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Old 07-05-2021, 10:50   #1
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Portugal: Temporary Import/VAT and COVID

I have searched the forums and haven't really found a good discussion that answers the sorts of questions I have, so I am starting a new thread.

We arrived in the Azores in June 2019 after crossing the Atlantic from the Caribbean. From the Azores, we sailed to Lisbon and immediately placed the boat in storage (July 2019). We had to return to the US to care for my dying father. Our intention was to return to Portugal in late spring of 2020 to continue our cruise into the Med (doing the Schengen/TI dance).

Then, as everyone knows, the world changed. Like so many other cruisers, we have been prevented from returning to our boat due to travel restrictions (4 return flights cancelled, in fact). Our 18-month Temporary Import period expired in December 2020. We did not place the boat in a customs bond before leaving, as we didn't have a reason to at the time. Assuming that the EU re-open this summer, it will be two years that our boat has been in storage - and well beyond our TI period.

I have been trying and failing to get a clear answer on our TI/VAT status for well over a year. I have spoken with yacht VAT consultants in Portugal, Spain, Germany, Madeira and the Channel Islands. No one has been able to answer our questions. So, I'm hoping that someone here (with direct knowledge of the situation) can provide some clarity. Because the COVID situation is dynamic, and because we have Schengen limitations, we aren't that interested in trying to force a cruise this year. However, we have to deal with the boat.

In an ideal situation, the Portuguese officials will recognize our dilemma and allow us to clear out of the country, sail into international waters, and sail right back into the country where we can store the boat for the winter. Then, next year after things have calmed down, we can sail into the Med after stopping in Morocco to clear the TI clock once again. I have seen others on this forum suggest that they've sailed into international waters to clear TI. And, I've seen others claim that those people are lying or are sharing nonsensical information.

I tend to agree that sailing into international waters is unlikely to work. But, I've entered enough countries on my boat to know that laws are interpreted by people, and those people might be open to any number of scenarios.

If this doesn't work, will we be allowed to leave this year without being responsible for VAT? Hopefully the maritime borders of Morocco have re-opened so we can clear the TI clock. Then we can sail right back to Spain and store the boat there until next year.

If neither of these scenarios will work, does anyone have any ideas? We don't want to make a break for it and leave Portugal to sail back across the Atlantic. One, the boat has been in storage for 2 years at this point... it'd be very unseamanlike to put to sea for a month or more without a shakedown cruise. And, two, we haven't been able to explore the Med yet.

Finally, how is VAT paid? We're not opposed to paying VAT if it can be done for a reasonable cost. We have an old boat that isn't worth that much money on the open market. But I haven't been able to get an answer about how this process works. Everything I've read seems to be about how to AVOID VAT. I've found nothing that address the ins/outs of simply paying the VAT. If we pay VAT, how is the boat valued? Do I have to reflag the boat? Does my engine need to meet emissions standards? I cannot find ANY information about this.

Any ideas/comment/help?!?!?

Thanks!
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Old 07-05-2021, 11:21   #2
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I can only say how I did the VAT thing..
In 2006 I bought a 2001 Bene 331 in the BVI's for $60K that the owner was desperate to sell at the end of its charter contract with Moorings.
I sailed her to St Martin where I added around $10K of upgrades to the boat before heading to the Azores.
When I arrived in Horta I contacted the local customs people and they sent a surveyor over to look over the boat and papers, the bill of sale was accepted at face value and a few days later I got the bill for the VAT at what was then 15%.
It was all done in water and very amiable.
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Old 07-05-2021, 11:28   #3
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Re: Portugal: Temporary Import/VAT and COVID

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I can only say how I did the VAT thing..
In 2006 I bought a 2001 Bene 331 in the BVI's for $60K that the owner was desperate to sell at the end of its charter contract with Moorings.
I sailed her to St Martin where I added around $10K of upgrades to the boat before heading to the Azores.
When I arrived in Horta I contacted the local customs people and they sent a surveyor over to look over the boat and papers, the bill of sale was accepted at face value and a few days later I got the bill for the VAT at what was then 15%.
It was all done in water and very amiable.
Thank you for the insight. Where was the boat flagged before you purchased it? And, where did you flag the boat after buying? Was this discussed at all with the customs officials? Were you also responsible for a customs duty.

Bene's are built in the EU, so they already conform to the CE standards. My boat was built in the US in 1981. So, it most definitely does NOT conform.

