Vat and tax implications of buying in Europe

[Heg]

Hello
Apologies if this has been answered, but I have searched the forums and cannot find anything pertaining to our particular situation.

Background

-We are both UK born. We hold UK passports but have not lived in the UK since 2001.
-We also hold NZ citizenship/passports, having lived there for 10 years.
- We are currently resident in Australia, but do not hold AU passports. As NZ citizens we simply have the right to live and work and pay tax here.

The issue

We wish to sell up our home and its contents, buy a catamaran and sail around the world for the next 10-15 years. We will have no fixed place of abode. ( many questions on that topic to follow )

We have researched prices here in AU and it is cheaper for us to buy a new boat in Europe , than it is to buy a second hand boat here.

We do not wish to buy a boat 'new' in Europe and then pay the outrageous charges to have it 'shipped' to Australia. It matters not a jot too us where we start our journey, so shipping to AU is a waste of time and money.

So, if we buy a boat in Europe, do we have to pay VAT? And where does the boat need to be registered? The plan for Europe collection would be to pick up the boat and then sail the Med area for a good few years to find our feet , before setting off further afield.

[valhalla360]

Search the forum for threads on VAT (there are many) and read thru. They may not answer your situation specifically but there is enough to piece it together.


The big question is do you become UK residents when you move back to the EU for those few years. EU residents pay VAT immediately. There may be ways to retain your kiwi residency but then you run afoul of VISA rules which limit how long you can stay...again there are ways to work around those. Then there is always the risk some official decides since you hold a UK passport, you are a UK citizen and VAT is due immediately (whether it is or not).


Of course if you just buy a VAT paid boat, it's a non-issue as you can stay in the EU under your UK passport as long as you like and the boat can stay as long as you like also.

[Heg]

Originally Posted by valhalla360

Search the forum for threads on VAT (there are many) and read thru. They may not answer your situation specifically but there is enough to piece it together.


The big question is do you become UK residents when you move back to the EU for those few years. EU residents pay VAT immediately. There may be ways to retain your kiwi residency but then you run afoul of VISA rules which limit how long you can stay...again there are ways to work around those. Then there is always the risk some official decides since you hold a UK passport, you are a UK citizen and VAT is due immediately (whether it is or not).


Of course if you just buy a VAT paid boat, it's a non-issue as you can stay in the EU under your UK passport as long as you like and the boat can stay as long as you like also.

But we wont be resident in the UK. We will be living on a boat, and touring Europe. As UK passport holders there is no limit to the time we can visit EU countries...

[valhalla360]

Originally Posted by Heg

But we wont be resident in the UK. We will be living on a boat, and touring Europe. As UK passport holders there is no limit to the time we can visit EU countries...

I'm not an immigration lawyer, so take it for what it's worth. I think you are trying to play both sides and will get caught in the middle (assuming someone actually checks).

If you spend years in the EU under your EU passport, I suspect they are going to claim you are a resident at some point (might be another country claiming you as a resident).

If you claim to be there under the Kiwi passport, I assume they are going to want to apply the Kiwi visa requirements.

[poiu]

Looks to me ideal. As a non EU resident you can use a boat in the EU without having to pay VAT. Keep proof of that and show it if asked. As an EU citizen you don't have visa issues. Perfect. Register the boat anywhere you like. It's irrelevant to the tax issue. I might get written legal advice to show troublesome customs officers as they often don't know the law and if they know about the UK passport may try it on.

[nauticalnomad]

I have both AU and UK passports and depending on where i am as to whether in a Brit or an Aussie..
I have a UK registered yacht and i looked at sailing home to Australia and the import duty would be the cost of a new boat or a hefty downpayment on one anyways..
Id buy one in America as they are cheap in my personal opinion.
Look round Trinidad or places that are remote. You may get some boats fully kitted out that the owner has bailed out on continuing his adventure.
Phuket also.
These places are also semi out of the way with not many buyers looking so you could make offers in your favour.
I maybe wrong but i think if you sail a foreign boat into EU and you flash an EU/UK passport you are liable for instant VAT.. However if you flash a non EU/UK passport you can cruise like a foreigner.
I havent looked into that yet. All i know is that id stay away from Australia with anything to do with paperwork these days. It seems to be a proper police state and not the free country it once was.. Asia is a better option. Its amazing scenery and the officials leave you alone once you have checked in.. That is of course if you are not doing anything illegal..
I met a couple in The Netherlands having recently returned from Australia saying their boat was impounded in Cairns and they were whisked off to court and charged 2500 dollars (or Euros equiv, not sure). For just sailing into Australia and landing without notifying the border patrol 24 hours in advance... Their cruising guide laid no mention of it and they were arrrested peacefully upon entry and charged/Extorted of money and sent on their way..

[undercutter]

As far as I know payment of sales tax has nothing to do with Registration of flagging of the boat which is in some cases Citizenship of Residency. I do not see why you could not buy the boat in any country of the E.U. without paying the V.A.T. as long as you are not a Resident of any of the V.A.T. agreement countries. Flagging the vessel in Langkawi, Malaysia would give you a Duty Free Port to call home. You obviously would have to export the boat directly from the country it was built in but I think that every subsequent country in the E.U. would treat it like every other foreign flagged boat from outside the E.U in regards to Importation.

