VAT question on sale of boat

[Charlie]

Hi All,

I have a boat in Italy that I purchased from an Italian national. It was registered on the Italian registry and I accepted that as proof of VAT paid. My ex wife had put it on the British SSR. I will need to change this over to a US documented boat. The boat has not left Italian waters. My question is, with the changes of ownership from the Italian national, to my ex wife, to myself and if I decide to sell it to someone else is it required to pay VAT again.

[Zanshin]

Once the boat is sold while physically outside of the EU or it is removed from the register of EU countries the VAT payment goes -poof- and VAT will need to be repaid when it is re-flagged to an EU country. The VAT status isn't dependent upon the nationality of the owners but on the flag and the location.

I learned that lesson when I sold my UK flagged boat while it was outside of the EU.
The Germans also enforce a time limit, I believe it is 5 years; if the boat leaves the EU for longer than that period of time the VAT status also expires!

[Charlie]

Ok I can understand the leaving the EU part but what if someone wanted to have an American documeted boat and to keep that boat in the EU. They would be subject to paying VAT. Could they pay VAT to keep the boat in the EU and if so what country? In my case it is still flagged in the UK but that must change soon it has remained in the EU. Confusing question. Perhaps I should ask can a US documented boat pay VAT and stay in the EU forever.

Sent from my SM-T900 using Cruisers Sailing Forum mobile app

[Prairie Chicken]

Charlie, if you have evidence the boat is VAT-paid, it may remain in the EU without having to pay it again, regardless of flag. Our Canadian flagged boat is VAT paid & remains in the EU.

[Pete7]

There is no link between the SSR (Small Ships Register) in the UK and VAT. VAT is a transaction tax and is paid each time the yacht changes hands up to being sold to the first retail customer, or on import into the EU. Typically builder pays VAT on raw materials and claims it back when sold to the importer, who pays VAT as part of the purchase from the builder then claims it back. Importer charges the customer VAT and declares it to Customs and Excise. A complicated system.

The Small Ships Register (SSR) doesn't prove anything, not even the legal owner, its just a laminated piece of A4 paper for part 1 or A5 for Part 3 to keep foreign customs happy as a form of identification.

Why does the yacht need to be de-registered on the SSR? do you not have residence in the UK? a requirement for SSR. The SSR are valid for 5 years, are you going to sell the boat before the 5 years are up? if so I wouldn't do anything,particularly if it remains in the UK. Keep the paperwork safe though.

I have previously rejected a yacht I wanted to buy because when I questioned the teenage broker about the 4 fans in the saloon he said the boat had sailed to Antigua and returned. However, the current owner had only owned it for a few months, so I suspected it had changed hands in Antigua and brought back which would result in a £6000 VAT liability for the importer. I wasn't prepared to be caught u in that because the cost was more than other UK models, so walked. The lack of records for the yacht didn't help the vendor.

Pete

[Charlie]

Originally Posted by Prairie Chicken

Charlie, if you have evidence the boat is VAT-paid, it may remain in the EU without having to pay it again, regardless of flag. Our Canadian flagged boat is VAT paid & remains in the EU.

I thought that this was the case but don't know how to find the answer. So may I ask if you purchased the boat in Europe and then put it under the Canadian flag or paid the VAT after bringing the Canadian flagged boat to Europe?

Originally Posted by Pete7

There is no link between the SSR (Small Ships Register) in the UK and VAT. VAT is a transaction tax and is paid each time the yacht changes hands up to being sold to the first retail customer, or on import into the EU. Typically builder pays VAT on raw materials and claims it back when sold to the importer, who pays VAT as part of the purchase from the builder then claims it back. Importer charges the customer VAT and declares it to Customs and Excise. A complicated system.

The Small Ships Register (SSR) doesn't prove anything, not even the legal owner, its just a laminated piece of A4 paper for part 1 or A5 for Part 3 to keep foreign customs happy as a form of identification.