Thank you!
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Old 07-05-2021, 12:02   #4
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pirate Re: Portugal: Temporary Import/VAT and COVID

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Thank you for the insight. Where was the boat flagged before you purchased it? And, where did you flag the boat after buying? Was this discussed at all with the customs officials? Were you also responsible for a customs duty.

Bene's are built in the EU, so they already conform to the CE standards. My boat was built in the US in 1981. So, it most definitely does NOT conform.

Thank you!
I Flagged the boat UK SSR while still in the BVI's and no, I did not pay any customs duty unless it was included in the VAT.
You have no requirement to conform to the CE standard if you have no intention to sell it in the EU.
My feeling is because of the Pandemic its unlikely you will be hit with a VAT bill.. if you decide to continue to the Med when you get back to her sail direct to Tangier and reboot your TI there, it's only 3/4 days max from Lisbon.
International waters does not count as most desire proof like a marina bill etc that you have actually left EU waters and not just coast hopped..
You can always head back to Portugal from Tangier, 30 hours will see you in Portimao if your prepared to motor.
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Old 07-05-2021, 12:20   #5
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Re: Portugal: Temporary Import/VAT and COVID

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You have no requirement to conform to the CE standard if you have no intention to sell it in the EU.
Please forgive the crudeness of this question as I mean no disrespect: do you "know" this to be true? Or, is it simply a hunch? How do I prove to VAT officials that I don't intend to sell the boat in the EU? What happens 10 years from now if I change my mind?

We love the idea of paying a reasonable VAT so we don't have to worry about leaving every 18 months. I understand that Schengen is different (I'm working on dual citizenship).
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Old 08-05-2021, 07:48   #6
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Re: Portugal: Temporary Import/VAT and COVID

If you import the boat it must be RCD compliant or exempt but enforcement is rare and I don't think the Portuguese customs has any interest in it. I doubt you have to pay VAT this year anyway but ask around when you get back to the boat and you will find out what the local situation is.
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Old 08-05-2021, 08:35   #7
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pirate Re: Portugal: Temporary Import/VAT and COVID

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Originally Posted by datswite View Post
Please forgive the crudeness of this question as I mean no disrespect: do you "know" this to be true? Or, is it simply a hunch? How do I prove to VAT officials that I don't intend to sell the boat in the EU? What happens 10 years from now if I change my mind?

We love the idea of paying a reasonable VAT so we don't have to worry about leaving every 18 months. I understand that Schengen is different (I'm working on dual citizenship).
I bought a Hunter 37 in 2004 and sailed it to the UK in 2005, I made enquiries regarding selling it through a Broker and was told that for me to do that it would need to be CE compliant.
I was also told if I continued to live on it instead of selling it there was no such requirement.
If you decide to sell in Europe be prepared to spend around €12K to do it.
Do you seriously think other Americans with non compliant American boats who have been sailing the Med for years CE'd their boats.. I think not.
Re the Hunter, I ended up selling her as a project to get around the CE.. the buyer was aware.
CE and VAT are completely different depts
Re your boat.. Just launch and sail to Tangiers.
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Old 08-05-2021, 08:55   #8
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Re: Portugal: Temporary Import/VAT and COVID

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Originally Posted by boatman61 View Post
I bought a Hunter 37 in 2004 and sailed it to the UK in 2005, I made enquiries regarding selling it through a Broker and was told that for me to do that it would need to be CE compliant.
I was also told if I continued to live on it instead of selling it there was no such requirement.
If you decide to sell in Europe be prepared to spend around €12K to do it.
Do you seriously think other Americans with non compliant American boats who have been sailing the Med for years CE'd their boats.. I think not.
Re the Hunter, I ended up selling her as a project to get around the CE.. the buyer was aware.
CE and VAT are completely different depts
Re your boat.. Just launch and sail to Tangiers.
Thanks. I have considered making a break for it but am concerned that Morocco is going to want to see my clearance papers from my last port. This isn't a concern in Morocco?
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Old 08-05-2021, 09:06   #9
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Re: Portugal: Temporary Import/VAT and COVID

