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Old 29-12-2013, 22:02   #1
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Dual Citizenship, where to register, and how that effects travel in the Med?

Hello all,

Quite a complex question I've got, and after reading as many threads as I can I think I might be more confused then when I started. Any help with this would be most welcomed.

So... We're originally from the Uk, both have Uk passports. We moved to Australia 5 years ago and have just got Citizenship here so we'll have dual passports.

We've just bought a boat and will be picking it up from Guernsey April next year. The basic plan is to sail around the Med for 1-2 years, then hop over the pond with the ARC rally, and make our way back to Sydney where we'll then sell the boat.

As we'll be selling in Sydney we haven't paid EU VAT on the understanding that we'll get hit later with GST which is fine.

Ok, so that's the basics out of the way, my questions are..

1. We are thinking of registering the boat as Australian. Do we need to do that in order to sell back in Sydney? Again we don't want to pay VAT straight away.

2. Can we still freely move around the EU Med countries via our UK passports even if the boat is registered in Australia (Oz flag?)? Will that cause any issues for us?

3. And other issues anyone can think of?

Regards,
Simon
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Old 30-12-2013, 05:37   #2
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

1. can't answer that

2. Yes you can, your personal freedom to move has nothing to do with the boat.

3. yes see below

I would strongly suggest you register the Yacht in Australia before cruising the EU. ( or alternatively Flag it outside the EU)

NOTE: You need to clearly be able to demonstrate that you are not tax residents of any EU country and you are domiciled and based in Australia, Bring house bills, utility bills, pay check documentation , so that if anyone questions your tax status , you can clearly show you are living in Australia. If you have property in the EU or are paying any form of tax there , be very careful as you may not entitled to any VAT free period.

The boat will then have 18 month to visit the EU and its early too reset that for another 18 months. Be aware that Portugal has a bit of a snot on about Channel island boats , UK VAT and VAT on boats in general at the moment .

Just ensure you carry enough documentation to keep the bureaucrats at bay, having said that VAT inspections per say are rare. ( but often focused on UK and channel island boats)

if you have a VHF radio ensure you have the appropriate ships license and operator license. A respectable certificate of competency is useful for the skipper and one crew person as well. ( and is required in Croatia)
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Old 30-12-2013, 05:43   #3
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Originally Posted by goboatingnow View Post
1. can't answer that

2. Yes you can, your personal freedom to move has nothing to do with the boat.

3. yes see below

I would strongly suggest you register the Yacht in Australia before cruising the EU. ( or alternatively Flag it outside the EU)

NOTE: You need to clearly be able to demonstrate that you are not tax residents of any EU country and you are domiciled and based in Australia, Bring house bills, utility bills, pay check documentation , so that if anyone questions your tax status , you can clearly show you are living in Australia. If you have property in the EU or are paying any form of tax there , be very careful as you may not entitled to any VAT free period.

The boat will then have 18 month to visit the EU and its early too reset that for another 18 months. Be aware that Portugal has a bit of a snot on about Channel island boats , UK VAT and VAT on boats in general at the moment .

Just ensure you carry enough documentation to keep the bureaucrats at bay, having said that VAT inspections per say are rare. ( but often focused on UK and channel island boats)

if you have a VHF radio ensure you have the appropriate ships license and operator license. A respectable certificate of competency is useful for the skipper and one crew person as well. ( and is required in Croatia)
Be especially careful with Portugal... they are mustard..
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Old 30-12-2013, 05:44   #4
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

Many thanks for the advice.

As we've been living and working over here in Sydney for the last 5 years we can bring lots of bills / tax returns, etc, with us. Good to know.

We do however have a flat we rent out in the Uk. But as I say for tax purposes (which I think is where you spend more and 180 days in one place) we are Australian. Hopefully the flat rental wouldn't effect us due to this?

As far as I can make out we shouldn't have to pay tax twice. If we're going to be paying GST when we eventually arrive back in Sydney I don't want to get hammered with 20% VAT as well.
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Old 30-12-2013, 05:51   #5
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

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Originally Posted by simonpickard View Post
Many thanks for the advice.

As we've been living and working over here in Sydney for the last 5 years we can bring lots of bills / tax returns, etc, with us. Good to know.

We do however have a flat we rent out in the Uk. But as I say for tax purposes (which I think is where you spend more and 180 days in one place) we are Australian. Hopefully the flat rental wouldn't effect us due to this?

As far as I can make out we shouldn't have to pay tax twice. If we're going to be paying GST when we eventually arrive back in Sydney I don't want to get hammered with 20% VAT as well.

