Buying a boat EU VAT avoidance

[digitalnomad]

I have no intention of evading tax, just trying to understand how it works.

I know that the rich register and pay tax in Cyprus and Malta at lower rates to reduce tax, and there are systems in place to do this, even to pay 0 tax. But the costs only make sense on values above the 300k mark (so I was told).

[Shrew]

Originally Posted by digitalnomad

Do we have any tax avoidance specialists?

If a UK person buys a boat in Greece that is not VAT paid (from a commercial person that charters the boat for some weeks a year) for let's say 50k euros. The UK person has the right to not pay tax and start the 18 month clock.

If the UK person then sells (in less than 18 months) the boat to his wife, that has a EU passport for the sum of 1 euro. She then pays the tax on said 1 euro (say 24%). The boat would then in theory be VAT paid?

Then she sells the boat for let's say 50k euros back to her husband, what would be the outcome?

Originally Posted by digitalnomad

I have no intention of evading tax, just trying to understand how it works.

This isn't asking "how it works". This is asking how to circumvent paying taxes. You're asking a public forum how to circumvent paying VAT (Value Added Tax).

[Montanan]

Originally Posted by digitalnomad

I have no intention of evading tax, just trying to understand how it works.

I know that the rich register and pay tax in Cyprus and Malta at lower rates to reduce tax, and there are systems in place to do this, even to pay 0 tax. But the costs only make sense on values above the 300k mark (so I was told).

The rates do not differ by much. One can save a few percent and if it is convenient to make entry into the EU customs territory at such lower VAT rate countries then yes it can be a method of choice. But for most recreational boaters it is not realistic to voyage a long distance without entry just to minimize a small lowering of the privilege taxation.

All very similar to the Sales or Use taxation of most States of the USA, albeit several times higher percentage imposed with VAT [say 6 to 8 percent in the States versus 20+% in the EU or UK, and there be States that have no Sales or Use taxation [no Privilege taxations].

Reference the graphic that indicates the standard VAT rates for each country.

If you or your wife reside in the EU then you will need to pay VAT on the good upon first importation, if neither of you reside in the EU then you can utilize the temporary admission status and have the 18 month period of deferred customs duty and VAT which can be discharged by taking the good [your vessel and its accoutrements] to a foreign place or port and then return to the EU under yet another temporary admission. Note that merely voyaging to international waters is NOT taking a good to a foreign place or port and will not discharge the good from its temporary admission / import status.

All the best.

[digitalnomad]

Originally Posted by Shrew

This isn't asking "how it works". This is asking how to circumvent paying taxes. You're asking a public forum how to circumvent paying VAT (Value Added Tax).

I am asking how does it work and how does a buyer avoid falling into a trap of buying a boat with a VAT receipt which may or may not be lagit.

To circumvent paying VAT has been well documented before, and there are systmes in place to do this. But the potential tricks that people might apply to the process and hense endanger potential buyers has not been investigated as far as I am aware. This is something which should be openly discussed in a public forum so that we all become more informed. Share the knowledge and share the love

[Montanan]

VAT on boats has always been an issue.

In many cases the original VAT receipt issued may not show a VAT number or invoice number or may have some other sort of error or omission, particularly when the yacht was manufactured or distributed by a small company. And the company in question is now out of business or no longer holds any records (they are only obliged to keep them for 7 years). In other cases the owner has no VAT receipt and probably bought the yacht without one. Alternatively, he may have a copy which is accepted by the UK Revenue and Customs Authority but which may not be accepted by a finance house.

There are also swathes of other yachts which were manufactured prior to 1985 and if in the EU on 31 December 1993 at midnight are exempt of VAT under the terms of the relevant directive. Finding proof of their location all that time ago is now very, very difficult. The ports where they were moored no longer have records and over the mists of time, a lot of owners have lost whatever proof they ever had.

Boats being used in the EU should have VAT-paid status unless they are just visiting. The original VAT invoice, from when the boat was either first bought within the EU or when it was imported from outside the EU, is usually sufficient evidence. A boat that is VAT-paid but is sold outside the EU loses its VAT-paid status and therefore VAT must be paid if the boat is brought back into the EU.