You should check out the EU guidance under “ Possibility to extend the limit for re-exporting the goods under temporary admission” in https://ec.europa.eu/taxation_customs/covid-19-taxud-response/guidance-customs-issues-related-covid-19-emergency_en. In essence, this is the EU telling local customs offices to extend the period. I used this guidance to get an extension of the 18 months for my boat in Spain. I used a Spanish lawyer to do so after several attempts to get it through a customs agent failed. But this was done before the period expired. In your case, with the period expired, I’m not sure I would go to the authorities and point out you are in violation. As I understand it, the tax was due the day the period expired. Let me point out that Gibraltar is now a good option for your 18 months reset. Good luck!
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Old 08-05-2021, 09:34   #10
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Thanks. I have considered making a break for it but am concerned that Morocco is going to want to see my clearance papers from my last port. This isn't a concern in Morocco?
If I were in your shoes I would just follow normal practice and go to the marina office as soon as you've stocked up and are ready to sail, pay your bill up to the following morning then sail.
Its what one does normally and I doubt very much the Spanish boats that sail from LA Linea/Algeceiras for a weekend in Tangier go through Immigration and get stamped out and back in.
Just present your boats papers as normal along with marina receipt as proof of last port... never had clearing out of the USA or the Caribe but never a problem in the Azores.. or just go straight to Gibraltar.
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Old 08-05-2021, 09:34   #11
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Re: Portugal: Temporary Import/VAT and COVID

my understanding is this:

- the ones targeted by CE compliance/importation rules are EU residents. the EU wants its residents to buy locally-made boats; and, if they do not (and prefer a wonderful boat from elsewhere), they are required to jump hoops, make some changes to the boat (change engine even) and, yes, pay up so to get a plaque to put on the top of the companionway hatch (where officials can plainly see it)

- under normal circumstances, a non-eu, like you, is considered to be passing though. he/she pays the ticket at the door (vat) and does the schengen thing and then is expected to be on his/her way...

- however, if your boat is put on the market in the EU, a broker can not legally sell it to an EU-resident without getting that person to sign forms acknowledging they know they must jump the ce-inspection hoops (which can be very expensive). and yes, the rules and regs are upped each year so to make it harder and harder and harder for eu-residents to bring in a non-ce-made boat.

hope this helps

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Old 08-05-2021, 09:36   #12
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Re: Portugal: Temporary Import/VAT and COVID

Montanan is really amazing at answering questions like these.

if he doesn't pop in, i suggest you send him a PM.

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Old 08-05-2021, 09:43   #13
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Yup.. He'll Google it and tell you what the site's say..
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Old 08-05-2021, 10:58   #14
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Re: Portugal: Temporary Import/VAT and COVID

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Edited:

We arrived in the Azores in June 2019 Your arrival in the Azores was the vessel's first importation into the EU, you should clear customs in Portugal and your temporary import [a.k.a. temporary admission] started in June 2019 hence eighteen months was December 2020 and 24 months would be June 2021; export your vessel before June and claim extraordinary circumstances as detailed below.after crossing the Atlantic from the Caribbean. From the Azores, we sailed to Lisbon and immediately placed the boat in storage (July 2019). We had to return to the US to care for my dying father. Our intention was to return to Portugal in late spring of 2020 to continue our cruise into the Med (doing the Schengen/TI dance).

Then, as everyone knows, the world changed. Like so many other cruisers, we have been prevented from returning to our boat due to travel restrictions (4 return flights cancelled, in fact). Our 18-month Temporary Import period expired in December 2020. We did not place the boat in a customs bond before leaving, as we didn't have a reason to at the time. Assuming that the EU re-open this summer, it will be two years that our boat has been in storage - and well beyond our TI period.


In an ideal situation, the Portuguese officials will recognize our dilemma and allow us to clear out of the country, sail into international waters, and sail right back into the country where we can store the boat for the winter. Then, next year after things have calmed down, we can sail into the Med after stopping in Morocco to clear the TI clock once again. I have seen others on this forum suggest that they've sailed into international waters to clear TI. And, I've seen others claim that those people are lying or are sharing nonsensical information.

I tend to agree that sailing into international waters is unlikely to work. But, I've entered enough countries on my boat to know that laws are interpreted by people, and those people might be open to any number of scenarios.

What is exportation?
The export procedure allows exit of Community goods from the EC customs territory. From a customs point of view, exported Community goods change their status to non-Community goods. For non-Community goods, the operation is called 're-exportation'.

The export procedure entails the application of all exit formalities, including, where applicable, the payment of export refunds and the presentation of export licences.