Ok , under the letter of the law, because you have rental income in the UK, you could be considered to be tax residents. However in practice none will know that anyway and has no way to check. So bring a good selection of current domestic bills, evidence of Australian employment and or income and your good to go.

Note there is no application process to avail of the VAT exception, you just avail of it

Note do not remain in any EU country for more the 180 days ( in any calendar or tax year) and preferably no more then 90 days at a time.

Dave
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Old 30-12-2013, 05:51   #6
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pirate Re: Dual Citizenship, where to register, and how that effects travel in the Med?

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Originally Posted by simonpickard View Post
Many thanks for the advice.

As we've been living and working over here in Sydney for the last 5 years we can bring lots of bills / tax returns, etc, with us. Good to know.

We do however have a flat we rent out in the Uk. But as I say for tax purposes (which I think is where you spend more and 180 days in one place) we are Australian. Hopefully the flat rental wouldn't effect us due to this?

As far as I can make out we shouldn't have to pay tax twice. If we're going to be paying GST when we eventually arrive back in Sydney I don't want to get hammered with 20% VAT as well.
23% in Portugal... a US registered Cat got caught out earlier this year so tread wary...
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Old 30-12-2013, 05:54   #7
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

Yes currently Portugal has a big thing on about VAT. since you will be using your UK passports, they can claim you are EU citizens and hence cannot avail of the VAT exception, While this is not the law in regards that , officials will/can be difficult to convince.

The fact that you are Australian citizens will however be a major advantage and should forstall any issues

Note also that there are considerable extension for Austalians to stay longer in many Med countries and many of the Schengen rules don't apply due to bilateral treaties, ( this is even more the case for NZ-ers) , Hence you could consider just travelling under Australian passports.

Dave
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Old 30-12-2013, 06:04   #8
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

Humm, I'm starting to wonder if it wouldn't just be easier to pay Uk VAT now and get it over and done with. If I did that would I still have to pay Australian GST when I sold back in Sydney?

I'm not trying to cheat the system by the way, I just don't want to get stung twice as that seems really unfair.

Regards,
Simon
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Old 30-12-2013, 06:09   #9
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

No I would definitely not pay the VAT , you are not required legally required to do so. follow the advice and things will be fine

Noe will you be able to reclaim the VAT when you pay the GST either

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Old 30-12-2013, 06:19   #10
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pirate Re: Dual Citizenship, where to register, and how that effects travel in the Med?

Dunno if this is any good.. flag her UK under SSR and travel on your UK passports and leave the registration to OZ till you get to the Caribbean..
I have never been asked to supply a VAT receipt.. or proof of payment anywhere.. when UK flagged.
I believe there is an exemption for 18mths if its being taken out of the EU zone permanently...
but I could be wrong.
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Old 30-12-2013, 06:25   #11
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

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Dunno if this is any good.. flag her UK under SSR and travel on your UK passports and leave the registration to OZ till you get to the Caribbean
No sorry Phil, thats exactly what they shouldnt do, as it merely re-enforces the view amongst officials this is a UK yacht with UK owners and no VAT. Not good.

what you want is to emphasise the Ozzie side of things. VAT is only an issue for EU tax residents, thats the key.

There is a 1-3 month exception for EU residents buying a boat they intend to export , the 18 month one only applies to non EU tax residents.

I agree with you, personally never been challenged for VAT , even in portugal, must have an honest face.!! Its a rare issue, and is actually typically brought upon by having incomplete boat registration document, or something fishy in the documents or overstaying etc
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Old 30-12-2013, 06:47   #12
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

While I don't doubt Dave has a fairly good handle on things, this is probalby worth consulting with a lawyer versed in dual citizenship and VAT issues in the EU.

You are operating in a gray area and even if the law falls on your side, it may take a long and drawn out court case to prove your point if an official does decide to take issue with your UK passport.

I believe if they decide you are a citizen (tax entity or whatever they call it), the VAT is due immediately. If they catch you 12 months later and decide you were committing tax evasion, what are the penalties? Does that 20% VAT double or tripple? Do they confiscate the boat while they sort it out?

While the advice above appears to be correct from my research, I would want a lawyer I could go back on if it all blows up.
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Old 30-12-2013, 07:37   #13
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

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While I don't doubt Dave has a fairly good handle on things, this is probalby worth consulting with a lawyer versed in dual citizenship and VAT issues in the EU.

You are operating in a gray area and even if the law falls on your side, it may take a long and drawn out court case to prove your point if an official does decide to take issue with your UK passport.