The above applies to all boats built or brought into the EU since 1 January 1985, or on the joining dates of States that have become EU Members since then. Boats already in EU Member States and territories on 1 January 1985 pre-date the requirement.

The evidence of VAT-paid status will generally be an invoice, showing the VAT element and a VAT number, or similar document, such as a completion statement. Boats sold between companies should show the VAT element on the invoice. Some EU states (notably Holland) ask for the original invoice, but otherwise a certified copy kept on board should be adequate. Keep the original and a couple of certified copies safely elsewhere. It is vital to pass this information on when the boat is sold, as it may be requested by Customs officers in either the UK or elsewhere in the EU.

In the case of home-builds and fit-outs, copies of all the major invoices should be kept and passed to subsequent owners to show VAT-paid status. Customs Notice 8 sets out further details.

Please note that HMRC do not have copies of individual VAT invoices from boat builders, dealers or other boat sales transactions.

Value Added Tax was introduced in the United Kingdom in 1972, as a tax on the supply of services, and on the sale or import of goods. Any yachts built in or imported into this country for private use since that date should be VAT paid and ideally a seller of a yacht should be in a possession to provide the buyer with the yachts original VAT receipt, or at least a copy certified by the builder or original supplier as being a true copy. Unless the seller is able to produce proof that VAT on the yacht has been paid at sometime, either in the UK or elsewhere in the EC, the buyer should be ready to face a potential VAT assessment on the current value of the yacht at any time an EC Customs official carries out a spot check.

Until the end of 1992 it was possible for a yacht built in the UK, for a UK resident, to be exported immediately upon completion without payment of VAT, for use overseas on a tax free basis. The International Convention on Temporary Importation provided that all convention countries should permit the free use of recreational equipment and "means of transport" for touristic purposes for a minimum of 6 months in any one year. This rule was interpreted more liberally than the minimum in most European countries including France, Spain and Italy, and over the years tens of thousands of yachts built for northern European owners enjoyed tax free status in Mediterranean marinas.

The completion of the Single Financial market on 1st January 1993 saw the end of concessions of this sort between EC states. Apart from a few months grace for yachts already enjoying tax free status, any yacht in any EC State, owned by a national of any EC State for his private use, must be VAT paid. In theory it should make little difference which State the VAT is paid in, since rates are intended to be roughly equivalent. In practice however, experience has shown that some States tend to be considerably more flexible in agreeing modest valuations with owners, and allowing payments to be spread over an extended period. The importer of a yacht from outside the EC will therefore find to his advantage to import to another EC State where a valuation and payment terms have been agreed in advance (in writing) before bringing it into this country. Once a yacht has been imported into any EC State and VAT paid, in theory no further VAT liability can arise within the EC. The completion of the Single Financial market on 1st of January 1993 also saw the introduction of an amnesty for any yacht in the EC built on or before 31st December 1984.

[Montanan]

FYI: VAT documentation.

A certified copy is a copy (often a photocopy) of a primary document that has on it an endorsement or certificate that it is a true copy of the primary document. It does not certify that the primary document is genuine, only that it is a true copy of the primary document.

A certified copy is often used in English-speaking common law countries as a convenient way of providing a copy of documents. It is usually inexpensive to obtain. A certified copy may be required for official government or court purposes and for commercial purposes. It avoids the owner of important documents (especially identity documents) giving up possession of those documents which might mean a risk of their loss or damage.

It has some similarities to a notarized copy, which is a form used in some countries, and particularly in some States in the USA. A notarized copy is signed by a notary public (not to be confused with a notary in a civil law country).

The certified copy is signed by a person nominated by the person or agency asking for it. Typically, the person is referred to as an authorised person. The person who is authorised to sign the certificate will vary between countries. Sometimes a person is authorised by legislation to do so (for example a court clerk, solicitor, or notary public), but this is not always so.

A copy of a primary document that is to be used internationally may have to be in the form of a notarized copy rather than a certified copy. A notarized copy may be more expensive to obtain. A copy of a document to be used internationally may also have to comply with special rules - Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents.

