VAT, foreign purchase and registration

[l2ustyl3ullet]

Like many before me, I have a dream of buying yacht and sailing the world. I have a 2 -3 year plan, so this is the start of a lot of research and a long journey. However, I haven't really been able to find the answer to what is probably a simple question (yet maybe complex because of bureaucracy).

I live in New Zealand, and would be looking to buy from Europe, most likely the Mediterranean, or America (but I think this is a little less likely). I have seen a few VAT not paid yachts for sale, and they seem somewhat cheaper, and would be a good choice, provided I'm not in for a big surprise. From what I can gather, if you sail off into the sunset, you could effectively ignore this and go ahead and buy. Has anyone done this? And how quickly do you have to sail away? Would I have a month or 2 or 3? If I buy in Croatia is sailing to Italy far enough away to not pay the VAT? The whole thing seems very hairy and best avoided because I don't know what might happen. Does anyway know for sure how to approach this? My end goal would be slowly but surely head west, the slower the better, but if I the tactic is to head straight for the Caribbean then ok, thats not really a problem.

Buying overseas is also a bit of an adventure but I am curious about whether or not I need to register the yacht to New Zealand? I watched SV Everlong recently (and putting aside that it seems they bought the yacht before ever seeing it), it seemed that they couldn't leave the marina without transferring the registration to Australia. I have a Dutch passport, does this mean I could just keep it registered under its European registration? What's the pros/cons of this and does it make any difference?

I have a million more questions, and clearly I don't like bureaucracy but I will stop rambling and hopeful someone can help steer me in the right direction.

[boatman61]

If you get Dutch reg for a non VAT paid boat you will be liable for the tax..
If you get NZ reg you'll have 18mths before you are liable.. This can be avoided by sailing to Turkey or some other non EU country and resetting the clock for another 18mths.

[valhalla360]

As long as you aren't an EU resident, it's easy if you plan to leave.

You get 18 months to start and if you leave you can seal the boat and extend that even further. If you take the boat out of the EU area (Croatia, Morocco, turkey, etc..), you can reset the 18 month clock indefinitely.

If you are an EU resident (not necessarily citizen), then you have to be careful as it is typically due immediately but there are some ways around that depending on your circumstance.

[l2ustyl3ullet]

Ok so the Dutch residency/citizenship (sorry not 100% sure which I have, but I think citizenship) isn't really a help, and seems like it could be a hindrance. So I would register the yacht with New Zealand and hopefully use my Dutch passport to hang around the EU (without having to deal with visa bureaucracy) for a year or so before heading off further and keep in mind the reset button on that 18 months if I end up hanging around that long.

And hopefully have EU citizenship doesn't cause me to have to pay the VAT, but I will investigate that a bit further to be sure.

[valhalla360]

Originally Posted by l2ustyl3ullet

Ok so the Dutch residency/citizenship (sorry not 100% sure which I have, but I think citizenship) isn't really a help, and seems like it could be a hindrance. So I would register the yacht with New Zealand and hopefully use my Dutch passport to hang around the EU (without having to deal with visa bureaucracy) for a year or so before heading off further and keep in mind the reset button on that 18 months if I end up hanging around that long.

And hopefully have EU citizenship doesn't cause me to have to pay the VAT, but I will investigate that a bit further to be sure.

I believe it's residency not citizenship that triggers the immediate need to pay VAT but I'm neither, so I haven't dug in too deeply on that subject.

Either way make sure you can document your status. As an EU citizen, wouldn't be surprised if the authority checked your citizenship and assumed that makes the VAT due immediately.

[Kenomac]

The change of ownership/yacht delivery will need to take place outside the VAT zone in a place like Montenegro. Then you just need to follow some simple 18 month rules to avoid VAT.

[LongRange]

We are an Australian family and at the start of the season we purchased an Italian VAT-paid boat after asking many of the same questions.

One thing we have found in Europe is that laws are arguably less precise than what we are used to. Consequently, there is a danger that the purchaser's personal interpretation of the law may not be compatible with the understanding of the person responsible for law enforcement in that particular instance.

We have heard several different versions from officials regarding what is necessary to "reset the clock" every 18 months for boats which are not VAT-paid. It ranged from "just leave territorial waters and come back the same night", through "we need to see a stamp in your passport from a non-EU nation", to "we need paperwork which shows that your boat was based in a foreign port (what exactly does that mean?) for a while (how long?)".

Throw the relative scarcity of non-VAT boats into the mix, and the proportionally lower resale value because non-VAT boats cannot be purchased by EU citizens, and from our perspective the whole thing started to look like false economy, which is why we decided to limit our searches to VAT-paid boats only.

My understanding is that the Dutch citizenship automatically rules out the option of non-VAT boats for you, irrespective of what other citizenships you may have on top. Again, that may be one of those grey areas which are untested in court, but personally I would not want to be a test case.

Good luck with your adventure, whatever you decide

[Kenomac]

The VAT rules are very specific and easy to follow, especially here in the Adriatic and in the Agean. There are non-VAT countries within close proximity (Turkey, Albania, Tunisia and Montenegro), usually just a few days away and nice places to visit. Fill up with 59 cent per liter diesel in Montenegro while you're there and enjoy the landscape and friendly people. Croatia can even be used to extend Schengen issues.

Been here in the Med for six years on a non-VAT paid US documented boat without problems, you'll just need to know the simple rules and then follow them. Examples such as photos holding newspapers and passport stamps don't work, check-in/check-out official paperwork is all that counts for sure. The ports then have the documentation of a non-VAT boat on record should the need to check it ever arise.

We've also used customs bonding when non-VAT countries weren't close by like when we were in eastern Spain/Sardinia and Corsica. Why pay VAT if you don't need to?