I believe if they decide you are a citizen (tax entity or whatever they call it), the VAT is due immediately. If they catch you 12 months later and decide you were committing tax evasion, what are the penalties? Does that 20% VAT double or tripple? Do they confiscate the boat while they sort it out?

While the advice above appears to be correct from my research, I would want a lawyer I could go back on if it all blows up.
hes not operating in a Grey area at all.


its very difficult virtually impossible to get good legal help on a combination of taxes and boats. Experts ( and case law) are rare as hens teeth. Often you can get seriously wrong information from "experts" This has been my experience and its why all over the EU , VAT law is the subject of loads of litigation ( in commercial goods situations )

Vat and boats doesn't really work the way you've outlines it. Even with recent treaty changes, VAT is the national not trans EU issue. Hence a Portuguese tax official cannot and will not determined your UK tax status. That is solely the function of the UK authorities, This is because tax competency is not harmonised under EU law.

Equally even if Vat was due, unless it was clearly established that it was , say Portuguese VAT that was due ( because commonly you overstayed in Portugal), then the Portuguese authorities cannot recover another countries VAT. ( even with recent changes)

IN reality on the ground, Customs officials have no other way of determining your tax status , other then the documents you, yourself carry. Hence once the OP carries proof of Australian tax status, there is no way the official can determine anything else. ( nor is he interested in doing so).

Secondly the TIR programme for Yachts, the 18 month excemption is well established and generally understood and utilised behind the scenes by 1000s of foreign yachts visiting the EU.

Note that VAT audits of foreign flagged boats are very rare indeed, and are generally triggered by lack of other documentation, concerns over the true ownership of the vessel, overstays or clear attempts at tax evasion strategies. In the main 10000s of boats come and go with nothing more than a "bonjour"


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Old 30-12-2013, 08:24   #14
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

We know of two couples doing exactly the same thing as you, both on new boats purchased out of France two years ago. Neither has had any issues so far by not paying the VAT on a Guernsey delivery. Both have UK property and dual citizenship... UK and Canada & UK and Australian. The first couple did decide to leave the EU just inside the 18 month VAT window on the advice of their attorney, just in case... not wanting to take any chances with a 2 million dollar boat having a VAT due.

Portugal sounds different, be careful, but no problems here in Spain to report.
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Old 30-12-2013, 10:50   #15
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Re: Dual Citizenship, where to register, and how that effects travel in the Med?

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hes not operating in a Grey area at all.


its very difficult virtually impossible to get good legal help on a combination of taxes and boats. Experts ( and case law) are rare as hens teeth. Often you can get seriously wrong information from "experts" This has been my experience and its why all over the EU , VAT law is the subject of loads of litigation ( in commercial goods situations )

Vat and boats doesn't really work the way you've outlines it. Even with recent treaty changes, VAT is the national not trans EU issue. Hence a Portuguese tax official cannot and will not determined your UK tax status. That is solely the function of the UK authorities, This is because tax competency is not harmonised under EU law.

Equally even if Vat was due, unless it was clearly established that it was , say Portuguese VAT that was due ( because commonly you overstayed in Portugal), then the Portuguese authorities cannot recover another countries VAT. ( even with recent changes)

IN reality on the ground, Customs officials have no other way of determining your tax status , other then the documents you, yourself carry. Hence once the OP carries proof of Australian tax status, there is no way the official can determine anything else. ( nor is he interested in doing so).

Secondly the TIR programme for Yachts, the 18 month excemption is well established and generally understood and utilised behind the scenes by 1000s of foreign yachts visiting the EU.

Note that VAT audits of foreign flagged boats are very rare indeed, and are generally triggered by lack of other documentation, concerns over the true ownership of the vessel, overstays or clear attempts at tax evasion strategies. In the main 10000s of boats come and go with nothing more than a "bonjour"


dave
If legal experts and case law is lacking, that does suggest a gray area at least in practical terms. We can debate if talking to a lawyer would be helpful but I would think a lawyer would still be better able to provide guideance.

I agree, the odds of being caught are probalby low but the potential cost if you are caught up with a busy body official is high both in monetary terms and hassle if they impound your boat.

I may have misspoke. I never thought Portugal would collect VAT for the UK. I'm not sure if this is the case but would Portugual if they found a non-VAT paid boat owned by a UK citizen be in a position to collect the Portugues VAT if the owner can't produce proof the UK VAT was paid? (while its a bit different with a boat, for comparison, if a UK citizen bought a TV in a Portugues store, I assume they would pay Portugues VAT on the TV.)
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