If the primary document has to be translated, an additional certificate is usually required. Typically, the document must be translated professionally and have the professional's certificate of accuracy attached to the translation together with a copy of the primary document. Then, the primary document, the translation, and the certificate of accuracy are photocopied in the form of a certified copy.


Also: Apostille Convention

https://en.wikipedia.org/wiki/Apostille_Convention

The Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, the Apostille Convention, or the Apostille Treaty, is an international treaty drafted by the Hague Conference on Private International Law. It specifies the modalities through which a document issued in one of the signatory countries can be certified for legal purposes in all the other signatory states. A certification under the terms of the convention is called an apostille (from Latin post illa and then French: a marginal note) or Hague apostille.[2] It is an international certification comparable to a notarisation in domestic law, and normally supplements a local notarisation of the document. If the convention applies between two countries, such an apostille is sufficient to certify a document's validity, and removes the need for double-certification, by the originating country and then by the receiving country.

[svtickles]

So to clarify the obvious, if I buy a charter vessel in Greece that is not VAT paid, I - as EU resident - must pay VAT on the purchase?

There's no way around this?

What if I'm going on a circumnavigation and not going to be a resident in the EU anymore? I suspect we will sell the boat on the way west rather than actually complete the journey.

Could I use my papers as resident in a non-EU country? Say, the U.S. (lived there 20 yrs ago) or somewhere else (dual citizenship).

What if I create a company and buy the boat as an asset? Does it have to be registered/"coded" for charter? I mean, it already is now (in charter in Greece). Only issue is - I don't have a professional skipper license - so, correct me if I'm wrong, I cannot offer charters (that's not the plan)?

23% VAT on 200k would be a good incentive if it could be saved somehow. Although, I'm also looking at VAT paid vessels on the market.

[Joh.Ghurt]

Originally Posted by svtickles

So to clarify the obvious, if I buy a charter vessel in Greece that is not VAT paid, I - as EU resident - must pay VAT on the purchase?

Yes

Originally Posted by svtickles

There's no way around this?

Not without changing at least one parameter in the equation:

• you don't buy
• not a boat without tax
• not in Greece
• not following law

Originally Posted by svtickles

What if I'm going on a circumnavigation and not going to be a resident in the EU anymore?

If you lose residency before you buy, you're just a foreigner. You can export the boat. If you give up residency after you buy, you're out of luck.

Originally Posted by svtickles

Could I use my papers as resident in a non-EU country? Say, the U.S. (lived there 20 yrs ago) or somewhere else (dual citizenship).

Citizenship is of no importance. Residency is. If you claim to live in USA with an US address, you might fool some people, but if you are also resident in an EU country, the law doesn't care that some people were fooled.

Originally Posted by svtickles

What if I create a company and buy the boat as an asset? Does it have to be registered/"coded" for charter? I mean, it already is now (in charter in Greece). Only issue is - I don't have a professional skipper license - so, correct me if I'm wrong, I cannot offer charters (that's not the plan)?

No idea, but be aware that the taxmen are suspicious of companies with just has one boat as asset. For more details best look in up the topic on sites about superyacht management. They have some very interesting articles about flag of convenience and management companies owning the yacht. And for them it isn't about 40000, it's millions.

As an alternative look in Turkey for a boat without tax, return residency before bringing the boat for 90 days to EU-waters and then sail around the world.

[Montanan]

Originally Posted by svtickles

So to clarify the obvious, if I buy a charter vessel in Greece that is not VAT paid, I - as EU resident - must pay VAT on the purchase?

There's no way around this?

What if I'm going on a circumnavigation and not going to be a resident in the EU anymore? I suspect we will sell the boat on the way west rather than actually complete the journey.

Could I use my papers as resident in a non-EU country? Say, the U.S. (lived there 20 yrs ago) or somewhere else (dual citizenship).

What if I create a company and buy the boat as an asset? Does it have to be registered/"coded" for charter? I mean, it already is now (in charter in Greece). Only issue is - I don't have a professional skipper license - so, correct me if I'm wrong, I cannot offer charters (that's not the plan)?

23% VAT on 200k would be a good incentive if it could be saved somehow. Although, I'm also looking at VAT paid vessels on the market.

