VAT, EU, British, Non Res.

[davedindubai]

My seaman's book is good enough for income tax purposes so hopefully also acceptable for VAT.

Maybe I'll end up paying the bloody tax! I hear Malta is good.

[Telesail]

Originally Posted by davedindubai

My seaman's book is good enough for income tax purposes so hopefully also acceptable for VAT.

So that is new information. There are specific rules for seaman in terms of how to count days and what counts as working days etc - these were tightened up to deal with ‘2 weeks on, 2 weeks off’ workers in the North Sea and are worth checking. I am familiar with the way they work for income tax but not sure how they would play into VAT. However, since the relevant rules establish where you are truly resident for UK tax purposes, I am guessing they may apply to residency as it applies to VAT.

I do not know how much the boat is worth or its condition, but one way of handling the VAT issue could be to get it coded through MCA as a small commercial vessel. That means you pay VAT on any income but not on the purchase price/import value. There are some requirements and it may cost up to 10k to go this route but it could be a valid strategy depending on your circumstances.

[Anders]

Originally Posted by davedindubai

I agree. But, a TA (18 months) is issued to the vessel only if the owner is non res of the EU.

So after 3 months in Spain, 3 months in France, 3 months in Italy and 3 months in Greece, the owner isn't resident in any one EU member state but is resident in the EU so surely the TA wouldn't be valid?

Am I over complicating this?

Yes you are over complicating it.
If you are not resident in any country in the EU you are not resident in the EU.

[Anders]

Originally Posted by boatman61

Thats after Brexit.. Your good till Spring..

Good at least until end of transition period at end of 2020.

[boom23]

Originally Posted by Anders

Yes you are over complicating it.
If you are not resident in any country in the EU you are not resident in the EU.

I am not sure this is correct... Countries in EU are like states in USA. If you spend more than 6 months in EU (regardless of country), you are EU resident. The country (or state) of residence, probably, becomes the one that you stayed the longest.

[davedindubai]

Originally Posted by boom23

I am not sure this is correct... Countries in EU are like states in USA. If you spend more than 6 months in EU (regardless of country), you are EU resident. The country (or state) of residence, probably, becomes the one that you stayed the longest.

I'm seeking pro advice on this question and will revert back.

[boom23]

Originally Posted by davedindubai

I'm seeking pro advice on this question and will revert back.

I agree. There is too much speculation going around and you want to make sure...

Here is something I found on the internet, which might bring up more questions or options:

"If you’re not resident anywhere and you are not a US citizen it is possible to be what is termed a perpetual traveler. The big concern I have had for most of our clients is that the common reporting standard requires them to declare somewhere that they are resident for tax purposes. I considered this to be a bit of a headache to me personally but then I realised that the simplest solution is to become tax resident somewhere that is friendly for expats. There are a number of potential locations many of which are quite interesting. I’ve outlined the options below. Of course the key question is where to opt for and hopefully this list will help. The key is there’s no point in ‘jumping out of the frying pan and into the fire’. Anyway to get this done you essentially have three choices:

• Nil tax havens
• Foreign Source exempt havens
• Low tax havens with special rules that share investors/traders can benefit from.

Nil Tax Havens
These are simply countries that do not have any of the three main direct taxes:
• No income tax or corporation tax
• No capital gains tax, and
• No inheritance tax

Many of the nil tax havens you’ve probably heard of or read about in novels. You may even have holidayed in some of them. They include:
• The Cayman Islands
• St Kitts and Nevis
• Dubai
• Monaco
• The Bahamas
• Bermuda
• Vanuatu
• The Turks & Caicos Islands
• Anguilla

Foreign Source Exempt Havens
These countries do levy taxes and sometimes they can be pretty high. However, what makes them tax havens is the fact they only tax you on locally derived income. In other words, if all your income is derived outside the tax haven you will not pay any tax.

Good examples of foreign source exempt tax havens are:
• Panama
• Costa Rica
• Hong Kong
• Singapore

These final two are interesting.
Malta - In Malta individuals holding a residence permit under the ordinary residence scheme pay personal income tax, at progressive rates of up to 35%, on any local income and on any foreign sourced income which is remitted to a Maltese bank account. The key here is you aren’t subject to income tax in Malta on foreign source income not remitted to a Maltese bank account. You are also not subject to income tax on any foreign capital gains whether they are remitted to Malta or not. Technically ordinary residence permit holders are required to reside in Malta for at least 183 days a year coupled with an intention to reside in Malta but I know two or three PT’s who live there three months a years and work around the world and as long as the government gets some tax each year the probably aren’t going to worry too much because they won’t want you to be resident somewhere else if you can be paying them! The main thing here is that you can hold a residence permit under this scheme and pay zero income tax in Malta in a completely legal way and probably nothing elsewhere. I recommend you pay some tax in Malta, but it doesn’t have to be a huge amount.