Why does the yacht need to be de-registered on the SSR? do you not have residence in the UK? a requirement for SSR. The SSR are valid for 5 years, are you going to sell the boat before the 5 years are up? if so I wouldn't do anything,particularly if it remains in the UK. Keep the paperwork safe though.

I have previously rejected a yacht I wanted to buy because when I questioned the teenage broker about the 4 fans in the saloon he said the boat had sailed to Antigua and returned. However, the current owner had only owned it for a few months, so I suspected it had changed hands in Antigua and brought back which would result in a £6000 VAT liability for the importer. I wasn't prepared to be caught u in that because the cost was more than other UK models, so walked. The lack of records for the yacht didn't help the vendor.

Pete

Thnx for the explination on VAT i didn't know that. Ex Wife has Canadian citizenship so we put it in her name. Marriage settlement gives me the boat but Ex Wife demands I get her name off of the boat. I can understand why you didn't purchase the boat with fans.

[Pete7]

I can understand her desire. You will need to be a resident of the UK to retain the SSR.

Pete

[Prairie Chicken]

So may I ask if you purchased the boat in Europe and then put it under the Canadian flag or paid the VAT after bringing the Canadian flagged boat to Europe?

We purchased both boats in Spain. The first was a Beneteau. After owning & sailing it for years without VAT paid we finally paid the VAT based on depreciated value from the purchase price. The second boat, a Jeanneau, was VAT paid when we bought her. After purchase they were registered in Canada.

Your original post seemed to indicate you assumed the boat was VAT paid because it had been on the Italian register. If this is the case, you may want further documentation to support the initial payment of VAT although that's not an area I'm familiar with. It does raise an question though. If a boat has been on an EU register, and was a private not-for-charter boat, is that supporting documentation the boat is VAT paid? Anyone have any thoughts on that?

[valhalla360]

Being on the Italian Register doesn't prove it was VAT paid. It may never be questioned but by itself, it isn't proof.


As long as the boat stayed in Europe (as you indicate), if you have proof of VAT, it stays VAT paid regardless of changes in the flag.

[boatman61]

Actually you can sail the entire N Atlantic Circle and not lose your VAT Status.. you'll have W Europe, the Med, Madeira, the Canaries, I believe the Cape Verdes, the Caribbean (use the French islands a bit) and the Azores..
Go for the flag you want..

[mikecambrai]

A further complication is if the vessel was built before 1985 (I think) then VAT was not due anyway.
There should always be a paper trail somewhere and usually a customs paper if she was ever imported.
What happens after Brexit is of course another possible complication!

[wolfgal]

Originally Posted by Charlie

Ok I can understand the leaving the EU part but what if someone wanted to have an American documeted boat and to keep that boat in the EU. They would be subject to paying VAT. Could they pay VAT to keep the boat in the EU and if so what country? In my case it is still flagged in the UK but that must change soon it has remained in the EU. Confusing question. Perhaps I should ask can a US documented boat pay VAT and stay in the EU forever.

Sent from my SM-T900 using Cruisers Sailing Forum mobile app

I'll be following this thread with interest as I am trying to figure out how to import a boat to Europe (I have nationality on both sides of the pond, which makes it a bit complicated).


At the risk of confusing you, Charlie, I'll tell you what I understand so far. PLEASE correct me if I am wrong everyone!

Once VAT is paid (and you can prove it), the boat can stay in Europe with a Canadian or American flag.

As long as the boat maintains its Vat-paid status (see Boatman 61's response), you can sell it in Europe and in European places (Martinque/Guateloupe, etc.).

This VAT-paid status goes, with the boat, to the next owner in case of sale. This is when VAT is paid once.

however, if the boat leaves Europe and doesn't check into a European port along the way for an extended period (not sure of time frame here - anybody?), VAT will need to be paid again, upon return to Europe, if you intend to stay.

The VAT itself varies a bit from country to country (between 17 and 37%). Depending on where you are or where you go to pay VAT, you can save a bit.

VAT is determined by the value of your boat - what you paid for it basically.

I've heard that the Azores and Malta have lower VAT and are better places to negotiate a lower boat value. (Can anyone offer better info)?

