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Wellington · 30-05-2009, 23:53

Hello from cold and windy Wellington
(with hail and even snow-flakes today !)

I'm an EU (French) national hoping to buy an ex-charter catamaran in Martinique, Guadeloupe or the BVI, "taxes not paid".

We want to sail in the Carribean for a while, then in the Pacific, and possibly end our 2 or 3-year trip in New Zealand or Australia, where we would pay the local VAT (GST) on the residual value, before selling the boat (or sell it "taxes not paid" if the buyer re-exports it to some other shores). Is it legally possible to do so, and without too many constraints, provided we don't "overstay our welcome" taxes-wise along the way ?

I've found a lot of info on CF and on other sites about VAT, sometimes contradictory. I can't find a site or thread on this forum that discusses the specific issue of maintaining a "taxes not paid" status. It seems that there are alternatives to the creation of an offshore company that rents out the boat to you (I would also welcome more info on this)

Have any of you sailed or have heard of fellow cruisers who sailed "taxes not paid" ? I would be very happy to hear about your experiences and recommendations.

Thanks

Zanshin · 31-05-2009, 01:52

Your EU taxes won't be due until such time as you stay in the EU for too long - I believe it is still 1 year. As long as you don't keep your boat permanently in any of the countries your tax status is of no interest to them.
My boat is most likely "taxes not paid" with full British registry (VAT was paid, but I bought the boat outside of the EU which I gather is a no-no and I might have to pay VAT if I take the boat back to the EU permanently. I'll cross that bridge when I get to it). Most of the countries I've sailed to in the Caribbean just asked for the boat's registry papers and only St. Martin and Antigua even noticed that my papers were in the previous owner's name and asked for my "letter of running". Some places ask if you have insurance (St. Barts and Nevis come to mind).
Creating an IBC to own the boat in anonymity where you are the actual company owner doesn't affect the tax status - the corporation is as much a legal person as you are and tax would still be due. There are other advantages to this construct, namely the assets never show up in your name and therefore cannot be recovered by third parties and that in the case of inheritance there is no tax issue, as just the shares are transferred.

jim_thomsen · 31-05-2009, 07:02

The rule for the EU is that if you are not an EU resident your boat can stay in the EU 18 months without paying VAT. It only takes a short trip out of the EU (we went to Morocco for a few days) and you can re enter and reset your 18 month clock. We were only asked for proof once in 3 years, in France.

TaoJones · 31-05-2009, 08:05

Quote:

Originally Posted by Zanshin

Creating an IBC to own the boat in anonymity where you are the actual company owner doesn't affect the tax status - the corporation is as much a legal person as you are and tax would still be due. There are other advantages to this construct, namely the assets never show up in your name and therefore cannot be recovered by third parties and that in the case of inheritance there is no tax issue, as just the shares are transferred.

This is all correct, Zanshin, except that more needs to be stated about an IBC, insofar as your statement that ". . . the corporation is as much a legal person as you are and tax would still be due." While that is not incorrect, this should be added: It all depends upon where the Corp is domiciled.

There are countries where it is advantageous to domicile one's IBC, and these are well-known. An IBC established in one of these preferred locations will enjoy these advantages as long as the Corp "resides" there - it makes no difference whatsoever where the assets of the Corp drop anchor.

TaoJones

Wellington · 31-05-2009, 18:05

Quote:

Originally Posted by jim_thomsen

The rule for the EU is that if you are not an EU resident your boat can stay in the EU 18 months without paying VAT. It only takes a short trip out of the EU (we went to Morocco for a few days) and you can re enter and reset your 18 month clock. We were only asked for proof once in 3 years, in France.

We will leave New Zealand to sail. As a result, we won't be NZ residents anymore (as we won't live here for at least 6 months and 1 day per year) but most probably EU residents by default (I guess you have to be "resident" somewhere, even when circumnavigating for years, right ?)

I've read on this forum, but couldn't find a confirmation neither in the French nor in the British tax codes, that EU residents have a 1-month VAT "grace" period when sailing in EU waters (18 months for non-EU residents). Could someone confirm this point ?

jim_thomsen · 31-05-2009, 20:45

Maybe I'm wrong, but since New Zealand is not part of the EU I do not think you would be EU residents by default - as long as you do not have a home address in the EU.
If you do not receive an answer to your question you may want to post it on: Yachting and Boating World forums: Viewing forum: Liveaboard Link They have many more cruisers from Europe and some of the best information on Euro cruising.

Wellington · 31-05-2009, 23:10

Quote:

Originally Posted by jim_thomsen

Maybe I'm wrong, but since New Zealand is not part of the EU I do not think you would be EU residents by default - as long as you do not have a home address in the EU.
If you do not receive an answer to your question you may want to post it on: Yachting and Boating World forums: Viewing forum: Liveaboard Link They have many more cruisers from Europe and some of the best information on Euro cruising.

