Foreign registered boat in EU waters

[Dolphinblue-BOB]

Originally Posted by Maver

As an EU inhabitant you can ask for an so called ICP, International Certificate of Pleasurecraft, try Pavillon Belge, than you will get a Dutch ICP. You will need someone to represent you. As a company outside the EU will be a problem to get an ICP.

Regards,

Martin

Excuse my ignorance, Martin, but i do not know what this is. I have heard for ICC, the International Certificate of Competence, and the ICOP, the International Certificate for Operators of Pleasure craft, which both allow you to operate pleasure craft of different sizes / sailing area. Would you please post a link to it?
Thank you in advance.

[Maver]

Bob,
The ICP is an European certificate of ownership what you need to have for sailing in the EU; the ICC is concerning you and your competence, the ICP is concerning your yacht. As all ready told check the site Pavillon belge : Le site officiel de l'immatriculation de bateaux de plaisance sous pavillon belge

Martin

[svlamorocha]

Originally Posted by asalcedo

Hi Bob,

Your opinion coincides with what the boat manufacturer has told me.

Also, according to the EC's publication referred earlier, Some Frequently Asked Questions about the rules for private boats - European commission what you say is valid if the BVI company can be considered the "person" referred there.

However, it seems easy enough to do that it makes me feel uneasy that one day the authorities could precinct my boat. I have heard horror stories in Italy in particular.

In my case, I am considering a 59' boat, the VAT (plus 12% additional tax in Spain) is very substantial and well worth it legally avoiding it

Thanks.

I suspect that in the process of earning the money to buy a 59-footer you have learned to spot things that are too good to be true. You can defer VAT but it will not be easy AND risk-free!

You may consider asking in which of the headings of article 558 of the EU 6th Directive does the proposed scheme fit. Then ask if when having EU residents on board you need to take position that the BVI corporation is in the charter business, if it needs to have charter revenues and pay its crew (you?) and what does all that mean for corporate and personal income taxes and VAT in the relevant jurisdictions. Also ask what will you need to report about the shareholders and beneficial owners of the BVI corporation.

When I was living in the UK I had plenty of opportunity to sail in very nice new "book a berth" boats at very cheap charter rates, just to let the owner "tick the boxes" to meet the requirements of the tax "scheme" for that boat. I do remember one of them saying that he wished he had taken the opportunity to pay VAT at some special rate in some other country and be done with it, rather than getting into the ongoing commitment of pretending to be in the crewed charter business. I confess I am far from Europe now and it may very well be that things have changed though.

[asalcedo]

Originally Posted by svlamorocha

I suspect that in the process of earning the money to buy a 59-footer you have learned to spot things that are too good to be true. You can defer VAT but it will not be easy AND risk-free!

You may consider asking in which of the headings of article 558 of the EU 6th Directive does the proposed scheme fit. Then ask if when having EU residents on board you need to take position that the BVI corporation is in the charter business, if it needs to have charter revenues and pay its crew (you?) and what does all that mean for corporate and personal income taxes and VAT in the relevant jurisdictions. Also ask what will you need to report about the shareholders and beneficial owners of the BVI corporation.

When I was living in the UK I had plenty of opportunity to sail in very nice new "book a berth" boats at very cheap charter rates, just to let the owner "tick the boxes" to meet the requirements of the tax "scheme" for that boat. I do remember one of them saying that he wished he had taken the opportunity to pay VAT at some special rate in some other country and be done with it, rather than getting into the ongoing commitment of pretending to be in the crewed charter business. I confess I am far from Europe now and it may very well be that things have changed though.

In the end it all boils down to that. Is it worth the hassle?

It probably is not. But, you see so many BVI (and the like) flags in European waters, that it makes one wonder if it really is feasible.

[GoingWalkabout]

There are options and as with everything in life there are pros and cons. One option is ....

Gibraltar Registration:

Small vessels in Commercial Use
As an alternative to the payment of VAT, we can advise that small vessels in commercial use such as Charter yachts, are not only exempted from paying VAT on their purchase, but they are only obliged to pay VAT on the proceeds of any charter operations that they may choose to undertake while in EU-VAT waters. However, vessels that are registered for Charter purposes are under no obligation to actually operate as such.

Any Yacht under 24m in length can register as a Small vessel in Commercial Use. Indeed, it is possible to register a pleasure yacht from the outset, as a Small Vessel in Commercial Use. It is also possible to change the status of a yacht currently registered as a private pleasure yacht to one of a Small Vessel in Commercial Use. In either case the yacht must comply with the MCA rules for the SVC coding.

Once the SVC Certificate is obtained the Registration Certificate of the yacht is amended to show the status of the yacht as a Small Vessel in Commercial Use. If the yacht does not generate any income, then there is no VAT liability.

In order to obtain the SVC Certificate, the yacht must be surveyed for this purpose and the surveyor will draw up a list of any modifications that may need to be made to the yacht. If the yacht is a new build, modifications could be made prior to completion. A second hand yacht can also change its status from Private Pleasure Yacht to Small Vessel in Commercial Use.

A second (and sometimes a third) survey is required to inspect and pass the yacht for the coding. The application is then submitted to the appropriate authority who issues the SVC Certificate for the yacht. The Certificate must be renewed every year and the yacht is only exempt from VAT while it is coded. The yacht is not obliged to actually work in order to qualify for the coding or to maintain it. But it must comply with the coding requirements.

Depending on the value of the yacht, any costs for modifications could be considerably lower than the VAT on the value of the yacht. The cost of the arrangement fee and the coding survey procedure is dependant on the size and location of the yacht, the cost of modifications obviously depends on what has to be done, but competitive quotes can be obtained for any client.