--As someone else said, normally you would not be required to pay VAT at all if you can prove that the boat was in EU water (the waters of countries that were a part of the EU at that time) before 1985 (i'm giving the year from memory, you'll need to double-check).--



It gets MUCH more complicated though:
Are you an EU citizen/resident?

You said that you put it in your wife's name and registered it SSR. My question is: is the boat CE-exempt? i.e., can you prove that it was in EU waters before 1989 (again, i'm giving the year from memory, you'll need to double-check)? If not, it might be best that you flag it Canada asap.

It may be to your advantage if you are not an EU citizen.

If you are not an EU citizen, you are not required to get the boat CE-inspected.

Yet, if ever you sell the boat to a EU citizen (or, in principle, if you are a EU citizen), the boat will need to be CE inspected.

This is where there are a few unknowns because, in principle, any foreign-made boat that is not CE-exempt and that has been obtained and thus "imported" by a CE resident/citizen has to comply with CE regulations. These regulations, mostly safety regulations, are updated yearly and preside over the boat-making industry in Europe.

CE inspection: Most often, changes will need to be made to the boat to meet requirements. Sometimes this is just a matter of changing fuel lines, adding jubilee claps to hoses, proving that the seacocks work and are accessible, and updating fire extinguishers, etc., but there is a process to respect: there is a CE guy the boat owner pays who comes and inspects. He gives the owner a list of things to do/change to meet requirements and returns to re-inspect. If the boat passes, it gets a CE plaque that must be visibly mounted in the boat.

The thing is: there are some CE safety requirements like minimum distance between the cockpit floor and the bottom of the companionway opening (where the washboards go - and you must have these), the size of opening ports and hatches, etc, that are not so easy to change... Older, more classic boats tend to pass fine but some newer boats do not meet the required CE measurements.

if the boat does not pass the inspection, it cannot be "imported" to Europe. Thus selling the boat might not be that easy in Europe even if it is VAT paid.

If you have a newer boat that would require expensive changes so to become CE-proofed, you might opt to sail it back over before selling.

Again, everyone, please correct me if I'm wrong.

Good luck, Charlie! (and please keep me posted)

[Charlie]

Hi Wolfgal

This boat was built in 1981 in France. Assuming it can be proven that it was in the EU during the transition date it is exempt from VAT

I was informed that a boat cannot be on the Italian registry without having VAT taken care of. I will have to find my source for that info.


If I sell I would probably look for an Americam buyer because it will be documented as a US boat soon and an American would appreciate that. The boat is only worth €20k or less so it would be easier for me to pay VAT then to spend much money on defending myself. It is not the kind of boat that the ministry of finanzia would look for.

Sent from my SM-T900 using Cruisers Sailing Forum mobile app

[wolfgal]

Originally Posted by Charlie

Hi Wolfgal

This boat was built in 1981 in France. Assuming it can be proven that it was in the EU during the transition date it is exempt from VAT

I was informed that a boat cannot be on the Italian registry without having VAT taken care of. I will have to find my source for that info.


If I sell I would probably look for an Americam buyer because it will be documented as a US boat soon and an American would appreciate that. The boat is only worth €20k or less so it would be easier for me to pay VAT then to spend much money on defending myself. It is not the kind of boat that the ministry of finanzia would look for.

Sent from my SM-T900 using Cruisers Sailing Forum mobile app

Great news!

Yes, though you may need to seek out a VAT-exempt paper of some sort, I wonder if there is a Vat issue at all, unless, of course, the boat wasn't in EU waters during the cut-off date.

I would dig into the boat's paper trail to the critical year. Marina slip receipts and/or purchase/work done receipts in an EU country (that year) are enough apparently to prove where the boat was physically located. There is a month cut-off for the year too: it is either mid-June or December, not sure which.

Being French-made, it is likely that the boat was still in France at that time. I'm bilingual in French, if ever you need help identifying what's written.

[Charlie]

Thanks Wolfgal,

I will be sure to keep you in mind if I need documents translated from French to English