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Old 11-09-2020, 01:55   #1
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Brexit and VAT

Hi,

I am hoping that in the community there is a VAT/Brexit expert that can help me.

I am British resident and I am considering purchasing a new stock boat in November from a broker in the UK with plans to sail her to the Med to enjoy my retirement. The vessel I have in mind requires significant upgrades and it is unlikely I will be able to get her to the EU before the 31st December. I will be buying in the UK and paying UK VAT.

My question is that if I purchase in the UK before the 31st December and apply for an HMRC TL2 certificate (Union Goods Status), can I then sail her to the EU after the 31st December and enjoy indefinite free movement around the Med in EU territorial waters or will I need to get her into an EU country, say France, before we leave the EU.

I can't seem to find an answer on the web.

Any advice will be greatly appreciated.
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Old 11-09-2020, 02:51   #2
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Re: Brexit and VAT

I don't think that is going to work. The boat needs to be in EU on 31 Dec 21 as a minimum.

I think your only solution is to sail it to France over Christmas, stay there a while, get lots of receipts then come back to the UK temporarily.

a T2L won't hurt especially if you visit Portugal and Croatia, so I would apply for one anyway.

Do keep copies of your VAT receipts.

Why not buy the boat in France from the UK dealer and pay the VAT to France?

Note, whilst you might solve the VAT query, what happens to UK citizens is a separate issue and still being discussed with the EU.

Pete
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Old 11-09-2020, 03:09   #3
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Re: Brexit and VAT

To qualify as EU VAT paid you need to have paid VAT in the UK and moved the boat to a location in the EU by 31 Dec 2020. If your boat is in the UK on that date it will remain UK VAT paid. You will be able to sail in EU waters for up to 18 months after which you'll either have to pay EU VAT or take the boat into non-EU waters for at least a day or so making sure you have proof. As far as I know you can do that indefinitely, but of course there are logistic problems with that depending on where you keep your boat.

Our boat is on the western French Med and to take it out of the EU requires a round trip of about 3000nm. Not practical at all on a regular basis! After the end of this year to do what you plan you would probably be much better off buying a boat that is already in the EU.
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Old 11-09-2020, 03:44   #4
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Re: Brexit and VAT

Thanks Hoolie and that's how I read the rules. Therefore if I get the vessel to France before the 31st December I can enjoy free movement indefinitely in the EU.

It is unlikely that I will be able to complete the upgrades I require for the boat before the 31st December but I could get it into a French marina before we leave the EU.

Next question. Assume I did get the boat to France before the 31st December, could I then sail her back to the UK to complete the upgrades and then return to the EU without affecting the free movement status?

I am aware, post Brexit, that we with have third country status and would only be able to stay in the EU for 18 months, however, I understand that if you take her to a non EU country such as Turkey, on your return to the EU the 18 months clock starts again.

Thanks
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Old 11-09-2020, 03:59   #5
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Re: Brexit and VAT

Quote:
Originally Posted by Haddock1 View Post
Next question. Assume I did get the boat to France before the 31st December, could I then sail her back to the UK to complete the upgrades and then return to the EU without affecting the free movement status?
Yes, this was recently covered on the RYA website. However, if those upgrades cover anything more than maintenance or new equipment that would create a new VAT liability once back in the EU. All be it a rather remote chance of being discovered. It's the same as buying stuff in the Channel Islands at the moment.

Quote:
Originally Posted by Haddock1 View Post
I am aware, post Brexit, that we with have third country status and would only be able to stay in the EU for 18 months, however, I understand that if you take her to a non EU country such as Turkey, on your return to the EU the 18 months clock starts again. Thanks
Yes generally that is the rule for 3rd party countries. Be aware that some 3P (not us that I know of) counties have agreements with individual EU countries that allow a longer time scale.

However, we are still in negotiations with the EU and despite all the thumping of chests and leaked stories in the news, I doubt anyone outside the close nit group of negotiators and politicians has a clear view of were we might end up.
Perhaps additional longer term concessions, or a complete shambles and no deal
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Old 12-09-2020, 14:18   #6
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Re: Brexit and VAT

As Pete suggests, all the "rules" may become obsolete depending upon what is negotiated (or not). Today's paper says that Johnson is looking to pull the plug on 15 OCT. If there is no "deal" by then, you may need to rethink. Will Britons be allowed to stay in the EU for more than two weeks at a time? Will the EU charge their own VAT on British vessels? Will Britain need to negotiate separate visa agreements with each different EU country? Will Scotland leave the UK? But perhaps you voted for Brexit or neglected to vote back in 2016.
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Old 16-09-2020, 22:59   #7
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Re: Brexit and VAT

Thanks for your insight.

I am considering basing my boat in northern Cyprus (which is the Turkish area) and from discussion with the marina you can stay in the territory as long as you have a contract with them (sort of automatic visa).

Therefore I am less stressed in getting the boat to the EU before the 31st December as I can reset the 18 month third party rule before VAT becomes payable in the EU as I will winter annually in Cyprus effectively resetting the clock.

I intend to sail her from the UK to a marina in Spain in the spring next year then work my way across the Med and finish my cruise in Cyprus by November. So that the boat sorted (I think).

Now me and the crew (the wife and kids on holiday).

I intend to stay on the hook when cruising and only go to marinas for fuel or when absolutely necessary (maintenance, storm avoidance). There are no formalities (the paperwork you need to complete when staying in a marina) other than paying the bill when buying fuel.

Therefore..... if the 90/180 rule applies how would an EU country ever know when the clock starts and how long you have been in EU waters? Also how could they prove you have been in EU waters all the time you were sailing?

Are they sophisticated enough to look at credit card transactions at restaurants, shops etc and if so if you paid in cash they would have no trail and in reality would they be bothered?

The plan would then to be repeat this for a few years then head down to the Canary's for the Arc and then who knows?

Thoughts?

PS Hope they are not monitoring this thread!
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Old Yesterday, 00:58   #8
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Re: Brexit and VAT

I am in a similar situation, I'm in the process of looking for a boat, I live in Cyprus ( the EU republic side ) a UK citizen and I'm considering buying a Vat free boat and mooring it in the Turkish side of northern Cyprus ( non EU ). Now with the UK out of the EU will it be advantageous for me to buy a non VAT boat and leave it in Northern Cyprus?
All thoughts appreciated,
Neil.
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Old Yesterday, 02:04   #9
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Re: Brexit and VAT

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Originally Posted by CyprusNeil View Post
I am in a similar situation, I'm in the process of looking for a boat, I live in Cyprus ( the EU republic side ) a UK citizen and I'm considering buying a Vat free boat and mooring it in the Turkish side of northern Cyprus ( non EU ). Now with the UK out of the EU will it be advantageous for me to buy a non VAT boat and leave it in Northern Cyprus?
Hi Neil,
I was coming from it on the basis of paying VAT on the boat purchased in the UK, however, if the UK has third party rules which will apply after the 31st December, then you may take a boat to the EU for up to 18 months at which point if you want to stay longer you have to pay the VAT on the boat at the rate of the country you are staying regardless if VAT has already been paid (which is the position in my case). By basing myself in the winter in northern Cyprus (Turkey) then I am outside the EU and when I return the 18 month clock starts again (my understanding anyway).

To answer your question you will need to get your head around the VAT rules in Turkey and how they treat non VAT paid boats based in their country.

By the way I have been recommended by a friend who had their boat based in northern Cyprus at Karpaz Gate marina (KARPAZ GATE MARINA - North Cyprus Marina) which looks fab. Good luck.
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