VAT advice please!

[Heath68]

Hi All,

I am looking at buying my first boat and have noticed some are VAT paid and most are not. I can find a number of posts in here that cover VAT but none specifica enough to give me comfort in my likely future VAT charges.

As a newbie I am totally green to this. My plan is to buy a boat and circumnavigate, and whilst i have preferable spots to begin from its not totally critical (that will just be my starting point).

So, can someone please explain, if the boat I am buying is EU flagged and VAT paid, does that mean its done? ie when I visit and cruise round the other countries (like the USA that might probably take a couple of years to get round) i won't get a VAT bill? or does it mean i won't get a VAT bill only when in the EU? If so then what when i got to say Australia?

Also if VAT is NOT paid, and lets say i want to bring it back to the UK for 6 months and fix her up before setting off, does that mean I have to pay the VAT in the UK? and if so is that payable on what I paid at UK rate? or what the boat's VAT would have been when it was new?

What I obviously don't want to do is find myself paying out VAT on a huge sum or on lots of sums as i travel from place to place.

Many thanks

[Pete7]

If you buy a yacht in the EU and it is VAT paid, then that's good, job done so long as you don't import into another country and stick to their rules on length to time you can stay as a johnny foreigner. Be aware if you sell it aboard and the new owner brings it back to the EU, he will have to pay VAT on entry to the EU. There is also a problem if you are out of the EU for more than 3 years, but possible ways around that.

If you buy a yacht in the EU which isn't VAT paid, then it's likely an ex charter yacht. Someone, preferably the company that you are buying it from will need to pay VAT at the point of sale.

What the charter companies do is buy and pay the VAT, then claim the VAT back through there VAT account. They pay VAT on all income earned and when they dispose of the asset they pay VAT on the second hand value. If they sell to someone in the EU then VAT has to be paid there and then or their VAT account will be diffy a payment, and the inspectors will be looking for this as it could be quite a large amount of money. If they sell to a non EU individual or overseas company then the sale doesn't attract VAT as its an export, assuming it leaves the EU straight away.

Now there is a problem. If you buy an EU VAT paid yacht and bring it to the UK, you have until the New Year to arrive in the UK. Brexit is going to make a real mess afterwards because you might and I say might, be charged VAT and import duty on arrival in UK after the New Year. However, since no one has worked out the details between the UK and the EU, we don't know what the deal will be.

If you buy an EU paid VAT yacht and keep it in the EU post New Year you should be okay, but keep tight hold of the paperwork and you must insure that VAT was paid. Equally if you buy ex VAT then make sure someone pays that VAT and you keep the paperwork.

Don't overlook UK registration which is a totally separate issue and you will need a UK address. Some light reading:

https://www.ukshipregister.co.uk/registration/leisure/

You should obtain an insurance quote before buying, ought not to be a problem but do check first for the area you want to sail in the short term.

That's probably clear as mud, but buying a yacht in the EU is a common occurrence that established brokers will be aware of.

Note, I am not an accountant, but did spend some time as a book keeper living in the EU. The advice is worth "what you paid for it" as the saying goes

[paul230]

This exactly the situation the situation that I find myself in. I to want to buy a boat and eventually circumnavigate and I have been looking in Europe for boats.
It is clear that it is a mine field and we must be aware of any pitfalls. I understand it as follows.
1. If you have a UK vat registered business and you buy the boat in the EU then you should not be charge vat , providing you leave with the boat asap. On return to the UK vat can become payable when you sell the boat. ?? this would normally been a business owned boat in the EU. not sure if you have to have a vat settlement invoice when you register the boat in UK

2. If you buy a privately owned boat in the EU deemed "vat paid " and an original copy of the initial invoice with the vat payment shown on it, then all is good.

Personally I will try to opt for a privately owned vat paid boat if I possibly can, as it would be horrendous to cruise into the EU in the future only to find at customs there is an outstanding 50,000.00 euros bill .

Also take into account the de-registration fee from its country of origin, and also bill of passage payment , these could be £3k-£4k could be different in all countries.

I am certainly no expert in this field , but I have worked all over Europe with my business , and one other thing to take into account is if you decide to pay the vat in the EU and try to claim it back when your back in the UK unless you get the return in before September it wont happen.
Obviously I have no idea whats going to happen after Jan 1st , but if possible I want mine before then.

If anyone can add to this, put me straight in anyway I would really appreciate the help

Cheers

Paul

[Pete7]

Originally Posted by paul230

1. If you have a UK vat registered business and you buy the boat in the EU then you should not be charge vat , providing you leave with the boat asap. On return to the UK vat can become payable when you sell the boat. ?? this would normally been a business owned boat in the EU. not sure if you have to have a vat settlement invoice when you register the boat in UK

If the business buys goods that are not VAT paid, then VAT will become liable at the point of purchase, vendors price + VAT probably. The new business then claims that VAT back. What I am not sure about is claiming back across EU boarders. Thankfully I don't think this situation fits H68s situation.

