UK boats could lose EU VAT paid status

[Rapanui]

I have received the following information regarding the EU VAT status of British boats post Brexit from the Cruising Association and having not seen much publicity on this think it should be disseminated as there could be an opportunity to negate the negative effects if people move quickly.

It appears that British boats who currently have ‘EU free circulation’ status e.g. VAT Paid which allows the boats to remain indefinitely in the EU will lose that status if located in the UK on Brexit day but will not lose that status if located outside UK on Brexit day. (See attached statement from the CA with an answer from EU Commission) The implications of losing EU free circulation status to me are:

• If Brexited UK residents eventually want to base the boat in the EU, we would either have to pay VAT againin an EU country or to get a waiver from paying VAT on import but have to export the boat to outside the EU every 18 months as is the case for other third party countries e.g. US, NZ, Australia with boats located in the EU.

• An EU resident buying a UK boat that has lost free circulation status and wishes to keep it in the EU would be liable to pay VAT even though the boat would have already have paid EU VAT prior to Brexit which would make the boat value ~ 20% less than boats with current EU VAT status.

I would suggest, that if the points above affect you, that the only way to negate that would be to sail to an EU country so that you were there on Brexit day and get all the evidence you can regarding proving that e.g. berthing receipts etc.
Cruising Association info:


UPDATE: Vessels in UK to lose EU VAT paid / Union goods statu

RATS has now received confirmation from the EU commission that any Vessel that is in the UK on the date that the UK leaves the EU, ie either March 29 2019 or at the end of a transition deal, will loose its status of Union Goods and hence will become liable for EU VAT if imported back into the EU.
For Non EU residents there is a Temporary Importation process which allows an 18 month period before the VAT must be paid or before the vessel must leave the EU. This 18 month period is not available for those resident in the EU and VAT becomes due as soon as the vessel arrives in the EU.
Sadly it seems that the option of preserving Union Goods status by obtaining a T2L is no longer an option for UK based yachts but the T2L could still be of value for yachts based in the EU on Brexit day
As far as we can read from the Commissions letter this removal on Union Goods status will apply to any vessel in the UK irrespective of the Nationality of the owner, the flag of Registry or where in the EU VAT was originally paid. This may have significant impact on any vessels owned by EU nationals ( and others ) who decided to overwinter in the UK this year.
The text of the response from the EU Commission is attached below:
From: EDCC < noreply@edcc.ec.europa.eu >
Date: 20 February 2019 at 13:40:31 GMT
To: Roger Bickerstaff
Subject: Europe Direct - 101000419398
Dear Mr Bickerstaff,

Thank you for contacting the Europe Direct Contact Centre.

Consequences of the UK's withdrawal from the EU on recreational boats will concern not only customs but also have an indirect tax dimension. The relevant legal bases to which will be
further referred in this letter are: the Union Customs Code (UCC) - Regulation (EU) 952/2013 (OJ L 299/1 of 10.10.2013) - the supplementing Commission Delegated Regulation (EU) 2015/2446 (UCC-DA) (OJ L 343/1 of 29.12.2015) and the Commission Implementing Regulation (EU) 2015/2447 (UCC-IA) (OJ L 343/558 of 29.12.2015) for the customs issues. For indirect taxes it concerns the Council directive 2006/112/EC (the VAT Directive) (OJ L 347/1 of 11.12.2006).

Where the recreational boat has been released for free circulation at import in the EU or has been manufactured in the EU, it has obtained the customs status of Union goods.
After the UK's withdrawal from the EU or the end of the transition period in case a Withdrawal Agreement with a transition period is concluded, in general, any goods in the customs territory
of the UK will lose their Union status and will become UK goods. This was also mentioned in a Brexit preparedness note from the Commission, published on 30 January 2018: https://ec.europa.eu/info/sites/info...axation_en.pdf. Following the Brexit preparedness notice mentioned above, a specific notice on VAT was published on 11 September 2018: https://ec.europa.eu/info/sites/info...ded-tax_en.pdf.

The customs status of a UK boat will depend on its location at that point in time: if the boat is located in an EU port or sails in EU territorial waters, it will keep its Union status; if the boat is located in the UK, its status will be that of a third-country boat when arriving in the territorial waters of the Union, i.e. it will be treated as non-Union goods. Customs controls for such UK boats will be the same as for boats coming from a third country.

We hope you find this information useful. Please contact us again if you have other questions about the European Union, its activities or institutions.

[s57ra]

This is insane, the bureaucracy is a pest and will kill the Europe at the end as an parasite.

To be on the safe side i moved my sailboat from UK to EU coutry flag, but still, how to prove where i was at the moment X? Where is the logic to pay the tax twice for the same good...

[Dockhead]

Discussed at length here:


Brexit VAT Issues




The unknown issue here is whether a UK boat loses UK VAT-paid status, if it is outside the UK on Brexit day.


Logically, it would, although relief might be found in the RGR regime if the boat is brought back within 3 years. But then does it lose EU status??