If you purchase a good with intent to export, e.g. to remove it from the customs territory [for personal use, and / or for an export resell] then you likely can claw back the VAT and duty that was paid upon purchase. You will need to apply for such at the place of export and there likely is a limited period of time to accomplish the exportation. And I suspect that there is limited ability to make use of the good. The boat likely would need to be put up on the hard in a bonded arrangement where the owner or crew does not have access to such, until it is splashed for prompt transport out of the customs territory. That is how a vessel is able to obtain up to a six month extension of the 18 month temporary admission when owned by a non-resident. Reference: https://www.gov.uk/government/public...u-member-state


Again this is just standard financial transactions. There is nothing unique about a vessel, it is a good that is purchase or imported and exported.

The VAT is a tax applied to the privilege of making a purchase. It shares some similarity to the Sales or Use taxation of the USA, albeit several times higher in percentage than what the States charge; and there are a number of States that do not have any Sales or Use taxation [Montana being one of the None Such Tax States, , which makes the cost of goods and services considerably less expensive.]

Proof of residency and non-residency is a matter of law. In most countries fiscal residency [tax residency] is based on living in a country for 183 days in a calendar year. Living somewhere else 20 years ago, ah, that would be a stretch to now make for continued residency, just saying. Heck I lived in England 60 years ago for four years, but that does not make me a British resident today. But remain fond of the UK and like my return visitations. Struggle with the language barrier though. The Yanks Brexited coming on 244 years ago, with the most famous break up letter ever written. The Dear George letter.

The applying of VAT is not based on citizenship, it is based on residency. Taxing the privilege of residing in a country. Is 23% a high price for the privilege????

[Montanan]

Originally Posted by svtickles

So to clarify the obvious, if I buy a charter vessel in Greece that is not VAT paid, I - as EU resident - must pay VAT on the purchase?

There's no way around this?

What if I'm going on a circumnavigation and not going to be a resident in the EU anymore? I suspect we will sell the boat on the way west rather than actually complete the journey.

Could I use my papers as resident in a non-EU country? Say, the U.S. (lived there 20 yrs ago) or somewhere else (dual citizenship).

What if I create a company and buy the boat as an asset? Does it have to be registered/"coded" for charter? I mean, it already is now (in charter in Greece). Only issue is - I don't have a professional skipper license - so, correct me if I'm wrong, I cannot offer charters (that's not the plan)?

23% VAT on 200k would be a good incentive if it could be saved somehow. Although, I'm also looking at VAT paid vessels on the market.

Reference: VAT problems when chartering in the EU
https://www.boatinternational.com/ya...in-the-eu--457

[jms28]

Just came across this thread by coincidence and hope I can find some guidance here

The problem:

- I am very interested in buying an old boat from a family member (a lot of emotional value)
- Said boat was orig. purchased in the early 90s in a then non-EU country (by now EU) under a company and VAT was NOT paid
- Boat has been in Greece since in the 90s, the VAT question apparently never came up
- Registry document still in company name (non-existent by now), although always declared and paid for as private leisure boat
- I am a EU resident/ citizen

Questions:

- What would you suggest is the best course of action here?
- Boat is not in the best shape, but of course the risk is that Greek authorities will undertake the valuation themselves and put an inflated price tag on it that I can't afford. But stepping back is not an option by that point anymore I guess, since we started the process and either myself or the family member will be in trouble
- Do I rightfully assume that gifting or inheritance will NOT make a difference re VAT due, since value not the price is decisive?
- Anyone experience with a similar scenario (ideally in Greece), perhaps even with a good contact that could guide through the process (without ripping me off)?

Really anxious about this and any help would be greatly G.R.E.A.T.L.Y. appreciated

[Montanan]

First there may be assessment of a transfer tax.
The majority of European countries covered in today’s map currently levy estate, inheritance, or gift taxes. These countries are Belgium, Bulgaria, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Lithuania, Luxembourg, the Netherlands, Poland, Portugal, Slovenia, Spain, Switzerland, Turkey, and the United Kingdom.

Estate tax is levied on the property of the deceased and is paid by the estate itself. Inheritance taxes, in contrast, are only levied on the value of assets transferred and are paid by the heirs. Gift taxes are levied when property is transferred by a living individual.

