reset the 18-month VAT clock.

You say you're thinking of sailing the Med for two or three seasons before leaving. By seasons do you mean the summer season, in which case you can sail for three months, return to N. America for the winter, and go back again next summer, which is essentially what we do. Or, do you mean two or three years of continuous sailing before leaving, in which case spending time out of Schengen will be necessary for you.

[crankysailor]

So do I understand this right, if the OP takes the boat to say Canada at some point later an then sells the boat there to an European who sails it then back to Europe.. Will its original VAT paid status be lost cause there was a sale outside the EU and thus the new owner would have to pay VAT again?




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[Rapanui]

As I understand the rules, if a VAT paid boat spends more than 3 years outside the EU then VAT is due on its return. Of course, the authority concerned would have to have knowledge and proof that you have spent more than 3 years away which would be pretty difficult.
As I also understand it, you can spend 3 months in Schengen and then spend 3 months in a non-Schengen country of which there are a few, so Italy then Croatia would be possible for example.
You can also request a longer stay in any country. You may have to jump through a few hoops to do so but that is possible. There was a recent posting regarding an Antipodean I think who had done this for Greece. Basically you have to prove you have the means to support yourself and get home at the end.

[Prairie Chicken]

As Rapanui says, if you take the vessel out of the EU for a given period of time, I thought two years but really am not sure, the vessel is deemed to have been exported from the EU & VAT would have to be paid if it was again to reside in the EU. Realistically though, it would be unlikely the authorities would be looking for evidence it had away for long enough to have been deemed exported.

An unrelated question is if the VAT-paid vessel is the subject of a sale outside the EU. I don't know the answer to that although there has been considerable discussion about that here on the forum. If you're buying in Italy, you should be fine.

[Huskybeer]

as long as the sale was done in the EU the VAT remains with the boat.
it is sufficient to be as a person one day out of Schengen. However, if you register the boat in the ccountry of your prefernece thru an agent ashore, no problems. Or better you get a (temporary) residency in the registering country. then your 90 day Schengen rule is void. Pls be aware that once you bring the boat back to Canada, depending on the age of the boat they may apply different taxes. Again, if you keep the boat registered in France pe. the4 60 day rule may not apply. Interesting legal question.

[Huskybeer]

it is sufficient to be as a person one day out of Schengen. However, if you register the boat in the ccountry of your prefernece thru an agent ashore, no problems. Or better you get a (temporary) residency in the registering country. then your 90 day Schengen rule is void. Pls be aware that once you bring the boat back to Canada, depending on the age of the boat they may apply different taxes. Again, if you keep the boat registered in France pe. the4 60 day rule may not apply. Interesting legal question.