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Old 17-02-2015, 09:50   #16
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Re: EU VAT, one more time...

I landed on my US-flagged boat in Ireland in 2009. I was "supposed" to pay the VAT to Ireland. I am a US citizen with a residence in Germany and I was to pay the VAT within 30 days of it landing in an EU country or before putting into "use".

The boat was berthed in The Netherlands for 3 years before I paid the VAT on a "very low-priced" bill of sale. No one ever came to question me, inspect or otherwise examine the boat, only a US flag got me stopped by the Dutch Marchausee several times a season, but they never asked about VAT.

Today, the catch is that having a 90 day tourist visa and the boat having a 180 day period to travel in the EU, the captain has to leave the EU every 90 days.

If you get a residence visa, then the VAT must be paid immediately and the ship is also subjected to a Post Construction Assessment survey immediately before use is allowed in the EU.

I found the Dutch and the Irish to be uninterested in all this, more concerned with documentation, radio licenses and insurance. I have heard that the French, Norwegians and Swedes more apt to question an American yacht more thoroughly.

According to German laws, as a US citizen residing full time in Germany with a German wife, I could have "imported" the boat, my car and all my household belongings within the first year duty free.

There are noises emanating from Brussels that they are finally waking up to the illogical nature of all this, but when will they actually do something about it, who knows. It seems their only job is to make laws, so that's all they do. I just wish they would put a little common sense into what they legislate.
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Old 17-02-2015, 23:58   #17
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Re: EU VAT, one more time...

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Originally Posted by TJ D View Post
Well, with all due respect, it's not about skirting the rules or dodging taxes. It's about understanding the rules and making an informed decision about whether or not we want to subject ourselves to a very expensive bureaucratic nightmare just to briefly visit some place.

We really are not based in Europe, but Jenny can't hold US residency while we are out cruising. The US demands that foreigners spend at least 6 months per year inside the USA as a condition of a green card, and we don't always do that. So, even though she doesn't really live in the EU, one has to be a resident somewhere! Vagabond/homeless unfortunately does not cut it when it comes to these things.

So, we have very few ties to Europe, and we're sure as hell not going to write them a check for 70,000 euros or whatever they decide they want just so we can cruise there for a couple of seasons! We will be sailing back to the Caribbean then to the So. Pacific after Europe, so there's just no reason that I can conceive of that we could be in any way construed to be skirting rules or dodging taxes. We have no problem paying what we owe, but if we would be even potentially liable for VAT, we will not be going. We've been to many countries to date, and have never encountered even a hint of this kind of thing as transient cruisers, so perhaps we need to just strike the entire EU off the list of places to go at this point. That seems to be a bit of a shame, doesn't it?

TJ and Jenny
Settle down, no one is calling you out as a bad person.

Of course it's about avoiding taxes (does that word sound better? If you don't like that pick a term that is acceptable) otherwise you wouldn't have asked.

The fact you are playing games with the rules for your green card (possibly well within the letter of the law. I have no idea.) doesn't change the fact she is an EU resident from the legal perspective, so is not relevant to if her residency would trigger VAT.

As stated previously, you have three options:
- Pay the tax which appears to be the intent, if not the letter of the law.
- Pay the lawyer to confirm exactly what you have to do to avoid paying the tax (or take internet advice from random strangers and live with the results).
- Skirt the law and hope you don't get caught
- And to throw in a fourth option: not cruise the EU.
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Old 18-02-2015, 01:47   #18
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Re: EU VAT, one more time...

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Originally Posted by valhalla360 View Post
Settle down, no one is calling you out as a bad person.

Of course it's about avoiding taxes (does that word sound better? If you don't like that pick a term that is acceptable) otherwise you wouldn't have asked.

The fact you are playing games with the rules for your green card (possibly well within the letter of the law. I have no idea.) doesn't change the fact she is an EU resident from the legal perspective, so is not relevant to if her residency would trigger VAT.

As stated previously, you have three options:
- Pay the tax which appears to be the intent, if not the letter of the law.
- Pay the lawyer to confirm exactly what you have to do to avoid paying the tax (or take internet advice from random strangers and live with the results).
- Skirt the law and hope you don't get caught
- And to throw in a fourth option: not cruise the EU.

Well, here we go again. How exactly did you come to the conclusion that we're 'playing games' with regards to a green card in the US? We are following the laws which are set out by the government, confirmed through legal consultation. This would be much easier if this were a legal option.

I'm sorry, but both of your messages are not accurate with regard to our intent. The phrase you first used is 'caught cheating'. Cheating is the last thing on our mind. We are law abiding people, and that's why we're not just winging it and going there hoping to fly under the radar.

That's the whole point of this exercise. We certainly would not base such an important decision based only on chat room info, but this forum does often have participants with good helpful suggestions, such as a link to an attorney who specializes in exactly this sort of thing, who might be difficult to find without a recommendation.

So, Valhalla, we'll just agree to disagree about what our intent is here and see if anybody else might have something more constructive to offer.

Thanks again to Charlie. I have emailed the customs person to whom you've sent us the link. Hopefully he can steer us the right way.