The term Export is also intended as import in a broader sense, as an indissoluble operation. Each export has an import. Hence the good, in this case, your vessel and its accoutrements which accoutrements are also subject to import duties and VAT must be imported into a place outside the EU territory. Sailing to international waters does not induce an importation hence it does not induce an exportation.




If this doesn't work, will we be allowed to leave this year without being responsible for VAT? Maybe, as per below an extension upto 24 months is available but must be requested and there are further extension allowed under extraordinary circumstances. The death in your family and the pandemic seemingly rise to the level of extraordinary circumstances and your lack of intent to sale and its lack of use are supportive of waiving importation.

If neither of these scenarios will work, does anyone have any ideas? We don't want to make a break for it and leave Portugal to sail back across the Atlantic. One, the boat has been in storage for 2 years at this point... it'd be very unseamanlike to put to sea for a month or more without a shakedown cruise. And, two, we haven't been able to explore the Med yet. I recommend that you do not mention your intention to explore other EU territory when first dealing with the Customs authorities as to arranging for duty and VAT waived discharge of your temporary importation that initiated in June 2019. Focus on getting your vessel out of the EU, commission an EU bonding boat yard to survey and refit the boat for a prompt departure, then get Customs clearance to leave the EU and fully document its clearance and departure. Explain to the Portugal Customs that your vessel is being refitted to avail safe export so as to discharge the temporary importation, and that the extension of TI is needed to avail the bonded boat yard to perform the necessary refitting so as to be able to transport the vessel on its own hull to a non-EU place of importation and thus fulfill the discharge export from the EU. Then you can reenter, but I would recommend entering in a port other than your departure so as to have a new set of Customs clearance authorities and document that re-importation . Keep your discussions with Customs solely on fulfilling the discharge procedure from temporary importation; do not disclose your intention to return under another temporary importation. Focus on fulfilling the discharge as that will avail Customs to clear your vessels departure.
Always fully clear the custom's procedure when departing a country and retain the proper documents thereof.


Finally, how is VAT paid? It is paid to Customs upon clearance of the good by Customs along with any tariff duties due. We're not opposed to paying VAT if it can be done for a reasonable cost. We have an old boat that isn't worth that much money on the open market. But I haven't been able to get an answer about how this process works. Everything I've read seems to be about how to AVOID VAT. I've found nothing that address the ins/outs of simply paying the VAT. If we pay VAT, how is the boat valued? It and each and every accoutrement is valued at its fair market value upon first entry, plus the cost of customs duty and insurance and transport delivery to the EU, a.k.a. CIF Customs, Insurance, Freight to an EU territory.Do I have to reflag the boat? Flagging is not a factor for importation, that is merely ascribing nationality to the vessel.Does my engine need to meet emissions standards? Yes if the boat is imported and not placed under TI status.I cannot find ANY information about this.

Reference the attached graphic as to the VAT rates by EU Country

Any ideas/comment/help?!?!?

Thanks!
Temporary Importation to EU

If a yacht operates in EU waters Value Added Tax (VAT) must be considered.

The EU’s Sixth Directive on Value Added Tax was amended in 1993. This amendment states that all yachts which are owned or used by an EU resident in EU waters must pay VAT or have proof of VAT exemption. Failure to comply with EU regulations can have serious consequences for a yacht and its owners – this can include detention or seizure of the yacht, or severe financial penalties.


Owners who are non EU residents, or a yacht which is non EU Flagged, who wish to sail their yachts in EU waters for private purposes may temporarily bring their yacht into the EU without customs duties or VAT needing to be paid.
The boats concerned have to be placed under the 'temporary importation procedure' (TI) with Customs and the period of use in the EU is limited in time to eighteen months. The temporary importation rules are covered under Article 562 of the Customs Code. When the time is up the boat has to leave, in official jargon this period is called 'the period of discharge'. The re-exportation of the goods from the customs territory of the Community is the usual way of ending or 'discharging' a temporary importation procedure. If the boat does not leave before the end of that time then customs duty and VAT become due.
A boat is temporarily imported into the EU and not into one of the constituent Member States. Thus it can move from one Member State to another with no further customs formalities during the 18 month period allowed.
After 18 months the yacht must be exported before re-entering the EU under the same rules.
How can a yacht be placed under TI? Just crossing the frontier of the customs territory of the Community is in general sufficient. But, the yacht may be required to use a route specified by customs and they may require the vessel to make an oral or written customs declaration. It is possible that customs may require the provision of some kind of security or guarantee to cover the payment of the customs duties and VAT that become due if the boat does not leave the EU.

