Tax not paid

[Pretorius]

HI All,

Thanks for allowing me to post here,i hope to splash next April,im in the market for a Cat, Lagoon 45 to 50, Can anyone explain the term,"Tax Not Paid"?

Thanks in advance

[Shrew]

Originally Posted by Pretorius

"Tax Not Paid"?

This is a bit out of context.

Where is the boat located?

What country is the boat flagged in?

If I had to guess.....is the boat located in Europe? If so, they are more than likely referring to VAT (Value Added Tax).

More information will yield more useful responses.

[goboatingnow]

Usually VAT not paid or Ex-Vat would be used in the EU. So it’s most likely sone form of import tax remains potentially payable.

[Pretorius]

Yes sorry , boats in the med, one i am interested in has a Norwegian flag but states "Tax not paid"

[Zanshin]

That would mean VAT has not been paid. If the owner is an EU citizen or resides inside the EU then the VAT would be due at the first entry point that the boat clears in at the VAT rate for that country.

If you are not an EU resident or citizen then the EU VAT tax status is not relevant to you unless you can keep the Norwegian flag and plan on entering an EU country. If you re-flag to the USA upon purchase then you can enter an EU country and not have to pay VAT.

[goboatingnow]

Originally Posted by Zanshin

That would mean VAT has not been paid. If the owner is an EU citizen or resides inside the EU then the VAT would be due at the first entry point that the boat clears in at the VAT rate for that country.

If you are not an EU resident or citizen then the EU VAT tax status is not relevant to you unless you can keep the Norwegian flag and plan on entering an EU country. If you re-flag to the USA upon purchase then you can enter an EU country and not have to pay VAT.

Just to correct some confusion

The flag of an EU vessel is not directly related to vat. Vat is a function of the “ beneficial “ owners tax residency. If you are a EU resident ( citizenship is irrelevant ) then you should pay VAT , even if you subsequently export the boat.

Registering the boat under a EU flag does not affect its vat status. If you are entitled to keep the boat in the EU , because you are a non tax resident then you can still in many European countries flag the boat and it remains vat not paid. The temporary admission process that allows 18 months without vat has nothing to do with the flag state.

Note that strictly speaking , a boat is classified as “ a new means of transport “. Hence vat is due in the EU country of “ destination “ ie where the boat will be kept not the first EU country You arrive at. I think this misunderstanding arose because the Azores had a preferential rate of VAT and many people paid it there.

[Zanshin]

goboatingnow - I'm afraid that the German tax authority, who responded to my questions regarding taxation as I'm a German citizen living overseas, disagrees with some of your opinions. Particularly the VAT payment, if required, is done at the first port of entry and not at the residency country or registry country. All I have is a German reference, but the European tax law is quite clear on that.

But since we don't know the nationality, citizenship and planned boat flag of the original poster and whether the boat is going to enter the EU we really can't answer the specific questions they have regarding taxation after purchase.

Zoll Referenzblatt:" https://skipper.adac.de/wp-content/u...maerz-2018.pdf

[goboatingnow]

Originally Posted by Zanshin

goboatingnow - I'm afraid that the German tax authority, who responded to my questions regarding taxation as I'm a German citizen living overseas, disagrees with some of your opinions. Particularly the VAT payment, if required, is done at the first port of entry and not at the residency country or registry country. All I have is a German reference, but the European tax law is quite clear on that.

But since we don't know the nationality, citizenship and planned boat flag of the original poster and whether the boat is going to enter the EU we really can't answer the specific questions they have regarding taxation after purchase.

Zoll Referenzblatt:" https://skipper.adac.de/wp-content/u...maerz-2018.pdf

Your tax authority is simply wrong. That’s not surprising , as tax authorities in the main do not deal with boats. EU vat law is clear. New means of transport vat is paid in the country of destination , the vat Directives are online for you to read.

As I said flag registry in itself is irrelevant in regards to vat. Some registries will check the legality of the vat status some do not. .

Here’s the Finnish text on the matter

“Taxation of new means of transport

By derogation from the general rule, VAT for a new means of transport is always payable in the country where the new means of transport is being used. ”

Ie if you buy a car in France vat free and live in Finland you pay the vat in Finland , not in Germany when yiu drive over the first border.

Here’s the text from the Irish Revenue site
“
Supplies of a new means of transport to any person in another Member State are considered intra-Community supplies (ICS). A new means of transport is a motor vehicle, boat or aircraft. The customer acquiring the new means of transport must pay Value-Added Tax (VAT) in the Member State of destination.”

Here’s the piece from the Eu itself europa.eu

“For new cars bought in another EU country, VAT is paid in the country where you import and register your car (your country of residence). This VAT scheme also applies to other new means of transport, such as large motorbikes, boats and aircraft.”

The same is technically true for boats

Ps . If you think about it , it makes sense , for highly mobile assets , particularly planes, paying vat in the first country you visit , would lead to massive “ vat shopping “ , NMT derogations were specifically formulated to prevent that.

[Zanshin]

goboatingnow - we still need to know more details from the OP, but regardless of which VAT rules might get applied, if the boat doesn't enter the EU then VAT will not be applicable to the purchaser; so all of our arguing might be a moot point.

[goboatingnow]

Originally Posted by Zanshin

goboatingnow - we still need to know more details from the OP, but regardless of which VAT rules might get applied, if the boat doesn't enter the EU then VAT will not be applicable to the purchaser; so all of our arguing might be a moot point.

The boat is in the med so likely in the EU and is owned most likely by a Norwegian making use of the temporary admissions process

One of two situations applies. , the purchaser is not a tax resident , in which case the sale can proceed without vat and the new purchaser can register the boat in the EU or elsewhere as flag registry rules allow.

Or,

The purchaser is EU tax resident( and not vat registered) , the reality is vat should and will be paid as there is no grace period for a tax resident. Also the sellers is legally obliged to collect the vat as security , which can be refunded if proof of proper export is provided. Since the seller remains liable if vat isn’t collected most sellers at the very least ESCROW the vat. So you have to fund the vat irrespective ( in fact you have to fund 2x the VAT )

And I’m not arguing , I’m correcting your error. ( and I provided three references )

[goboatingnow]

By the way , I should have made this clear , a new means of transport for a boat is a vessel under 100 hours from new.

A second hand vessel currently in the EU, vat not paid being bought by a eu tax resident , must pay the Vat to the seller if vat registered or to the country where the vessel is in on the sale date. No recovery of that vat is possible even if exported from the EU. There is no grace period for a tax resident. Removing a vat free vessel from a Eu state by a tax resident is technically vat fraud.

If a EU tax resident wishes to export such a vat free boat that is presently in the Eu, the boat needs to be removed from the EU by the seller to a third country and the deal done there.

—————

In fairness to Zanshin, I should say that if you buy a vessel outside the EU secondhand you pay the vat in the country of first arrival, this would include a boat new from the US as it’s not “new” by the time it arrives in Europe