TJ and Jenny
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Old 18-02-2015, 03:00   #19
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Re: EU VAT, one more time...

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Originally Posted by TJ D View Post
Well, here we go again. How exactly did you come to the conclusion that we're 'playing games' with regards to a green card in the US? We are following the laws which are set out by the government, confirmed through legal consultation. This would be much easier if this were a legal option.

I'm sorry, but both of your messages are not accurate with regard to our intent. The phrase you first used is 'caught cheating'. Cheating is the last thing on our mind. We are law abiding people, and that's why we're not just winging it and going there hoping to fly under the radar.

That's the whole point of this exercise. We certainly would not base such an important decision based only on chat room info, but this forum does often have participants with good helpful suggestions, such as a link to an attorney who specializes in exactly this sort of thing, who might be difficult to find without a recommendation.

So, Valhalla, we'll just agree to disagree about what our intent is here and see if anybody else might have something more constructive to offer.

Thanks again to Charlie. I have emailed the customs person to whom you've sent us the link. Hopefully he can steer us the right way.

TJ and Jenny
Every reading I have had: the intent is for EU residents to pay VAT immediately upon bringing the boat in the tax zone. There may be exceptions but if you are unwilling to play with tax avoidance schemes that may be perfectly legal, there is no help for you.

I've tried to offer you what advice I can with good intent but as you are fixated on semantics over substance, I will stop responding to this thread. Good luck with not paying VAT while not working the system legally.
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Old 26-02-2015, 07:23   #20
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Re: EU VAT, one more time...

Well, if anyone's still reading this thread, we have learned some things (or not).

We've been in contact with the main customs offices in both Germany and the UK, as well as an attorney in London who specializes in VAT issues for yachts.

The results have not really shed any light on the situation in general.

Germany says that since we are on a sailboat, an EU resident being on board the boat in a marina does not constitute 'use' under EU law, as long as the boat isn't sailed/moved while the non-EU person is outside the EU (this is our plan). Therefore, we would not be subject to VAT/import duties.

The UK, when asked the same question in the same way, tells us that our plans do constitute 'use' under EU law, and therefore tax/import duty would be due immediately upon my leaving the EU.

The lawyer says that in effect, we would probably be fine, but one never knows for sure.

So, that's where things stand now. Of course, the rules are supposed to be 'harmonized' throughout the EU, but it would appear that every country's interpretation differs. It's surprising that it would be as ambiguous as it appears to be over there.

So, we'll be making a summer cruise to Labrador/Newfoundland/maybe Greenland this summer instead, and will leave the EU alone until we get the residency question taken care of. Either Jenny's moving out of the EU or I'm moving in!

Interesting times we live in...

Thanks for the help, and thanks for the PM's. It's good to get some info from those of you who have dealt with this.

Signing off. TJ
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Old 26-02-2015, 09:27   #21
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Re: EU VAT, one more time...

"Of course, the rules are supposed to be 'harmonized' throughout the EU, but it would appear that every country's interpretation differs."

If anything is "harmonized" in the EU, I would like to know what. I have lived in Germany for 15 years and am constantly checking for updates on VAT status, Post Construction Assessment surveys, regulations regarding out-dated flares and rockets (France wants to fine every out-dated flare 75 euros regardless of how many current dated flares or rockets on has), Orion flare pistols need a license in Holland to put them in your car and you can't leave the flare pistol on board when no person is on board - but one doesn't need a license for a PLASTIC Orion flare pistol in Germany.

When I first sailed into the EU, I landed in Ireland, but having previously stopped in Saint Pierre, I asked the Irish Customs and Immigration officer when did the clock start ticking on my US-flagged vessel for the 180 days...He said, "Oh, leave your boat here in Baltimore, we don't care about that stuff."

No one asked me for VAT or PCA documents in England or Holland and now that I have imported the still US-flagged boat, no one still asks.

And the idiots in Brussels who make all these illogical laws know nothing about boating. Unfortunately, the US seems to be trying to learn tricks from Brussels.
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Old 26-02-2015, 10:36   #22
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Re: EU VAT, one more time...

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Originally Posted by George DuBose;
If anything is "harmonized" in the EU, I would like to know what.
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Old 26-02-2015, 10:45   #23
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Re: EU VAT, one more time...

Okay - I'm sailing under swiss flag - this means I'm also not under EU law concerning VAT and Tax issues. The rule is that we have to leave the EU every 18 months for a day or so and then we have the right to stay there other 18 months. So far this was working perfect the last few years. Go to Norway / Monte Negro / Gibraltar to avoid any tax issues with the EU.

We were checking this with lawyers and they agreed on that.

Hope this helps !

Markus
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Old 26-02-2015, 11:44   #24
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Re: EU VAT, one more time...

George,

I share in your frustration. I can't believe that we could ask two N. European countries authorities the same question and get opposite answers.

Well, actually I can.

For clarity's sake, the issue for us is that I own the (American) boat, and I'm the American. Where we are running into problems is we don't know for sure whether or not my wife (EU resident, technically) can be on board at all while I'm outside the EU.

