Buying an EU-Registered Yacht in Australia

[ribbony]

We are looking at some sailing yachts here in Oz that have been sailed here from germany and france. These vessels are for sale and they seem to fit our needs well except that they are foreign registered.

What protocols should we undertake to purchase one of there vessels and are there any traps that we should avoid.

We want to avoid buying a vessel that we latter find out may have encumberances or debits owing on it.

Cheers

[swagman]

Hi Ribbony,

Even in the UK - when if one buys a second hand car there is a central registry to check if finance is still owed or another party has an interest in the vehicle - there is not one central source of ownership interests in yachts.

There are two - the Small Ships Register and the Registry of British Ships. The former tends to be used when vessels are privately owned or purchased under a personal loan, the second if one has a marine mortgage. Some vessles are not registered with either.

There is not to my knowledge, one central EU boat register in existance, and I'm afraid I dont have further details of what applies in France or Germany.

I'd suggest you contact the local consul or embassy of the countries where your boats are registered and secure from them the relative registry contact details. The write to them all.

I'd practically suggest if you never plan to ship the vessel back into the country of origin, you may be unlikely to ever have to worry as I'd assume once you've purchased your vessel you'd re-register it in Oz so that you could easily sell it locally at some time on the future?

I also assume you've checked out import duty requirements if you do buy one?

Sorry I can't be more helpful but good luck with your plans.

Regards

JOHN

[Weyalan]

You may want to contact Australian Customs and ask them what duties and taxes will be owing on the vessel - it may be liable for any of the folowing
1. Import duty (maybe like 5% or something)
2. 10% GST on purchase price
3. 10& GST on delivery cost (Note: even if you sail a vessel from Europe yourself, you can still be liable for GST on "delivery cost" of what the commercial delivery cost might have been if you hadn't delivered it yourself).

Of course, all of these may already have been paid by the vendor, but it wouldn't hurt to check

[Talbot]

you have the rules wrong here


Import duty at abt 5% - I think this is in abeyance at the moment.

10% GST on purchase price or valuation of yacht under certain rules - quite complex, but set out quite well on the government website.

10& GST on delivery cost - codswallop. Delivery costs can be deleted from boat valuation for calculation of above GST

Peeves me no end that you have to pay this even if you are emigrating!

[Weyalan]

Last year I looked at importing a yacht from Japan to Australia.

The following is a link to Australian Customs Service's website; specifically the page regarding Importing a yacht:

http://www.customs.gov.au/site/page.cfm?u=4365

According to that site:

Yachts are subject to a general rate of duty of 5% based on the customs value (basically the price paid) and 10% GST calculated on the customs value plus international transport and insurance plus the duty.

Note that you not only pay GST on the purchase value, but also on the delivery cost and on the Delivery insurance.

On top of that, you pay GST on the import duty as well!


So, to give a fictional example:

If you purchased a boat for, say $200,000, that was going to cost $25,000 to get here and $5000 to insure for the delivery.

You would be liable for:
5% import duty on $200,000 purchase price = $10,000
10% GST on $200,00 purchase price = $20,000
10% GST on $10,000 import duty = $1,000
10% GST on $ 25,000 delivery costs = $2,500
10% GST on $5,000 insurance = $500

Duties = $34000

That is my understanding of it, anyway. Of course, Talbot may be 100% right and Her Majesty's Australian Customs Service may be misinformed...

[Seaquesta1]

Of course your other option is to thumb your nose at the beaurucrats, apply a bit of creative thinking and fly under-neither the customs dept radar.

You'd be surprised at how many holes there are if you go looking for them.

However I couldnt possibly condone that kind of behavior?!

[Talbot]

The possible temp reduction on the customs was reported on these fora a month or so ago.

The other information was in response to detailed queries answered by the Australian Customs - whoes first recommendation was that this should only ever be done through a Customs Broker. The full text from Customs (and I draw your attention to the part about deductions for overseas freight is:

PRIVATELY IMPORTED YACHTS, SHIPS OR OTHER VESSELS

QUESTION:

How are privately imported yachts, ships or other vessels valued for Customs purposes?

ANSWER:

(a) When purchased overseas new or second-hand for export to Australia, such vessels are generally valued using the transaction value method. This method uses the basis of the actual price paid or payable for the vessel and is utilized whenever the requirements of S161 of the Customs Act are met.

(b) In other cases where a provision of S160 or S161E precludes the use of transaction value (of (a) above), valuation is determined by reference to the alternative valuation methods in their sequential order.