Countries typically charge only estate or inheritance tax. However, estates can be double-taxed if they fall under two jurisdictions that apply different taxes. For this reason, European Union member states have installed mechanisms intended to prevent or relieve double-taxation if such a situation occurs.

Second as an EU resident, items that you own that are located within the EU are subject to VAT.

I believe the standard VAT in Greece is 24%

Of issue is where title will be transferred to you as the country where the boat ownership by an EU resident first arrives in the EU is where the tax should be assessed and paid.

Of keen issue is why the boat that has resided in the EU is not presently of VAT paid status. Seemingly VAT should have already been paid by the owner unless there was some specific exemption. The present owner may need to pay VAT prior to a title transfer so as to allow for freedom of commerce of the vessel within the EU, that is to say, a good cannot be sold or transferred in the EU that has not had the proper taxes paid. Value added tax (VAT) was implemented in to the Greek taxation system in 1987 in order to replace turnover tax and other indirect taxes.

Good luck and bon voyages with your new boat.

[Montanan]

Originally Posted by digitalnomad

Do we have any tax avoidance specialists?

If a UK person buys a boat in Greece that is not VAT paid (from a commercial person that charters the boat for some weeks a year) for let's say 50k euros. The UK person has the right to not pay tax and start the 18 month clock.

If the UK person then sells (in less than 18 months) the boat to his wife, that has a EU passport for the sum of 1 euro. She then pays the tax on said 1 euro (say 24%). The boat would then in theory be VAT paid?

In order to transfer ownership the boat will need to have freedom of commerce, which requires that it have paid customs and VAT if due. One can only have temporary admission status if one exports the good to a foreign place or port before the period of temporary admission [and deferred import taxation]. You can't sell a boat or any other good that is in temporary admission status, nor can you declare for temporary admission status if it your intent to sell the good during the statutory period of requested temporary admission. If you try to alter the temporary admission status do expect to be required to pay penalty and back interest from the date of admission. One is not allowed to scam the system.

Does your wife have EU residency or just EU citizenship? If either of you have EU residency then there is no temporary admission status available and taxation will be due upon purchase or entry of the boat to the EU.

Then she sells the boat for let's say 50k euros back to her husband, what would be the outcome?
Seriously you do realize that both of you could end up in
prison, and not sharing the same cell. Just pay the privilege taxes and be done with it.

By the way, you can expect to pay UK import customs duty and VAT on the boat if you import it from the EU to the UK.

[Montanan]

Originally Posted by Montanan

First there may be assessment of a transfer tax.
The majority of European countries covered in today’s map currently levy estate, inheritance, or gift taxes. These countries are Belgium, Bulgaria, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Lithuania, Luxembourg, the Netherlands, Poland, Portugal, Slovenia, Spain, Switzerland, Turkey, and the United Kingdom.

Estate tax is levied on the property of the deceased and is paid by the estate itself. Inheritance taxes, in contrast, are only levied on the value of assets transferred and are paid by the heirs. Gift taxes are levied when property is transferred by a living individual.

Countries typically charge only estate or inheritance tax. However, estates can be double-taxed if they fall under two jurisdictions that apply different taxes. For this reason, European Union member states have installed mechanisms intended to prevent or relieve double-taxation if such a situation occurs.

Second as an EU resident, items that you own that are located within the EU are subject to VAT.

I believe the standard VAT in Greece is 24%

Of issue is where title will be transferred to you as the country where the boat ownership by an EU resident first arrives in the EU is where the tax should be assessed and paid.

Of keen issue is why the boat that has resided in the EU is not presently of VAT paid status. Seemingly VAT should have already been paid by the owner unless there was some specific exemption. The present owner may need to pay VAT prior to a title transfer so as to allow for freedom of commerce of the vessel within the EU, that is to say, a good cannot be sold or transferred in the EU that has not had the proper taxes paid. Value added tax (VAT) was implemented in to the Greek taxation system in 1987 in order to replace turnover tax and other indirect taxes.

Good luck and bon voyages with your new boat.

FYI, if VAT should have been paid by the owner, it will be assessed at the value upon whence the VAT would have been due, not its present value. And a penalty and interest may be assessed for the late payment.