Another Croatian VAT query

[BlueTenHunt]

Hello,

Have done some searching but not able to find answers to this exact query. My husband and I purchased an ex-charter 2004 monohull in November 2016 in Croatia.

Whilst we have slowly waded (and still wading) through various paperwork exercises regarding registration and the infamous Croatian vignette (which deserves a whole thread of it's own) we were wondering about the VAT situation.

We purchased from a charter company and paid 25% VAT. I also have the original invoice from the charter company when they purchased the yacht in 2004 which shows VAT was paid then also (at 22% as was the rate in 2004).

The yacht was cancelled from the Croatian Ships Register in December 2016 and is now a registered UK vessel (Part 1).

Our next move is to 'export' the vessel by leaving Croatian waters and coming back into Croatian waters to be able to apply for the cruising vignette.

Is there a way we can claim back the VAT we paid on the purchase? Or even the 5% difference in UK vs Croatian VAT rates?

I'm all ears....

[boatman61]

If you paid VAT on a secondhand boat that had VAT paid when new.. you've been well tucked up.
VAT is a once only payment.

[BlueTenHunt]

In some further reading the VAT status of the vessel would have changed to 'unpaid' as the charter company most likely reclaimed the VAT in 2004. I guess asking for some evidence of that is my next step...

[boatman61]

Possibly true as Croatia was not an EU member in 2004.. what date is the VAT paid certificate you have.??

[BlueTenHunt]

Originally Posted by boatman61

Possibly true as Croatia was not an EU member in 2004.. what date is the VAT paid certificate you have.??

The sellers invoice is dated 16th April 2004. It is an invoice and not a VAT certificate if that makes any difference.

[boatman61]

Hmm..!!! I think I'd check with a VAT expert.. if the invoice says VAT was paid then you should not be liable in theory.. else I'd have thought it would have been sold for export and the invoice should show that.
But I'm far from an expert.

[poiu]

There is no such thing as a VAT certificate in the UK and I doubt in the EU too as we have been obliged to harmonise our VAT rules.

The original invoice doesn't mean that the VAT was not paid and reclaimed. If the original owner was a business, this almost certainly happened.

Your purchase invoice if it shows the vendors VAT number and details correctly should serve as a VAT certificate. Proof of payment would be good too, as would proof that the vendor is correctly VAT registered.

Of course there is no limit to the extent of proof that someone might demand. if you want belt and braces, get an accountant and lawyer to certify the documents as genuine and original. Ok, I'm being facetious now. Bloody bureaucracy.

As to your main question, you pay the VAT rate applicable in the EU country you buy something in and that's the end of it if you are from the UK. You can only reclaim it if you buy the boat for a business.

[ccannan]

Originally Posted by boatman61

VAT is a once only payment.

Not always.

If an EU VAT paid vessel is exported outside the EU and sold, the boat can't re-enter the EU for longer than 18 months without the new owner having to pay VAT on the value of the vessel.

I'm searching for the source, but I'm pretty sure this is true, but am all ears if someone can point me to better news.

[Garethj]

Having been going thru a similar exercise myself there are a couple of points to clarify;
VAT is not a tax on the item - it is a tax on the transaction itself ie the sale, so can in effect, be charged as many times as they feel fit.
Thankfully, this really only applies if a boat is VAT paid, removed from EU waters, re-sold, then re imported back into the EU - we have been warned and this put us off several yachts which initially appeared VAT paid

[poiu]

Originally Posted by ccannan

Not always.

If an EU VAT paid vessel is exported outside the EU and sold, the boat can't re-enter the EU for longer than 18 months without the new owner having to pay VAT on the value of the vessel.

I'm searching for the source, but I'm pretty sure this is true, but am all ears if someone can point me to better news.

Not exactly true. As usual the rules are more complicated. Firstly the requirement to re-pay on re-entry only happens after I think 3 years, not as soon as you leave. Also, If the importer is an EU resident then VAT has to be paid immediately on arrival. It is only non-EU residents who enjoy the 18 month exemption.

Practically speaking, it could be pretty hard to prove a VAT paid boat was exported and it is very unlikely you would be caught out on re-entry, especially if you had original proof of payment. It would be quite unfair too, such that the authorities are unlikely to dig hard.