The more important issue here is "income taxes". If you really plan on leaving Australia for 10-15 years you might better flag the boat in a state that has no taxes and officially depart "Australia" for tax purposes. Get a P.O. Box in the Cayman Islands and officially reside there. Use your Kiwi Passports when traveling to Australia to visit and you have no hassles there either. You just won't be able to work there or in the EU and as such re-establish residency anywhere that you may sail the boat.

[Heg]

Originally Posted by undercutter

As far as I know payment of sales tax has nothing to do with Registration of flagging of the boat which is in some cases Citizenship of Residency. I do not see why you could not buy the boat in any country of the E.U. without paying the V.A.T. as long as you are not a Resident of any of the V.A.T. agreement countries. Flagging the vessel in Langkawi, Malaysia would give you a Duty Free Port to call home. You obviously would have to export the boat directly from the country it was built in but I think that every subsequent country in the E.U. would treat it like every other foreign flagged boat from outside the E.U in regards to Importation.

Some great advice there. Thank you You are correct re flagging the boat and tax being two completely separate issues

Originally Posted by undercutter

The more important issue here is "income taxes". If you really plan on leaving Australia for 10-15 years you might better flag the boat in a state that has no taxes and officially depart "Australia" for tax purposes. Get a P.O. Box in the Cayman Islands and officially reside there. Use your Kiwi Passports when traveling to Australia to visit and you have no hassles there either. You just won't be able to work there or in the EU and as such re-establish residency anywhere that you may sail the boat.

Good point. We have been wondering where we will considered 'tax resident' if we have no fixed place of abode other than the boat...Will have to investigate this some more.

[valhalla360]

"The plan for Europe collection would be to pick up the boat and then sail the Med area for a good few years to find our feet "


This seems to me to be the crux of the matter. If it was 3 months and you are gone, claiming to be a kiwi resident is probably viable. I assume a "good few years" is at least 3 years full time in Europe. I'm betting that long and they will consider you a resident if an official takes notice of your situation.


Technically, it has nothing to do with the flag though put a UK flag on it while in possession of a UK passport without paying VAT and it begs them to look further.


Of course you hear lots of stories of people flying under the radar but if you do, you takes your chances.

[Heg]

Originally Posted by valhalla360

"The plan for Europe collection would be to pick up the boat and then sail the Med area for a good few years to find our feet "


This seems to me to be the crux of the matter. If it was 3 months and you are gone, claiming to be a kiwi resident is probably viable. I assume a "good few years" is at least 3 years full time in Europe. I'm betting that long and they will consider you a resident if an official takes notice of your situation.

I have done some research and it seems we can have up to 18 months in Europe. Also - a UK passport does not make us 'resident' elsewhere in Europe. We would have to reside in the Uk to be classed as resident there and then it would have to be for more than 6 months.

Originally Posted by valhalla360

"Technically, it has nothing to do with the flag though put a UK flag on it while in possession of a UK passport without paying VAT and it begs them to look further.


Of course you hear lots of stories of people flying under the radar but if you do, you takes your chances.

We would have no intention of flagging it with a UK flag.

[boatman61]

If you are buying a boat in the EU secondhand the odds are VAT/IVA has been paid.. unless its from a charter company.. whichever way, unless the owner can provide documented proof off payment don't touch the boat.. this leads to zero problems in Europe for the boat.
For you.. I'd use your UK Passport till you head for the Caribbean.. keep to a max of 5mths consecutive/country to avoid residency problems..
As for your flag.. choose what you like..

[Heg]

Originally Posted by boatman61

If you are buying a boat in the EU secondhand the odds are VAT/IVA has been paid.. unless its from a charter company.. whichever way, unless the can provide documented proof off payment don't touch the boat.. this leads to zero problems in Europe for the boat.
For you.. I'd use your UK Passport till you head for the Caribbean.. keep to a max of 5mths consecutive/country to avoid residency problems..
As for your flag.. choose what you like..

And if all else fails, we'll use your services to deliver it here to us in Brisbane

[valhalla360]

Originally Posted by Heg

I have done some research and it seems we can have up to 18 months in Europe. Also - a UK passport does not make us 'resident' elsewhere in Europe. We would have to reside in the Uk to be classed as resident there and then it would have to be for more than 6 months.


We would have no intention of flagging it with a UK flag.

Flaging is a side issue. Though no pun intended is would be a red flag. Let's set that aside.

What is the 18 month rule you are referring to? If it's the VAT temporary import exemption, that assumes you retain your Kiwi residency status and travel under Kiwi passport.

As long as you stay out of the UK, you wouldn't become a UK resident.

But if you hang out in say Greece for a year, it would have to be under the UK passport as the Kiwi passport is limited to 3 months. If you insist you are a Kiwi, you have overstayed your Schengen visa. If you claim to be under the UK passport, that could trigger the Greeks to claim you as a resident.

If you bounce around between EU countries, it would probably make it harder to track but it would be a constant game and no guarantee someone wouldn't catch on.

[Pete7]

You can't have a UK registration unless your have a UK address and this is something they have been checking up on lately.

The manufacturers will be up to speed on supplying an EU yacht and immediately exporting it out of the UK. However, you can't then cruise around the Med when so many of the countries of the Med are inside the EU, unless you want to pay the import duty or stick to North Africa

Pete

[boatman61]

Originally Posted by Heg

And if all else fails, we'll use your services to deliver it here to us in Brisbane

Thank you kind Sir..
But I see no reason it should not go well for you.. so enjoy your future.