All I can say is that I cancelled my boat's being put onto the hard on 1 April, so that I'm ready to move if I have to.

[Dockhead]

Originally Posted by s57ra

This is insane, the bureaucracy is a pest and will kill the Europe at the end as an parasite.

To be on the safe side i moved my sailboat from UK to EU coutry flag, but still, how to prove where i was at the moment X? Where is the logic to pay the tax twice for the same good...

Marina receipts are the classical evidence of where the boat was on a particular date. Keep a good log these days.


Note well that the flag is irrelevant to tax paid status. It would seem that EU flag vessels would lose their status if they are in the UK on Brexit day, as well. Perhaps there is an EU version of RGR which could help -- I don't know.

[boatman61]

Just another EU money grab.. expected nothing less..
The amusing thing is I suspect most 27ft+ boat owners are pro Remain...

[Dsanduril]

In addition, grab some screen shots of your boat’s track out of the UK and location on Brexit day from a commercial AIS data provider. Can’t hurt. And the powers that be will already have that data if they want it.

[Brendan]

I was afraid of this. Very disappointing.

[Va2shp]

They spit on EU, but still want EU advantage. Common guy's you won't be worse than us NON EU people.

[boatman61]

Originally Posted by Va2shp

They spit on EU, but still want EU advantage. Common guy's you won't be worse than us NON EU people.

So you would be happy to pay a double tax on your boat..???
Loada Bollox

[Montanan]

"It appears that British boats who currently have ‘EU free circulation’ status e.g. VAT Paid which allows the boats to remain indefinitely in the EU will lose that status if located in the UK on Brexit day but will not lose that status if located outside UK on Brexit day."

I suspect it also depends on whether the boat that had previously had EU VAT paid was owned by an EU resident or a UK resident. It seems that there is the prospect that BREXIT results in UK residents losing the previous EU benefits as to their post BREXIT importation of goods into the EU.

Question: In the alternative will a boat that was located in the EU on Brexit Day be required to pay UK VAT when the boat reenters the UK? And is there a distinction between UK residents and non-UK residents? Reciprocity would seem to dictate such. But this issue would seem to apply to all goods not just boats, because either the good has EU VAT paid status or it doesn't and crossing the border with a good between a non-EU country and EU territory implies an importation.

Being a Yank watching from this side of the pond, all things BREXIT =

[boatman61]

Its all things this side as well..
Theres 650 people who suddenly have to think where for 40yrs others have thunk for them and they are bolloxed.. Duhh..!!! Whadaido.???

[Montanan]

Originally Posted by Dsanduril

In addition, grab some screen shots of your boat’s track out of the UK and location on Brexit day from a commercial AIS data provider. Can’t hurt. And the powers that be will already have that data if they want it.

Seems like a good method of providing documentation.

I recall before 1979, California having a tax on retail inventory, but which tax was specific to inventory in state on a particular day of the year. Stores and warehouses would close during that day to take physical inventory counts. Companies with expensive inventory that was readily transportable would make arrangements for transhipment of the expensive inventory to be out of state on that day and then return the following day. Result loads of trucks crossing into Nevada, Arizona and Oregon, parking for 24 hours then driving back.

[Montanan]

Suggestion: Put the boat on the hard with its aft in Northern Ireland and its bow in the Republic of Ireland; there being some provisions about a "backstop" on the Emerald Isle to allow for continuance of a soft border.

That way the vessel receives dual status. EU + UK = EUUK, or UKEU, albeit not to be confused with IKEA.

[Va2shp]

Originally Posted by boatman61

So you would be happy to pay a double tax on your boat..???
Loada Bollox

Not being part of EU, I am in this situation. It is not a question of being happy, but of honnesty, Uk does not want to be part of EU but want the advantage of EU. I think they are in for a few surprises.

[Dockhead]

Originally Posted by Montanan

"It appears that British boats who currently have ‘EU free circulation’ status e.g. VAT Paid which allows the boats to remain indefinitely in the EU will lose that status if located in the UK on Brexit day but will not lose that status if located outside UK on Brexit day."

I suspect it also depends on whether the boat that had previously had EU VAT paid was owned by an EU resident or a UK resident. It seems that there is the prospect that BREXIT results in UK residents losing the previous EU benefits as to their post BREXIT importation of goods into the EU.

Question: In the alternative will a boat that was located in the EU on Brexit Day be required to pay UK VAT when the boat reenters the UK? And is there a distinction between UK residents and non-UK residents? Reciprocity would seem to dictate such. But this issue would seem to apply to all goods not just boats, because either the good has EU VAT paid status or it doesn't and crossing the border with a good between a non-EU country and EU territory implies an importation.

Being a Yank watching from this side of the pond, all things BREXIT =

The residence of the owner, and indeed the flag state of the vessel, has nothing to do with the VAT-paid or duty-paid status of the goods.


As to possible UK consequences of the vessel's being outside of the UK on Brexit day, see the linked thread. Relief might be possible through the RGR scheme, but would using that then cancel your newly acquired EU tax paid status? No one knows.