EXPLANATION:

Transaction Value Method - S161

Privately imported vessels, outlined in (a) above, are generally valued using the transaction value method of S161 on the basis of price actually paid or payable for the vessel. Transaction value is the primary valuation method and will be utilized to the greatest possible extent. The transaction value is determined irrespective of the time at which the sale contract was concluded and hence irrespective of any market fluctuations after the date when the contract was concluded.

However, the price paid or payable can only be determined when there is sufficient reliable information (S160) for the purpose. S161H is also directed at specific situations where the transaction value cannot be applied. Where the transaction value method cannot be utilized, recourse must be had to the alternative valuation methods in their sequential order.

Examples of situations which would require using one of the alternative methods would include:

„h when the vessel is built by owner labour (and is therefore not subject to a contract of sale);

„h the vessel has been extensively modified since purchase;

„h the purchaser and the vendor are related parties (S154 (3)) and that relationship has influenced the price of the vessel.

2

Is There Any Allowance Made For Deterioration Of The Vessel During Voyage To Australia?

While the Customs Act contains no allowance for depreciation in respect of the transaction value method, S163 and Customs Regulations 126 (a) or (b) allow for refund of Customs Duty in circumstances that include deterioration or damage of a vessel during the voyage to Australia.

An owner seeking such a refund would need to satisfy a Collector that the vessel had been "made lower in character or quality" (ie deteriorate) or had suffered "injury or harm that impairs value or usefulness" (ie damage) by reason of the voyage to Australia. An owner could establish such a claim for refund by producing evidence of his insurance claim in relation to the deterioration or damage. It is considered that damage or deterioration of a minor nature, ie normal wear and tear that would not warrant an insurance claim, does not constitute grounds for refund.

Of course, the deterioration or damage may be so substantial as to make the vessel different from as it was when the import sales transaction (S154 (1)) took place. In such a case recourse to the alternative valuation methods, in their sequential order, would be necessary.

Alternative Methods Of Valuation:

In circumstances where the Collector is unable to determine the Customs value of a privately imported vessel by having recourse to the transaction value method, the Collector will utilize one of the alternative valuation methods.

If it is not possible to use either the identical or similar goods methods, the Collector may be able to utilize the deductive value method.

The deductive value method would use the price from the first arms length sale of the vessel in Australia. Where this is not available to a Collector, the first arms length sale price in Australia of identical or similar goods may be used.

From this actual sale price a Collector would work back to calculate the FOB price of the vessel at its place of export. If a collector is unable to determine a deductive value, then computed value method and the fall back method are the final legal options.

Fall Back method of valuation

In circumstances where it is not possible to utilize any of the preceding valuation methods to value a privately imported vessel, the last valuation method is the fall back method (S161G).

Section 161G provides that where a Collector has determined that all other valuation methods cannot be applied, then the Collector shall determine the value of the imported goods by:

„h reviewing the previous valuation methods sequentially; and

„h interpreting their provisions with a reasonable degree of flexibility.

Where the Customs value is determined using the provisions of S161G, a flexible deductive method should result in acceptable and equitable valuations. These valuations may be based on:

(i) the advice of an independent marine surveyor as to the Australian landed duty/sales tax paid value of the imported vessel having regard to the age and condition of the vessel.

NB: It should be noted that where a collector is NOT satisfied with an Australian valuation tendered by an importer, further valuation advice from other independent sources may be requested.

From such a valuation appropriate deductions may be made for included Australian Customs duty and sales tax, and any other necessary elements in accord with the principles of the flexible deductive method.

Self Transported Goods

"Self transported goods" are defined in S151 (1) as meaning:

¡§(a) a ship imported otherwise than in another ship or an aircraft; ...¡¨

An owner may construct a yacht himself and sail it to Australia. Or, a purchaser may enter into a contract of sale for an overseas vessel and arrange for the vessel to be sailed to Australia on the purchaser's behalf.

In any case, where an owner of a privately owned vessel claims a deduction for overseas freight in relation to "self transported goods", the determination of the deductible amount is left to the discretion of the Collector.

The Collector will disregard that part of the deduction claimed in respect of non-commercially viable segments of the voyage - for example, in a contract of sale of a yacht involving the sailing of the vessel from San Francisco to Sydney, the vessel may not necessarily travel by the most commercially viable route; in effect, a working holiday.

The most commercially viable route may be taken as meaning that route that involves the minimum number of necessary stops for taking on essential supplies/fuel for a vessel of the class or kind that is imported.

Allowance for-overseas freight

As the legal definition of overseas freight (S154 (1)) allows for ¡§amounts paid/payable .. in respect of the transportation of the goods¡¨, reasonable allowance may be made for such essential sailing costs as are necessarily incurred in sailing the vessel to Australia, by the most commercially viable route. Guidelines as to what may be regarded as essential sailing costs are attached as Appendix A.