An example of savings may be summarised as follows:

- 17.5% VAT on a yacht valued at GBP £750,000 would be GBP £131,350.
- Fees, Survey Fees and Disbursements of e.g. £8,000 + modification costs of e.g. £15,000 to allow the same vessel to obtain MCA coding could amount to GBP £23,000, resulting in a saving of £108,350. (These figures are just examples of costs)

[K_V_B]

Originally Posted by asalcedo

Which country has a 9% VAT rate on boats? I don't see it in European Union value added tax - Wikipedia, the free encyclopedia

Thanks

He's probably referring to Malta. But I believe France has a similar scheme as well.
What you should look in tois have the BVI company "lease" the boat to you. The company doesn't pay Vat, you pay VAT at a reduced rate.

[goboatingnow]

Just some clarification. The Temporary import relief directive uses the term " beneficial owner ". Hence if customs decide that in their view you are the beneficial owner , they will levy vat.

Personally if you are an EU resident is just pay the vat.

The 9% scheme in Malta is a leaseback scheme. Lots of paperwork and really not worth it

France's scheme applies to leases as well. Not sure if that scheme is still running

Dave

[weavis]

It has been my experience that an EU passport holder will face difficulties ALL THE WAY if they own/part own a non VAT paid boat in European waters, even if you are a resident of a non EU country. The fact that you reside in the UK and have an offshore company seems to not make too much difference to some member states anymore.

Regardless of the law, countries who think they are entitled to VAT will be singularly unhelpful and obstructive. One of the questions asked in Spain when boarded, is "Senor, do you own property in Spain?" YOu could very well find your boat impounded for a long time whilst the slow machinations of the legal framework get started. Dont ask.......

[svlamorocha]

Originally Posted by asalcedo

In the end it all boils down to that. Is it worth the hassle?

It probably is not. But, you see so many BVI (and the like) flags in European waters, that it makes one wonder if it really is feasible.

Hassle is not the only variable. Risk is the other one. Some folks will be prepared to stick to their line that the corporation that owns the boat is owned by Mr Joe Bloggs or XYZ Inc of Road Town, Tortola, BVI, and they are only caretakers, crew, charterers prepared to show adequate papers, etc. Other folks will move the boat frequently so it will not catch anyone´s attention. Those who get away with it are either very lucky or do several of those things.

Having in mind your Spanish connection, have a look at article 8 of Spain´s Corporate Income Tax code. I have highlighted in bold the points that intend to address the scheme we seem to be talking about. In summary, if the boat is owned by a company incorporated in a tax haven and most of the assets of the company are in Spain OR it is effectively managed from Spain then the company will be deemed Spanish resident for income tax purposes. You will find other rules to the same effect (VAT, matriculation tax, etc).

Artículo 8. Residencia y domicilio fiscal.
1. Se considerarán residentes en territorio español las entidades en las que concurra alguno de los siguientes requisitos:
a) Que se hubieran constituido conforme a las leyes españolas.
b) Que tengan su domicilio social en territorio español.
c) Que tengan su sede de dirección efectiva en territorio español.
A estos efectos, se entenderá que una entidad tiene su sede de dirección efectiva en territorio español cuando en él radique la dirección y control del conjunto de sus actividades.
La Administración tributaria podrá presumir que una entidad radicada en algún país o territorio de nula tributación, según lo previsto en el apartado 2 de la disposición adicional primera de la Ley 36/2006, de 29 de noviembre, de medidas para la prevención del fraude fiscal, o calificado como paraíso fiscal, según lo previsto en el apartado 1 de la referida disposición, tiene su residencia en territorio español cuando sus activos principales, directa o indirectamente, consistan en bienes situados o derechos que se cumplan o ejerciten en territorio español, o cuando su actividad principal se desarrolle en éste, salvo que dicha entidad acredite que su dirección y efectiva gestión tienen lugar en aquel país o territorio, así como que la constitución y operativa de la entidad responde a motivos económicos válidos y razones empresariales sustantivas distintas de la gestión de valores u otros activos.

2. El domicilio fiscal de los contribuyentes residentes en territorio español será el de su domicilio social, siempre que en él esté efectivamente centralizada la gestión administrativa y la dirección de sus negocios. En otro caso, se atenderá al lugar en que se realice dicha gestión o dirección.
En los supuestos en que no pueda establecerse el lugar del domicilio fiscal, de acuerdo con los criterios anteriores, prevalecerá aquél donde radique el mayor valor del inmovilizado.

[Dolphinblue-BOB]

Originally Posted by Maver

Bob,
The ICP is an European certificate of ownership what you need to have for sailing in the EU; the ICC is concerning you and your competence, the ICP is concerning your yacht. As all ready told check the site Pavillon belge : Le site officiel de l'immatriculation de bateaux de plaisance sous pavillon belge

Martin

Thanks Maver! This is really a very good information.

[Dolphinblue-BOB]

Yes, I was referring to Malta. The procedure is a bit complicated than the Gibraltar solution. Thanks for the good information.

[valhalla360]

Originally Posted by goboatingnow

Just some clarification. The Temporary import relief directive uses the term " beneficial owner ". Hence if customs decide that in their view you are the beneficial owner , they will levy vat.


Dave

That was the term I was looking for.

Fairly standard practice that if a corporation is set up for no purpose other than tax avoidance, it will be treated as if there is no corporation and you own the boat directly.

You may get away with it but when they catch up with you odds are they will make all assumptions not in your favor (ie: what is the taxable value) and possibly add penalties.