Originally Posted by paul230

2. If you buy a privately owned boat in the EU deemed "vat paid " and an original copy of the initial invoice with the vat payment shown on it, then all is good.

Personally I will try to opt for a privately owned vat paid boat if I possibly can, as it would be horrendous to cruise into the EU in the future only to find at customs there is an outstanding 50,000.00 euros bill .

I don't think there is a problem in buying a boat that is ex VAT, so long as someone pays the VAT and there is a nice paper trail. The Greeks will be quite happy to take 24% from the sale. You just have to make damn sure the boat is in the EU at the end of the year and there is more of that paper trail to prove it long term.

Originally Posted by paul230

I am certainly no expert in this field , but I have worked all over Europe with my business , and one other thing to take into account is if you decide to pay the vat in the EU and try to claim it back when your back in the UK unless you get the return in before September it wont happen.

If an EU citizen pays VAT on an EU yacht this summer and the yacht stays in the EU, there is no way the UK will refund the VAT.

Originally Posted by paul230

Obviously I have no idea whats going to happen after Jan 1st , but if possible I want mine before then.

If anyone can add to this, put me straight in anyway I would really appreciate the help, Cheers Paul

No reason not to buy a boat in Europe, just don't bring it home for a while and a bit "to be sure"

Part 3 Registration is £25 for 5 years and needs a UK address, no other paper work. The address on the application will draw lots of attention if its outside the UK, so use a UK address. Part 1 is a whole different ball game and costs quite a bit more.

Pete

[paul230]

Having worked in several countries of the EU the rules seem reasonably clear.

When we purchased materials in any EU country which were coming to the UK then we were not charged vat.
Likewise we never charged any vat on labour or any materials we took over from the UK.
As far as our accountants were concerned to claim vat on EU purchases, they can only be made once a year ( September ) and its not straight forward, any mistakes it gets rejected and wait until the next September. Most countries were fine but one has never paid ( luckily not were you would buy a boat ).

I think what is needed is to be very careful and make sure you have all of the paper work ( vat trail ).

Thanks for the input , all help much appreciated.

[Pete7]

Worth noting that on a EU VAT paid yacht, there may be more than one VAT invoice. I have about 15 invoices showing VAT for the various stage payments, plus the extras the first buyer chose. Originals at home, copies on the boat.

Pete

[Heath68]

Originally Posted by Pete7

If you buy a yacht in the EU and it is VAT paid, then that's good, job done so long as you don't import into another country and stick to their rules on length to time you can stay as a johnny foreigner. Be aware if you sell it aboard and the new owner brings it back to the EU, he will have to pay VAT on entry to the EU. There is also a problem if you are out of the EU for more than 3 years, but possible ways around that.

If you buy a yacht in the EU which isn't VAT paid, then it's likely an ex charter yacht. Someone, preferably the company that you are buying it from will need to pay VAT at the point of sale.

What the charter companies do is buy and pay the VAT, then claim the VAT back through there VAT account. They pay VAT on all income earned and when they dispose of the asset they pay VAT on the second hand value. If they sell to someone in the EU then VAT has to be paid there and then or their VAT account will be diffy a payment, and the inspectors will be looking for this as it could be quite a large amount of money. If they sell to a non EU individual or overseas company then the sale doesn't attract VAT as its an export, assuming it leaves the EU straight away.

Now there is a problem. If you buy an EU VAT paid yacht and bring it to the UK, you have until the New Year to arrive in the UK. Brexit is going to make a real mess afterwards because you might and I say might, be charged VAT and import duty on arrival in UK after the New Year. However, since no one has worked out the details between the UK and the EU, we don't know what the deal will be.

If you buy an EU paid VAT yacht and keep it in the EU post New Year you should be okay, but keep tight hold of the paperwork and you must insure that VAT was paid. Equally if you buy ex VAT then make sure someone pays that VAT and you keep the paperwork.

Don't overlook UK registration which is a totally separate issue and you will need a UK address. Some light reading:

https://www.ukshipregister.co.uk/registration/leisure/

You should obtain an insurance quote before buying, ought not to be a problem but do check first for the area you want to sail in the short term.

That's probably clear as mud, but buying a yacht in the EU is a common occurrence that established brokers will be aware of.

Note, I am not an accountant, but did spend some time as a book keeper living in the EU. The advice is worth "what you paid for it" as the saying goes [emoji2]

Thank you Pete, I saw you had answered quite comprehensively other questions so i am glad and grateful you have spent the time and effort going through it.

I intend to definitely be out of thr EU for more than 3 years... in basic terms what are the options?