Note: These days, every boat transaction and check-in/check-out proceedure is recorded on computers here in the Med to be shared with other government officials... there's no sneaking around the system. You play by their rules... the host country officials leave you alone.

[l2ustyl3ullet]

Still seems pretty confusing to me, the rules are pretty clear though, an EU resident would be liable to pay the VAT when the boat enters an EU country. But even then what VAT rate is still a question because it seems it varies between countries. It does say RESIDENT though, which I would assume a citizen, even someone with duel citizenship like myself, is a resident or has the ability to be anyway. But resident suggests you live there, so I don't know. Been researching for the last hour, but haven't really gotten anywhere.

Guess I could drop my Dutch Citizenship but that would mean more bureaucracy. I have never been to Europe, but it seemed like having a passport would be something useful. Could have my girlfriend (probably wife by the time it comes to buying the yacht) be the owner and she could register it with Korea. Seems like a round about solution.

My goal would be to sail back to New Zealand eventually and maybe keep it here or sell it, but that would be many years down the track. Just would be nice to not pay VAT since I won't be keeping the boat in Europe and would have to pay tax in New Zealand at some point. I know with New Zealand it's not due until you sell, which is nice, but would rather not waste money paying taxes more than once. Still maybe it's not such a big saving, and maybe the yacht I finally settle on won't be one that is VAT not paid. But good to know these things before narrowing my search.

[Kenomac]

What's so confusing about VAT? It's basically a sales tax for VAT zone residents on boats or other items which have not had the VAT previously paid. Purchase the item or boat outside the VAT zone, then the tax isn't due or required of non-zone residents. Purchase the same item or boat within the zone.... the tax is due at the point of sale.

If VAT zone residents purchase an item or boat outside the VAT zone, the tax isn't due until the item enters the Tax zone.

Very simple really....

[El Pinguino]

DO NOT put her under the NZ flag if you wish for a hasslefree life cruising the SW Pacific.

Can't help you with the European end of things but if you arrive in NZ and are an NZ resident you will have to import her but, based on my experience** you are not obliged to re-flag her.

If you leave her with a foreign flag you can leave for the Pacific at any time with no fuss. If she is NZ flagged you will have to deal with all the Cat 1 compliance rollocks that , if you do not like bureaucracy, you will not enjoy .

In my opinion look for a VAT free boat outside EU ( Carib?) and if you can put or keep her under the Dutch flag. Then stay in the SW Pacific and never take her back to NZ.... the GST/Duty saved will pay for a lot of aeroplane rides to and from your boat.

** I bought a VAT unpaid UK flagged boat in Thailand. Entered Australia on an Oz passport ... had to pay about A$20k sales tax/duty but did not have to reflag... kept her there for 9 years under UK flag. Left in 2003 and the 20k is now dead money as I doubt she will ever go back to Oz.... was just another cost of doing business.....

As I understand it NZ and Straya apply the rules in a similar fashion.

[l2ustyl3ullet]

I guess my confusion is now just around resident vs citizen, haha, not all residents are citizens but are all citizens considered residents?

And fair enough about not registering under the NZ flag, $20k sure is a lot of plane rides. My understanding was for bringing a boat into NZ that you have basically be living on or just using for more than a year they hold fire on making you pay the taxes, at least until you sell (if you do). But yeah, if you get stung with the tax, oh boy! They tax you the cost to import, which i understand to be the cost of a crew to sail from where you purchased it. And they wouldn't even care if you sailed there yourself, its tax on what it would have been if you paid to get it delivered :S. That adds up to a hell of a lot of money. But guess that's another problem for another time. I think I would leave the boat is Fiji or something and fly home, sit down in the customs office and have a good long chat with them. And get a few things in writing before sailing to NZ then.

[aclmck]

Originally Posted by l2ustyl3ullet

I guess my confusion is now just around resident vs citizen, haha, not all residents are citizens but are all citizens considered residents?

And fair enough about not registering under the NZ flag, $20k sure is a lot of plane rides. My understanding was for bringing a boat into NZ that you have basically be living on or just using for more than a year they hold fire on making you pay the taxes, at least until you sell (if you do). But yeah, if you get stung with the tax, oh boy! They tax you the cost to import, which i understand to be the cost of a crew to sail from where you purchased it. And they wouldn't even care if you sailed there yourself, its tax on what it would have been if you paid to get it delivered :S. That adds up to a hell of a lot of money. But guess that's another problem for another time. I think I would leave the boat is Fiji or something and fly home, sit down in the customs office and have a good long chat with them. And get a few things in writing before sailing to NZ then.

It appears that you are a dual national, don't get caught trying to use your dutch passport while claiming vat free status on your boat, I know a fellow that did and he needed to pay 80k there and then or have his boat impounded, he has suggested that the boat be in another name or a company to be able to use his French passport to stay in Europe all year without having to leave for 180 days

it appears to be quite complicated while trying to avoid taxes and stay longer than 90 days as an eu passport holder.

[valhalla360]

Be careful of putting it in your wife's name to skirt the rules. EU residents using a boat, under the 18month rule, is technically a no-no. A day sail on someone's boat is unlikely to be an issue but if they can determine you are effectively an owner or primary user, you could get caught. This stops an EU resident from having an NZ buddy put the boat in his name to avoid VAT. That's a much easier link to establish if your wife is the owner.

Given your dual citizenship either plan on paying VAT or get a legal opinion. I'm seeing at least some comments on here that I believe are wrong but I'm not a lawyer, so I'm not going to get into an argument over them.

[l2ustyl3ullet]

Seems the duel citizenship just screws me over in 2 countries (well 1 country and a continent). Hurray. Oh well, will either plan around it and not going anywhere EU related or just avoid those VAT not paid yachts. Not really wanting to break the rules, but mostly don't want to stung with a big extra cost after the fact.