The legal place of expert (S154 (1)) must also be determined in relation to self-transported goods. Part (c) of the definition of place of export states:

"where the goods, being self transported goods, were exported from a country by sea or air - the place, or last place, in that country from which the goods departed for Australia;"

It is the importer's responsibility to provide sufficient reliable information to clearly prove from which country the vessel was exported for Australia. For example, where the owner can prove that he/she made representations to apply for migrant status prior to departure for Australia, this may indicate from which country the vessel was exported for Australia.

In other cases, the owner may make a decision to sell the vessel during the voyage to Australia or even after the vessel has arrived in Australia. In all such situations where the owner is unable to provide sufficient reliable information regarding the country from which the vessel was exported to Australia, a Collector will have recourse to part (f) of the definition of place of export:

"in any other case - a place determined by a Collector."

In such cases a Collector will determine the place of export to be the final port of call in the last country visited prior to the vessel arriving in Australia, and determine any allowance for overseas freight (ie essential sailing costs) accordingly.

APPENDIX A

ESSENTIAL SAILING COSTS

Where, in determining the customs value of an imported vessel that is ¡§self transported goods" (S154 (1)), a Collector may need to determine a deduction for overseas freight. In cases such as where the owner has sailed the vessel to Australia, part (c) of the definition of overseas freight would apply. To calculate the deduction for overseas freight a Collector may have regard to essential sailing costs incurred under the most commercially viable conditions.

Such costs would include essential sailing expenditure necessarily incurred while the vessel is actually sailing between (and entering or leaving) those ports of call on the most commercially viable route. It would NOT include any in-port expenditure related to the vessel¡¦s period of stopover.

Where supported by sufficient reliable information, essential sailing costs would also include:

„h cost of maps, charts, pilot books, light/radio lists, sight reduction tables and similar printed navigational matter;

„h crew's hire/wages or forage allowance in lieu (NOTE: allowance is for minimum number of crew required to sail vessel of same class or kind, and will be based on expert advice where required);

„h victualling or food costs (NOT including alcoholic beverage/tobacco costs);

NOTE: a Collector may require expert advice from a suitable authority as to the average number of sailing days that it would take for a vessel of the same class or kind to sail from the place of export to Australia so as to determine an appropriate allowance for such victualling costs.

„h basic on-board medical supplies or first aid kit costs;

„h bunkering or fuel/oil supply costs;

„h official or commercial port, harbour, dock, mooring, sea canal, landing and similar costs; and

„h Customs/Immigration fees for visas, entry, clearance and the like.

The following are NOT regarded as essential sailing costs for Customs valuation purposes:

„h items that normally form part of a sea-going vessel's fittings or equipment such as ship's radio, radar equipment, compasses, signal flags, and any safety equipment such as life jackets, flare guns etc that would normally be included in the vessel's current Australian market value upon importation.

„h Claims for replacement costs for the vessel's fittings or equipment incurred during voyage from the place of export to Australia; and

„h any repairs, restorations, modifications or maintenance costs incurred in respect of the vessel or its equipment during the voyage from the place of export to Australia. Such costs would necessarily maintain or improve the vessel's condition and so their value would be reflected in the vessel's current Australian market value upon importation.

In all cases a Collector will ensure that the total of allowable costs as outlined above does not exceed the estimated costs of overseas freight and insurance. That is, overseas freight and insurance costs that would have been incurred if a vessel of the same class or kind had been shipped as cargo on another vessel via the most commercially viable route from the place of export to Australia.

Also, a Collector will not have regard to any costs for the above-mentioned sailing expenditure unless the importer can prove such costs by sufficient, reliable documentary evidence (S160 (1)).

[swagman]

...........is not something I'd suggest anyone attempts in Oz. As an Oz national I can guarantee the Oz public may be pretty laid back, but sad to say the officals tend not to be when taxes are avoided.
Best do it once but do it right.
JOHN

PS Talbot. Are you sure the duties etc also apply on emigration? When we went out in late 70's one could as an emigrant take certain prior owned UK possessions (cars and we also took a dinghy etc) and not be liable for import duties. fyi I never had the need to question a yacht at that time, and I appreciate rules may well have changed in the 25 years since.

[Talbot]

Certain that they apply on emigration as that was the question! My plan is to sail out via panama to the Perth area when I finish work in abt 6 years time (unless I win the lottery!). I can bring cash, and goods in (even if I sell them later for loads of money), but if I bring my residence with me it will cost me so much that I will probably have to sell the boat

I am not twitter and bisted about this - not ***** much