Thanks Jim for the link to YBW. If you know other such forums that could be of interest, please don't hesitate.

I'm French, not Kiwi. Even if we haven't lived in France for many years, this is where, I assume, we will be "residents by default" while cruising.

I've just spent over one hour on your site, and enjoyed it very much (not just the Corsica - Cote d'Azur logs, which brought back great sailing memories)
Whereabout in the Carribean to you plan to spend the hurricane season ?

jim_thomsen · 01-06-2009, 05:06

Thanks for the nice comments Wellington,
Good luck with the tax issues - The actual tax code is not UK or French, but EU. If you want to read it: you can review the EU Official Journal at www.eurunion.org. Article 561 and 562(e) are the ones that apply. A great source of information is Jack Tyler (find him on the Seven Sea Cruisisng Association site: SSCA Discussion Board • Index page) , but mainly about non-EU registered boats sailed by non-residents. He also has a great website: SV Whoosh

We need to return to the US to take care of a number of projects so we will leave Tenaya on the hard in Nanny Cay (one of the few locations that is approved by our insurance company for hurricane season).

Robertcateran · 01-06-2009, 17:18

Watch out for individual countries having a different set of taxes. There is a thread somewhere about some people being up for a big bill for overstaying their welcome in Spain

TaoJones · 01-06-2009, 18:18

Quote:

Originally Posted by Robertcateran

Watch out for individual countries having a different set of taxes. There is a thread somewhere about some people being up for a big bill for overstaying their welcome in Spain

http://www.cruisersforum.com/forums/...ice-24975.html is the thread to which Robertcateran refers.

TaoJones

Wellington · 05-06-2009, 18:14

[quote=Wellington;288112](I guess you have to be "resident" somewhere, even when circumnavigating for years, right ?)

I read somewhere that your boat could be your PPR (Primary Personal Residence), but I assume it works only within the territorial waters. Is it possible not to be a resident from any country while circumnavigating ? (or are you automatically resident by default of your country in such a situation ?)

goboatingnow · 05-06-2009, 18:29

OP, As always on EU VAT or elsewhere there is confusion,

Firstly , you have to determine if you are a tax resident of an EU country ( not the EU , theres no such concept). If you are a tax resudent of an EU country, then VAT is immediately payable ( plus customs duties) on entry into the EU. ( except VAT free areas such as teh canaries etc). There is NO grace period, just enough time for you to get to the bank and back to customs. Vat ranges from 15% to 22% in differnt countries of the EU

GST, is Not VAT its an austrialian sales tax and has different rules.

If you can establish that you are not a tax resident of an EU member state ( note that acquiring tax residency is typically after 6 months or so , loosing it can take forever depending or your countries rules) then you can use the temporary importation rules to bring the boat into teh EU for upto 18 months , extendable to 24 months insome cases. However if at any time during that period you become a tax resident then VAT is due unless you meet the TOR requirements ( transfer of residence).

Spainish matricluation taxes of an additional 12% on top of VAt and customs will become due if you become a tax resident of Spain, without going through the TOR requirements & procedures

Note that in general the foreign colonial outposts of EU member states, such as French pacific islands are not considered part of the EU. Hence if you stay away from the EU ( assuming you are a tax resident) then no VAT will become due.

GMac · 05-06-2009, 19:51

Quote:

Originally Posted by goboatingnow

GST, is Not VAT its an austrialian sales tax and has different rules.

Actually a NZ one the Aussies copied (poorly) but is effectively the same as VAT.

Wellington - if you are French and have a French passport I'd say you be called a EU Citizen if they want to tax you. If you have a NZ passport or another from outside the EU then I'd think you could argue you're not a EU citizen and want to have the 18 moths grace period.

NZ rules are you can have 9-12 months then duty (currently 5% but doesn't apply to Aussie built boats) and GST (12.5%) will be drawn out of you in very much a blood sucking way. But you can apply for extensions and/or do a trip up to Fiji for a few weeks and come back resetting the clock. After a couple of years of 3 week holidays they will start to ask questions though.

Interesting thread. I'm also looking at heading to the Med to boat shop and have wondered about the tax thing as well. Mind you the US boat market has dived into 'give a way' in places so maybe.....

Anyone know, If you buy a 'tax paid' boat in the EU or US can you claim any back if you 'export' it again. By export I mean up anchor and sail off to the other side of the world.

Wellington · 05-06-2009, 20:57

Quote:

Originally Posted by GMac

Anyone know, If you buy a 'tax paid' boat in the EU or US can you claim any back if you 'export' it again. By export I mean up anchor and sail off to the other side of the world.

That's an interesting question... I think it is true provided you're the original buyer (you bought new) and within 3 or 6 months depending on countries / type of goods

I wish there were "800" numbers to ask such questions to custom officials, as the answers are rarely clear to the layman, including on official websites. All the custom people I managed to speak to asked me to put my questions in writing, they wouldn't answer even simple queries. Still waiting for the answers 3 weeks later...