Tax Residency and VAT

[tanre]

A new predicament just came up. Currently living in Spain past my 90 days (90/180 Schengen) as I wait for some documents to arrive in order to then get married and apply for a residence card of Spain (the local cops/customs agreed this option was the best). The residence card will be a temporary one. There are 3 requirement that I need to meet in order for me to claim that I am a tax resident of Spain. Marriage being one but also staying in Spain for more than 183 days in a year. I will not be applying for Spanish citizenship. I am considering leaving Spain prior to 183 days as to show additional proof that I am not a tax resident of Spain. I would lose my residence card at that point until I reapply, but this assures that I wouldn’t have to pay VAT on the boat.

As a US passport holder who still has a valid driver’s license and address, I am attempting to purchase a boat, yet still claim the US as my tax residence. I still will be filing taxes on any dividends and interest I earn, but I am no longer employed. SO, my question is this: If I do NOT show my residence card from Spain to anyone, how will they ever have a reason to think I MAY be a tax residence of Spain.

So, please correct me if wrong:

I could buy the boat, pay VAT (due on sale), file for TIR so I can keep my boat in the EU for 18 months and get a refund of the VAT upon exporting the boat out of the EU (max 90 days for me as the Residence card does not allow for free travel throughout the EU…its only for Spain).

I imagine the only time the residence card concept would even come to light is if I checked into Spain and definitely if I either went to Spain after my 90 days in the Schengen areas or stayed in Spain longer than 90 days.

Does anyone have any insight into this?

Next question is if I bought a boat, paid the VAT and then got it refunded upon EU export, what happens if I later become a Spanish residence and use the boat in EU waters? Would I have to keep my tax residency for as long as I keep the boat?

Thanks again

[Orion Jim]

The negative ramifications of not having the professional guidance of a qualified local attorney/CPA to guide me through the process would be enough to make me happy to pay for their services. We all have different risk tolerances.

[Joh.Ghurt]

Originally Posted by tanre

I could buy the boat, pay VAT (due on sale), file for TIR so I can keep my boat in the EU for 18 months and get a refund of the VAT upon exporting the boat out of the EU (max 90 days for me as the Residence card does not allow for free travel throughout the EU…its only for Spain).

Better check if you really can do it this way. In my experience it always was:

1. buy the boat with VAT
2. export it in a reasonable amount of time (rather quickly)
3. claim back VAT
4. re-enter EU Waters
5. claim TIR
6. have 18 months time until you leave EU-waters again

As to the clever plans beating immigration rules and the time limits of Schengen visas, better not rely to much on "nobody will know" or "should". You ain't the first one trying such schemes.

[goboatingnow]

I know several people using dual passports to play the 18month vat concession but staying way longer then 90days. It’s illegal in general but as the guy says falling from 50 floors up , so far so good.

In your case

If you are a resident of Spain you will not be entitled to claim TIP legally. The vat rules do not use the term tax resident , what they say is you must be “ established “ pursued the customs union. This is not identical to tax residency.


You cannot reclaim vat on a secondhand sake if that is the case.

You have 90 days to export the vessel in which you can then claim vat back (note within that time , you must not use the boat significantly ** in the meantime )

If you subsequently become established inside the customs union. Vat is immediately due unless you are availing of Tor( transfer of residence )exemptions .

Getting specialist knowledgable advice on this area is very difficult.

————
**
Marine vesselOver 7.5metres in length3 months old or less, or sailed for 100 hours or less

[boatman61]

Seems to me you are trying to jump through a lot of different hoops that are not needed from what I read in your post.
You claim to want residency, which you then go on to say you are not bothered keeping, its not needed for marriage nor for VAT avoidance..
Just buy the boat, flag it outside the EU (US) and sail it to Tangiers, keep her there while you go back to get married then sail her back into the EU under the TIP agreement.
This is assuming I have interpreted your post correctly.
If you become resident of Spain the boat is fair game for VAT regardless of flag.. you could always try the Delaware LLC dodge used by many EU residents.

[tanre]

Thank you for the responses...I am looking into it more trying to find professionals and am erring on the side of caution (leaving prior to 183 days now).