The legal provisions on temporary importation are found in Articles 562 and 137 to144 of the Customs Code.

Temporary Importation - EU Customs Code Articles

Article 137
The temporary importation procedure shall allow the use in the customs territory of the Community, with total or partial relief from import duties and without their being subject to commercial policy measures, of non-Community goods intended for re-export without having undergone any change except normal depreciation due to the use made of them.

Article 138
Authorisation for temporary importation shall be granted at the request of the person who uses the goods or arranges for them to be used.

Article 139
The customs authorities shall refuse to authorize use of the temporary importation procedure where it is impossible to ensure that the import goods can be identified. However, the customs authorities may authorize use of the temporary importation procedure without ensuring that the goods can be identified where, in view of the nature of the goods or of the operations to be carried out, the absence of identification measures is not liable to give rise to any abuse of the procedure.

Article 140

1. The customs authorities shall determine the period within which import goods must have been re-exported or assigned a new customs approved treatment or use. Such period must be long enough for the objective of authorized use to be achieved.

2. Without prejudice to the special periods laid down in accordance with Article 141, the maximum period during which goods may remain under the temporary importation procedure shall be 24 months. The customs authorities may, however, determine shorter periods with the agreement of the person concerned.

3. However, where exceptional circumstances so warrant, the customs authorities may, at the request of the person concerned and within reasonable limits, extend the periods referred to in paragraphs 1 and 2 in order to permit the authorized use.

Article 141
The case and the special conditions under which the temporary importation procedure may be used with total relief from import duties shall be determined in accordance with the committee procedure.

Article 142
1. Use of the temporary importation procedure with partial relief from import duties shall be granted in respect of goods which are not covered by the provisions adopted in accordance with Article 141 or which are covered by such provisions but do not fulfil all the conditions laid down therein for the grant of temporary importation with total relief.
2. The list of goods in respect of which the temporary importation procedure with partial relief from import duties may not be used and the conditions subject to which the procedure may be used shall be determined in accordance with the committee procedure.

Article 143
1. The amount of import duties payable in respect of goods placed under the temporary importation procedure with partial relief from import duties shall be set at 3 %, for every month or fraction of a month during which the goods have been placed under the temporary importation procedure with partial relief, of the amount of duties which would have been payable on the said goods had they been released for free circulation on the date on which they were placed under the temporary importation procedure.
2. The amount of import duties to be charged shall not exceed that which would have been charged if the goods concerned had been released for free circulation on the date on which they were placed under the temporary
importation procedure, leaving out of account any interest which may be applicable.
3. Transfer of the rights and obligations deriving from the temporary importation procedure pursuant to Article 90 shall not mean that the same relief arrangements must be applied to each of the periods of use to be taken into consideration.
4. Where the transfer referred to in paragraph 3 is made with partial relief for both persons authorized to use the procedure during the same month, the holder of the initial authorisation shall be liable to pay the amount of import
duties due for the whole of that month.

Article 144
1. Where a customs debt is incurred in respect of import goods, the amount of such debt shall be determined on the basis of the taxation elements appropriate to those goods at the time of acceptance of the declaration of their placing under the temporary importation procedure. However, where the provisions of Article 141 so provide, the amount of the debt shall be determined on the basis of the taxation elements appropriate to the goods in question at the time referred to in Article 214.
2. Where, for a reason other than the placing of goods under the temporary importation procedure with partial relief from import duties, a customs debt is incurred in respect of goods placed under the said procedure, the amount of that debt shall be equal to the difference between the amount of duties calculated pursuant to paragraph 1 and that payable pursuant to Article 143.


Sorry for your loss.

Best regards,

Dan
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Old 08-05-2021, 11:04   #15
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Re: Portugal: Temporary Import/VAT and COVID

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Montanan is really amazing at answering questions like these.

if he doesn't pop in, i suggest you send him a PM.

wolfie
Hi Wolfie,

I resemble that remark.

Here in The Last Best Place, Montaña we don't have Sales or Use taxation, nor VAT but when we export from 406 Country we incur such so one get's to learn the ways of various countries and States, all part of doing business.

A boat is just a good that is imported and exported every time it enters or departs a country, not really anything unique about it.

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