[Rapanui]

We have just in March 2016 paid VAT on our cat when we brought it out of charter.
Croatia was not in the EU in 2004 but if the boat was purchased in another country which was in the EU in 2004 then the the boat would have been VAT paid. However, the boat will have been outside the EU for a 9 years until Croatia's accession in 2013 so would be deemed to have lapsed, unless the boat visited a EU country at least once every 3 years.
If the boat was purchased in Croatia (ie has a Croation VAT receipt) in 2004 and the tax was not reclaimed, then you may have a chance as there were transitional arrangements for boats older than 8 years
A VAT on transport and boats will not be charged during their first launch if the date of the first use exceeds eight years from the date of Croatia's accession to the European Union, or if the vessel is older than eight years, starting from 1 July of this year
No VAT charge on foreign boats older than 8 years | Kaiser Yachting
Whether this applies to a boat purchased for business use seems unlikely,
we asked this for our 2003 boat and were told no, but if you can prove it paid all relevant taxes which were not reclaimed, which seems unlikely, maybe!
As to reclaiming the difference in VAT UK to Croatia, the answer is no. VAT for a boat owned by an EU resident is due in the first EU country the boat arrives at (unless you arranged temporary documentation to immediately export the vessel after purchase). In your case it first arrived as a private boat in Croatia upon purchase. We considered exporting ours to Malta and paying VAT there at 15% but in the end we did not bother.
You do not need to 'export' the vessel and re-enter to get the vignette and the light dues etc. As long as you have the document that releases you from the Croatian registry, the insurance Blue card, the UK registration etc, the Port Captain will do that. Take advice from the charter company or Marina reception as to which Harbour office to use as a few (Split!) can be very officious and obstructive. It will help to borrow a native guide from the charter company or marina to help the first time, we did!

[ccannan]

Originally Posted by poiu

Not exactly true. As usual the rules are more complicated.

I agree.

Originally Posted by poiu

Firstly the requirement to re-pay on re-entry only happens after I think 3 years, not as soon as you leave. Also, If the importer is an EU resident then VAT has to be paid immediately on arrival. It is only non-EU residents who enjoy the 18 month exemption.

I agree.

Originally Posted by poiu

Practically speaking, it could be pretty hard to prove a VAT paid boat was exported and it is very unlikely you would be caught out on re-entry, especially if you had original proof of payment. It would be quite unfair too, such that the authorities are unlikely to dig hard.

Unless the boat had been sold to a non-EU resident.

[meirriba]

Originally Posted by boatman61

If you paid VAT on a secondhand boat that had VAT paid when new.. you've been well tucked up.
VAT is a once only payment.

Not exactly...
The VAT paid by a business corporation is normally reclaimed.
This is basic VAT process.
If you pay VAT anywhere in the EC, you cannot reclaim difference if you re-register it in another EC country (and you are not asked to pay difference if the VAT in the new flag state is higher).

[Rapanui]

It is a good idea to apply to UK HMRC for a T2L as reportedly Croatian officials sometimes demand this in favour over the actual VAT receipt. The T2L proves 'Community Status' and means that all tax issues are dealt with and the goods (boat) is able to ciculate freely in the EU. The UK RYA can provide guidance and the form, and HMRC returned our stamped form within a week.

[moseriw]

first of all: the vignette is notv ifamous, only the way the collect the fee as nowadays it is only valid from 1.1. - 31.12. Before this you could buy one on 1.8. spend xour holidays and spend them next year in july. As long as the boat is not out on sea the vignette is not required.
Btw. did you pay the sojourn tax too? Thisd goes for one year i.e 1.6. to 31.5.

Your customs question.
Vat was paid 2004 and you claimed for proof 2016 - perfect.
Croatia is in the EU and therefore transfering to an UK owner is ok, without VAT as it is already paid. If you have only 17% VAT in England it can be that you can contact HM Customs to get the 5% VAT.

BUT be careful. When it comes to that the actual value is taken for calculations. So I expect a 2004 cat was about 350.000€ new and after 12 years in charter it is around 60.000?

Well OK would be sround 3000€ for you. I would try.
Speak with HM customs - this is the easy