[boatman61]

I don't see what the problem is with the 183 days..
I have been a resident of Portugal for nearly 15yrs now, the first five years it was Temporary Residency then it became 10yrs Permanent Residency renewed next March. I was out of the country for 10mths on two deliveries, 7 months Florida to Perth via S Pacific then stayed 3 months more in Oz helping prepping then delivering a boat from Perth to Tassie for a CF member..
Raised no questions or problems when arriving back in Portugal.
All travel is on my UK passport, no problems.. mind we were still EU members back then..
Not that I can see any difficulties as I just did Spain and back on my UK passport, only problems were Covid related.

[tanre]

The problem, from my understanding,is that with a temporary residence card, you become a tax resident after living in Spain for more than 183 days in a calendar year. Once you become a tax resident on Spain, VAT is due on a purchase on a boat that is bought within the EU (Croatia).

[letsgetsailing3]

It may well be that you're better off just paying the tax, if your intent is to keep the boat in Spain.


You can dance around the rules if you're there temporarily, but if you start forming a permanent association, tax authorities may sniff that out.

[Montanan]

And there is the added wrinkle of your new-to-you spouse having an ownership interest or spousal USE of your vessel.

If your spouse is an EU resident then when your spouse uses the boat [or has ownership to it] then VAT will be due based on your spouse's interest or use of the vessel in the EU customs territory.

It is not all about you, once you get married.



Simple solution, just pay the VAT and be done with it.

[tanre]

Intent is not to stay in Spain, or EU. Spouse will not have ownership interest, but will have USE of vessel. I think the USE case to prove VAT for a non Tax resident and non owner will be quite a legal battle if ever someone would attempt.

[Montanan]

Originally Posted by tanre

Intent is not to stay in Spain, or EU. Spouse will not have ownership interest, but will have USE of vessel. I think the USE case to prove VAT for a non Tax resident and non owner will be quite a legal battle if ever someone would attempt.

Intent is not a factor, as to the facts of the moment. If your spouse is an EU resident and uses the vessel in the EU, VAT and customs duties will be due. Private use rules.

Private use means recreational (non-commercial) use. This can also include the use of a company owned vessel for private recreational purposes.

Very easy to determine as you will need to provide a list of all the persons on the boat when entering the EU and their EU status / passports.

One pays EU taxes when residing in the EU.

[tanre]

Originally Posted by Montanan

Intent is not a factor, as to the facts of the moment. If your spouse is an EU resident and uses the vessel in the EU, VAT and customs duties will be due. Private use rules.

Private use means recreational (non-commercial) use. This can also include the use of a company owned vessel for private recreational purposes.

Very easy to determine as you will need to provide a list of all the persons on the boat when entering the EU and their EU status / passports.

One pays EU taxes when residing in the EU.

Im not sure how this will matter, but I am not educated. I have a USA passport, she a Spanish one. Different last names. All registered info on the boat is registered to me. How can anyone ask for VAT because she is a passenger on my boat? I will not be a tax resident of Spain and AM a tax resident of the USA.


It seems logically ridiculous that they ask for VAT from a non EU resident who is sole owner of a vessel regardless of who is on board.


We will not be presenting our marriage certificate and dont see how that is relevant.

[goboatingnow]

Originally Posted by boatman61

I don't see what the problem is with the 183 days..

I have been a resident of Portugal for nearly 15yrs now, the first five years it was Temporary Residency then it became 10yrs Permanent Residency renewed next March. I was out of the country for 10mths on two deliveries, 7 months Florida to Perth via S Pacific then stayed 3 months more in Oz helping prepping then delivering a boat from Perth to Tassie for a CF member..

Raised no questions or problems when arriving back in Portugal.

All travel is on my UK passport, no problems.. mind we were still EU members back then..

Not that I can see any difficulties as I just did Spain and back on my UK passport, only problems were Covid related.

You are a Portuguese resident hence you can leave and return to Portugal as many times as you like.

[goboatingnow]

Originally Posted by Montanan

Intent is not a factor, as to the facts of the moment. If your spouse is an EU resident and uses the vessel in the EU, VAT and customs duties will be due. Private use rules.

Private use means recreational (non-commercial) use. This can also include the use of a company owned vessel for private recreational purposes.

Very easy to determine as you will need to provide a list of all the persons on the boat when entering the EU and their EU status / passports.

One pays EU taxes when residing in the EU.

Correct