Heath

[Heath68]

Originally Posted by paul230

This exactly the situation the situation that I find myself in. I to want to buy a boat and eventually circumnavigate and I have been looking in Europe for boats.
It is clear that it is a mine field and we must be aware of any pitfalls. I understand it as follows.
1. If you have a UK vat registered business and you buy the boat in the EU then you should not be charge vat , providing you leave with the boat asap. On return to the UK vat can become payable when you sell the boat. ?? this would normally been a business owned boat in the EU. not sure if you have to have a vat settlement invoice when you register the boat in UK

2. If you buy a privately owned boat in the EU deemed "vat paid " and an original copy of the initial invoice with the vat payment shown on it, then all is good.

Personally I will try to opt for a privately owned vat paid boat if I possibly can, as it would be horrendous to cruise into the EU in the future only to find at customs there is an outstanding 50,000.00 euros bill .

Also take into account the de-registration fee from its country of origin, and also bill of passage payment , these could be £3k-£4k could be different in all countries.

I am certainly no expert in this field , but I have worked all over Europe with my business , and one other thing to take into account is if you decide to pay the vat in the EU and try to claim it back when your back in the UK unless you get the return in before September it wont happen.
Obviously I have no idea whats going to happen after Jan 1st , but if possible I want mine before then.

If anyone can add to this, put me straight in anyway I would really appreciate the help

Cheers

Paul

I am not a business buying a boat so i will never get any advantages from being vat registered.

When you said "Also take into account the de-registration fee from its country of origin, and also bill of passage payment , these could be £3k-£4k could be different in all countries." Is this to do with the flag of registration? I am assuming then that you are saying that i would have to get it registered here where i live in the UK? I didnt know that. Not that it makes a lot of difference to me, i just didnt know about the cost of it.

So.. vat paid is good (as long as you have proof). Vat no paid is ok as long as you get proof that they pay it.?

Then i can cruise from one country to the next and not have to worry too much about being asked to stump up more vat.

Does it matter which country vat was due in? Like for example South Africa? I originally had this idea to sail slowly round (say 8-10 years) then probably moor it at a preferred country/location and then use it as a holiday home and fly there when i felt like it. Probably not doable is it?

Heath

[Heath68]

Originally Posted by Pete7

Worth noting that on a EU VAT paid yacht, there may be more than one VAT invoice. I have about 15 invoices showing VAT for the various stage payments, plus the extras the first buyer chose. Originals at home, copies on the boat.

Pete

I just thought... my wife is from Thailand, do you know if there would be any advantages to registering there as the "vat" there is only 7%

[boatman61]

Originally Posted by Heath68

I just thought... my wife is from Thailand, do you know if there would be any advantages to registering there as the "vat" there is only 7%

If the boat is already EU VAT paid that's pretty pointless if your staying in the EU for a while..
As for registration, VAT is irrelevant where that is concerned as one only becomes liable for VAT if you return to the country of registration.
For example I bought a boat in the USA and registered it UK SSR while still in the US.. I then sailed her back the following year but as it was also my only home VAT would only be liable if and when I sold it.
De-reg and registration is pretty cheap.. for a French boat I bought it cost nothing other than postage to remove and £35 for the SSR.
Travelling the world will cost nothing in boat taxes but will cost you in entry fees and harbour dues.
If it is an EU reg VAT paid boat your well set for a circumnavigation as the French are prolific territorially in the Carribe, Pacific and Indian oceans so you can plan on being in French territory every 18 to 24mths to stay EU valid and avoid VAT on return.

[Heath68]

Originally Posted by boatman61

If the boat is already EU VAT paid that's pretty pointless if your staying in the EU for a while..
As for registration, VAT is irrelevant where that is concerned as one only becomes liable for VAT if you return to the country of registration.
For example I bought a boat in the USA and registered it UK SSR while still in the US.. I then sailed her back the following year but as it was also my only home VAT would only be liable if and when I sold it.
De-reg and registration is pretty cheap.. for a French boat I bought it cost nothing other than postage to remove and £35 for the SSR.
Travelling the world will cost nothing in boat taxes but will cost you in entry fees and harbour dues.
If it is an EU reg VAT paid boat your well set for a circumnavigation as the French are prolific territorially in the Carribe, Pacific and Indian oceans so you can plan on being in French territory every 18 to 24mths to stay EU valid and avoid VAT on return.

SSR? I dont know what this stands for.
My worry was if i bought a second hand boat that VAT had NOT been paid on I may have to go in and out of territorial waters in different countries to save them charging me VAT. If i took 2 years to sail around the US coast I don't know the implications of having a non vat paid boat. A friend told me the best way is to buy a boat and just pay the VAT but that adds 20% to the cost of buying a boat and puts some of them beyond my means.