Prevent loss of VAT-paid status when purchasing outside of the EU

[schilke]

Hi there, pretty lost in the jungle of information out there but I suppose my question is quite straight forward and maybe someone can help:


I want to purchase a boat in the western Caribbean. The VAT of the vessel is paid (in the EU). The seller is an EU citizen and so am I. I want to return to the EU eventually next year. My understanding is that I will lose the VAT paid status when purchasing outside of the EU and then returning. Is there a legal (sneaky ) way to prevent this from happening?



It doesn't seem right to me that a boat which VAT has been paid already should have its VAT paid again. But not that this would matter to the EU bureaucracy



Note: It is not a feasible solution to sail to Martinique (EU) or alike.


Thanks a lot!

[Anders]

There is no legal way to do what you want to do. Buying in Martinique would make no difference either, all French overseas departments are excluded from the VAT directive.

[Danm1]

If you execute the sale in the EU, how would the authorities know where the boat is?

[Anders]

Originally Posted by Danm1

If you execute the sale in the EU, how would the authorities know where the boat is?

Would be fine until custom becomes suspicious and ask for proof. Catching smugglers is what they do for a living.

[schilke]

Originally Posted by Danm1

If you execute the sale in the EU, how would the authorities know where the boat is?

The sale is in fact executed in Caribbean. Would it be enough to just change the location on the contract and pretent it happened in EU?

[schilke]

I heard that this counts as "France". Is that not so?

[Zanshin]

I am not sure that having the boat physically in a French overseas Departement in the Caribbean would not work. While they aren't part of the European VAT, they are still technically in the EU. I sold my U.K. VAT paid boat in the BVI and lost the VAT status; and researched back then what I could have done differently. I think it is worth getting a professional legal opinion on this matter - saving that 19+% is worth it.

Also, from your user name, you might be from Germany. There's an added wrinkle that the Germans will occasionally enforce, that is that items that leave the Eurozone for more than a certain period of time lose their VAT paid status. Stories of Germans cruising the world for over 5 years and then having to re-pay VAT upon return to Germany abound on the German forums.

[grahamj]

Just rent the boat until you are back in the EU. Simple matter to deduct the rent from the purchase price.

[schilke]

That's actually a pretty good idea

[Anders]

I would consult a lawyer specialising in EU imports before trying that scam. Tax fraud is a criminal offence.

[Zanshin]

I like the rental option as well. It is logical, and legal - not a scam at all.

[Montanan]

Originally Posted by Danm1

If you execute the sale in the EU, how would the authorities know where the boat is?

Upon entry when clearing customs upon arrival to the first EU country.

If the vessel has been sold outside of the EU or has been outside of the EU for three years and returns it will be considered a new import and not a temporary export and return, even if it had previously been EU VAT paid status and there was no ownership change.

Export and reimportation of goods [a vessel is merely a good] routinely induce both of the privilege taxations of customs duties and VAT taxation. Enjoy your privilege of paying taxation.

[Montanan]

FYI:

https://oceanskies.com/yachts/yacht-...e%20EU%3B%20or

Snipets therefrom:

Is it possible to defer and/or reduce the EU VAT that I pay on a private yacht through a leasing or rental scheme?
If the yacht leasing and/or rental scheme being contemplated is a mechanism that is motivated primarily to defer and/or reduce the amount of VAT payable on the EU purchase or EU importation of private yacht we suggest tread with caution. Although such schemes differ considerably in methodology, the underlying commonality is the creation of an artificial structure to manipulate the use of an EU VAT registration in order to create a fiscal advantage that would not otherwise be available for a private yacht. Such schemes are not without risk and probably best avoided in the light of ever evolving EU caselaw and ongoing investigations by the EU Tax Commision.

Can a yacht be considered VAT paid because of its age?
Under EU Single Market transitional arrangements certain yachts that were in use as private pleasure craft at the time of the creation of the EU single market are ‘deemed’ VAT paid under the Age Related Relief Scheme. For a yacht to benefit from this scheme it must be evidenced that the yacht was in use as a pleasure craft on 1st January 1985 AND moored in the EU on the 31st December 1992. As Austria, Finland and Sweden joined the Single Market two years later, the relevant dates are ‘ in use before 1st January 1987 AND moored in the EU on 31st December 1994. The position for countries subsequently acceding to the EU appears less clear in that there appears to have been no formal transitional arrangements put in place for yachts to become 'deemed' VAT paid. In general this is an area where we strongly recommend that owners should contact the relevant EU member state for detailed guidance before assuming that their vessel can be considered 'deemed' VAT paid.

Can an EU VAT paid yacht lose its VAT paid status?
Yes - an EU VAT paid yacht can lose its VAT paid status. Examples of how a yacht might lose its VAT paid status include:

- The VAT paid is reclaimed (i.e. where the owner was VAT registered and able to reclaim the VAT they paid on vessel purchase); or

- The vessel is sold whilst physically located outside the VAT territory of the EU; or

- The vessel is physically located outside the EU for more than three consecutive years.

In addition, if a vessel is substantially improved or modified without EU VAT having been paid on the improvements or modifications it may no longer be considered as fully VAT paid. Customs duties and VAT will be due upon the improvements or modifications.

[Montanan]

Originally Posted by schilke

Hi there, pretty lost in the jungle of information out there but I suppose my question is quite straight forward and maybe someone can help:


I want to purchase a boat in the western Caribbean. The VAT of the vessel is paid (in the EU). The seller is an EU citizen and so am I. I want to return to the EU eventually next year. My understanding is that I will lose the VAT paid status when purchasing outside of the EU and then returning. Is there a legal (sneaky ) way to prevent this from happening?



It doesn't seem right to me that a boat which VAT has been paid already should have its VAT paid again. But not that this would matter to the EU bureaucracy



Note: It is not a feasible solution to sail to Martinique (EU) or alike.


Thanks a lot!

The western Caribbean zone is a region consisting of the Caribbean coasts of Central America and Colombia, from the Yucatán Peninsula in southern Mexico to the Caribbean region in northern Colombia, and the islands west of Jamaica are also included.

Which western Caribbean country are you likely to be purchasing the boat in?

You may need to first pay VAT to the country in which you are purchasing the boat, and the seller may need to pay import customs duties in order to it to be provide freedom of commerce and thus be allowed to sell the good [the boat] in the Caribbean nation.

And yeah, expect that taxation will arise upon arrival and importation in the EU.

Give each country their due. [taxation due]

[Montanan]

FYI as to whether a specific territory of an EU nation has EU VAT rules applied please reference the following link:

https://taxation-customs.ec.europa.e...territories_en

None of the French oversea territories / islands are part of the EU VAT zone.

For the EU territories not covered by EU VAT rules:

Which VAT applies to goods arriving from EU territories not covered by EU VAT rules?

Goods in free circulation coming from these territories are subject to the import VAT of the EU country they arrive in.
This is because EU countries are obliged to treat goods from these territories the same as goods coming from outside the EU.
(Articles 274-277 VAT DirectiveEN•••)

Which VAT applies to goods leaving to EU territories not covered by EU VAT rules?

Goods leaving to these these territories are subject to the export formalities and for VAT purposes are considered as transported outside the EU territory.
(Article 278-280 VAT DirectiveEN•••)

Which VAT rules apply in the territories not covered by EU rules?

In these territories, national rules apply: EU country may choose not to apply any VAT, to apply different VAT rates under different conditions than in the rest of its territory or to apply the same VAT rates as in the rest of its territory.