Number two is Uruguay. In 2011 Uruguay introduced changes to the tax laws that made some foreign-source income taxable for all residents of Uruguay, the government however decided to grant a tax exemption for all foreign residents! they did this in order to keep the existing foreigners in Uruguay and ensure future immigration to the country. This exemption applies for 5 years so it’s worth a look. Personally I have residence in Panama and that works well for me but if Europe is better for you Malta is a good choice.

The key is avoid multiple residency situations. A friend in Canada who had a holiday home ended up tax resident but not actual resident which was a nightmare but had he been resident somewhere else he would have been fine. This is an interesting summary "Many countries, including Spain, France, Portugal and Cyprus, have a double tax treaty which will determine an individuals tax residency status in favour of just one country, forcing the other to drop their residency claim. If you remain within the rules of your country of residence, then tie breaker rules will come into effect.

Using Spain as an example (it is similar in many other countries) In Spain, you will become resident for tax purposes if you spend more than 183 days in the calendar year (tax year) in Spain; or your centre of economic interests is in Spain.

The first tie breaker rule is that if you are resident in both countries according to each country’s domestic rules, you are deemed to be resident in the country in which you have a permanent home available to you. Note that a permanent home is any form of accommodation which is continuously available to you for your personal use, and does not have to be owned by you.

Where you have a permanent home available in both countries, the second tie breaker rule comes into play and that is which country is your centre of vital interests, i.e. the country with which your personal and economic relations are the closest. The term centre of vital interests covers the full range of social, domestic, financial, political and cultural links within your personal and economic relations. For example, if you have a home in the UK where many of your possessions are kept, and your family and majority of friends live in the UK, and you have UK based pensions and investments, it can be difficult to prove that Spain is the centre of your vital interests.

If this test is indeterminate, then the third tie breaker is used: in which country you have an habitual abode. This broadly means the country in which, over a reasonable period, you stay more frequently. The comparison must be made over a sufficient length of time for it to be possible to determine whether residence in either the UK or Spain is habitual.

Finally, if the answer to the third test cannot be determined i.e. you have an habitual abode in both countries, you are deemed to be resident in the country of which you are a national. At this point for example UK nationals will be regarded as UK residents."

[SnakeEyes]

I have found this link useful myself on the matter of residency, VAT and where the boat is registered.

EU VAT Regulations for Yachts - Network Yacht Brokers Lefkas

[keithw88]

Dave: (I reckon you will have to pay VAT). My vessel, which had long been and continues to be in the Western Med, was sold to me as "VAT-exempt" but the broker found out close to settlement day it was not in the EU on the vesting day, so in fact VAT was payable. The PO applied to pay VAT in France, because they had a system or policy which calculated, at least for my boat, a very low valuation. So he paid very much less tax than I thought he would have had to. His gain, no benefit to me - but maybe yours if something similar could be applied to your boat.
Good luck.

[grahamj]

Dave,

If your circumstances are as described there will be no VAT payable upon arrival into the EU.

In order to avoid that happy situation changing you need to ensure that the boat is not deemed to have been permanently imported by dint of spending more than 18 mths in the EU. At the same time you must remain none resident in any EU state. Making sure you don't spend more than 90 day in any calendar year in any one state should do that.

You can leave the EU for a day and the 18mth clock is reset. You may need to provide evidence of where and when you've been in/out of the EU but the boat journey log and marina/fuel receipts should be sufficient.

It's not that complicated.

https://ec.europa.eu/taxation_custom...ats-faq_en.pdf

[ErikFinn]

Originally Posted by atoll

with the first yacht we were registered in south africa ,with the second it was registered under uk SSR but was quite old and built before 94 so vat did not apply so i guess i satisfied the vat and eu admission rules in both cases,it was in 2006 and 2008 so awhile ago.

What's that about the year 1994??
VAT does not apply to boats built before 1994??

[Two Oceans]

I read in UK's HMRC Notice 8 Clause 3.15 that you could bring your pleasure craft into the UK from another non EU country without paying VAT or customs duty if you were a returning resident. Link and extract below.
So I don't know why so many folks post the comment that there is no way to avoid paying the VAT for importing a boat beyond 18 months when it appears you can. Am I wrong?




https://www.gov.uk/government/public...-uk#section315

3.15 Are there any additional requirements if I am transferring my residence to a place in the EU?
If you are moving your normal home from a non-EU country to an EU country, including the UK, you may import your vessel free of customs duty and VAT providing that you:

have lived outside the EU for a continuous period of at least 12 months
have possessed and used the vessel outside the EU for at least 6 months prior to importation
did not get the vessel under a duty/tax free scheme (see below)
declare the vessel to an officer
will keep the vessel in the EU for private use
do not sell, lend, hire out or otherwise dispose of the vessel in the EU within 12 months of importation unless you notify the Personal Transport Unit first, on Telephone: 01304 664 171, and duty and VAT is paid on disposal

[Anders]

That's correct, if you are moving back you can import your possessions like furniture, car, boat etc without paying tax on them.

[Two Oceans]

Anders - will you receive some sort of deemed VAT certificate so you can then sell the boat sometime in the future as VAT paid?

[Anders]

Don't know. I have returned with a car but not with a boat.