The rule says that an EU resident may not 'use' the boat while the foreign owner is out of the EU. According to Germany, living on board in a marina does not constitute 'use', only if the boat is used for its intended purpose, namely sailing, does the 'use' definition get met.

The UK views it differently, they have answered that her being on board while I'm out of the EU regardless of whether the boat is underway constitutes 'use' by an EU resident, and therefore VAT would be due.

Now, I suppose we could rent a shoreside apartment anytime I have to go away for her to live in, but we live on our boat, and it seems just plain absurd to have to go to those lengths.

So, we're thinking that we're going to have to skip the EU for as long as she's legally a resident there. We just don't want to take the chance of getting a huge tax bill, and we don't want to have to abandon the boat every time I have to hop on a plane.

Sigh.

TJ
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Old 26-02-2015, 11:58   #25
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Re: EU VAT, one more time...

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Originally Posted by TJ D View Post
George,
For clarity's sake, the issue for us is that I own the (American) boat, and I'm the American. Where we are running into problems is we don't know for sure whether or not my wife (EU resident, technically) can be on board at all while I'm outside the EU.

(snip)
.. we live on our boat..(sip) ..
So, we're thinking that we're going to have to skip the EU for as long as she's legally a resident there.
I find it easy to understand that VAT is not really harmonized, but do not understand that your wife, who lives in a boat that has never been to the EU can be deemed to be a resident of a EU country (as defined in the VAT law of where the boat will be in the EU, which may be the same or another country)?

I have been through several situations where there was some confusion between the concept of meaning of tax residence in country X for the purposes of country Y taxes and other concepts such domicile, citizenship or right to stay for ever under immigration rules of country Z. Good advisors helped me clear through all that. Hopefully there is some potential on that front.
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Old 26-02-2015, 12:19   #26
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Re: EU VAT, one more time...

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I find it easy to understand that VAT is not really harmonized, but do not understand that your wife, who lives in a boat that has never been to the EU can be deemed to be a resident of a EU country (as defined in the VAT law of where the boat will be in the EU, which may be the same or another country)?

I have been through several situations where there was some confusion between the concept of meaning of tax residence in country X for the purposes of country Y taxes and other concepts such domicile, citizenship or right to stay for ever under immigration rules of country Z. Good advisors helped me clear through all that. Hopefully there is some potential on that front.
Well, it seems that nobody's allowed to not have a legal residence, and because we're not in the US enough, she's not allowed to hold residency there, so her home country sort of became her de facto residence. I don't know how else we could do it, short of establishing in a Caribbean country, but it just seems too dodgy for us to want to do that.

I think that after our research the thing that concerns us the most is simply the uncertainty of it all. We're pretty gobsmacked that we could contact the head customs agencies of 2 of the more stable EU countries and get opposing answers to the same questions.

So, it sort of got us feeling like it's not really worth the risk to go there, which is a real disappointment, as we were really pretty excited to get out of the tropics for a while, but it would seem that the rules are applied without any real standard, and winding up getting hit with a big bill simply because we met the wrong customs guy on the wrong day will sort of be looming over us all the time while there. More specifically, it would be looming over her while I'm away. It will diminish the enjoyment, and a stressed out admiral doesn't make for a happy boat.

I think that we'll probably put this cruise on the back burner until we get it sorted out better. If somebody knows a pro who really knows this stuff (in the UK would be best), I would love a recommendation. That might make us reconsider.

Thanks for the ideas.

TJ
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Old 26-02-2015, 12:57   #27
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Re: EU VAT, one more time...

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Well, it seems that nobody's allowed to not have a legal residence, and because we're not in the US enough, she's not allowed to hold residency there, so her home country sort of became her de facto residence.
I do not know if you have been a serial expat working for a multinational, moving every 2 or 3 years and working with advisors to figure out how to comply with the law and not pay more than necessary in each place. Have you read the actual written rule that defines the residence that matters, which is a (VAT?) tax rule from some European country, not a US rule?

I am yet to see one real case in which someone who planed ahead based on good advice HAD to default to deemed tax residence equal to country of citizenship because he/she did could not qualify for any of the things that come before that in most definitions (intention, property available, family ties, previous residence, etc). That said, I know there is always a first time!

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Originally Posted by TJ D View Post
(snip)
If somebody knows a pro who really knows this stuff (in the UK would be best), I would love a recommendation. That might make us reconsider.
TJ
I have seen great advice on UK tax residence/domicile matters from Ken Blanchard of KPMG´s London office (+44 20 7951 4367). He used to run the London-based team that looks after all sorts of tax issues for corporate expats. If you are concerned about the rules of a country other than the UK he will be able to refer you to the right person.
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Old 26-02-2015, 13:42   #28
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Re: EU VAT, one more time...

Charlie,

I will certainly give Mr. Blanchard a call. Maybe there's a way we can get this done after all.

I do appreciate the help, it's all a bit over our heads, frankly. We've been cruising primarily in less developed parts of the world with periods back in the US for many years, so this is pretty daunting. I'm more used to putting on a clean shirt and long pants, walking over to the port offices with my little waterproof case with the boat papers, and getting everything all done in a few hours at most. We've never faced a regulatory behemoth like the EU before, that's for sure.

TJ
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