How skip VAT?

[pier]

Hallo everybody,
I've been reading the forum for some time but this is my first question.
I'm going to buy a new cruising cat for delivery 2011. VAT is a big amount of money that I would save for cruising around when will retire.
As italian citizen, buying the boat in south africa and not sailing in EU waters I should be not requested to pay any VAT.
What will happens when I will cruise in south pacific, australia and new zeland? Is there any limit for the lenght of stay in this area without pay any VAT (for example, what about french polynesia)?
Any advice where to register the boat?
Sorry for my english since I speak italian and thanks for your help, ciao, Pier

[hellosailor]

Pier, there are limits for the length of time that anyone can stay in any jurisdiction--regardless of VAT. You will find that your options on registering the boat will depend on your own nationality, so it is probably Italian-flagged or nothing, unless you place it in a corporate ownership, which brings other complications. And if it is Italian-flagged, you may have to pay VAT regardless of where it is--that's something you'd need to check with your own government to be sure.

It doesn't matter what your nationality is or how the boat is registered, every country places visa limits on the length of time that you can stay, and further limits on how long the boat can stay. And these limits will change from time to time, so you can't really guess now about what might apply by the time you go cruising. You can only look at the regulations for each country that you plan to visit, one by one, to see what they want now.

Your English is much better than my Italian. < G >

[Pblais]

As noted sooner or later the boat has to have a title registration else be considered stolen. You can be expected to prove ownership a ny place or any time by any authority.

As a person owning a boat you could have it titled in Italy or no place. This is where the tax collector will be waiting. One interesting thing is here in Virginia (the US has no boat sales tax only the states do), the maximum tax is $2000 US so long as you pay it voluntarily at time of purchase. Otherwise the tax is 5.5% with no limit and possible fines. It applies to residents and has nothing to with title registration. The key is title regitration means nothing what so ever as far as taxes. So for VAT because you are Italian you won't be allowed to register the boat in South Africa, but if you register it in Italy the tax collector will catch you. It's how they set it up so you could not beat the VAT.

[TaoJones]

Welcome to the Forum, Pier. Glad you're here.

Given that evading taxes in Italy is almost a sacred duty, and has been elevated to an art form, I would think you should be able to "ask around." If you know any other Italians interested in sailing and cruising their own vessel, chances are pretty good that they will have figured out all of the angles when it comes to keeping their tax Euros in the curising kitty.

Have you looked into registering and home-porting whatever vessel you buy in Croatia? There used to be huge savings possible by doing so. You might check with Henley & Partners in Zurich.

Henley & Partners - Exclusive private residence solutions, trust and corporate services, tax planning, offshore trust, offshore residence, offshore, residence, trust, tax, planning, corporate, services, companies, second passports, second citizenship

They have a reputation for professionalism, and can offer the most up-to-date, reliable information in this regard.

TaoJones

[Pblais]

Just to be clear you need a company local to the country of choice to register a vessel in a country not your own. This is a fundamental international law. It basically sets up a way where the company owns the boat and not you so it can be registered there legally. There are companies that do this for commercial boats but there are of course fees for the service. On an oil tanker the money is huge. Most of the scams for beating the taxes don't really work for recreational boats but some how you end up paying someone to help you beat the tax and of course they take the money gladly. Given you are breaking the law it becomes an easy practice to leave you high and still owing the tax. One crook can't convict the other without confessing their own crime first.

As a general forum policy we are not set up to help you violate your local tax laws or any other laws. We also will delete any postings that pretend to support such activities though most will probably find you worse off than just paying the tax now or perhaps latter when you have to sell the boat and prove clear title.

[rsn48]

Paul, until you've walked a mile in the other guys shoes..... In Canada we have VAT except it is called GST.

Total taxes on a $150,000 new boat in Canada would be (I really should say BC) $19,500. 6 % is the GST (VAT) here, so the GST portion of the $19,500 would be $9,000, the remainder is our provincial tax (State tax). The total tax is 13% and I can assure you that after you have shelled that out over and over again, it becomes fair game to reduce the taxes. It isn't only Italy that has taken VAT evasion to a high art form. I can guarantee you when I purchase my next boat, I won't be paying out "all" the taxes due on it. We as a nation are being ripped off on taxes in Canada.

So the average Canadian would understand some one trying to not necessarily avoid, but reduce the tax bill. Certain tax or like wise charges being reduced become a way of life in many countries. Probably the longest standing Canadian "tax" evasion is paying duty at the border on goods acquired in the states. I think its fair to say that 3/4's of Canadians have lied crossing the border stating the value of their goods.

As some of you know I was in Whitehorse, Yukon this past summer. I went with two friends to Skagway; they bought all kinds of goodies (I didn't, if there is a tourist trap in the States it has to be Skagway). My one friend is a Roman Catholic Seminarian; he was packing about $500 in goods over the border back to Canada. The Canadian customs agent came on and asked if any one had more than $50 in value they were bringing back. I kid you not, not hand went up on our tour bus; it was all I could do to stop laughing. She knew we were all lying but chose to let it go.

Part of the Canadian way of life is lying at the border about value of items brought back.

Some Americans make money from Canadians. I told this story before here, but it illustrates best what I mean. I owned a small travel trailor and it needed new tires; I went to a Les Schwab somewhere around Bellingham (American town close to the Canadian border). After the new tires were installed, the manager came over and asked if I was going to use the dirt pile out back. I didn't know what he was talking about, he said: "You don't want to cross the border with shiny new tires do you?"

[David_Old_Jersey]

Originally Posted by Pblais

Just to be clear you need a company local to the country of choice to register a vessel in a country not your own. This is a fundamental international law. It basically sets up a way where the company owns the boat and not you so it can be registered there legally. There are companies that do this for commercial boats but there are of course fees for the service. On an oil tanker the money is huge.

Yup. and for leisure boats, probably why I have never done an oil tanker

Most of the scams for beating the taxes don't really work for recreational boats but some how you end up paying someone to help you beat the tax and of course they take the money gladly. Given you are breaking the law it becomes an easy practice to leave you high and still owing the tax. One crook can't convict the other without confessing their own crime first.

This depends on what taxes you are trying to evade, sorry, I mean "mitigate" ,........

Whilst of course (like any sort of business) their are scamsters around in the offshore world, but not everyone is. Honest ......and it is quite possible to legally use offshore or other "onshore" countries to plan for taxes. Very much depends on personal circumstances and what is being tried to achieve. (but broadly speaking if yer US, yer fooked - which may explain the reaction to this osrt of thinking / planning from the US view point??).

Of course folk may well use money salted away to buy expensive toys registered in the names of offshore or onshore companies for use outside their own country......which may or may not have advantages when it comes to tax. Naughty people

As a general forum policy we are not set up to help you violate your local tax laws or any other laws. We also will delete any postings that pretend to support such activities though most will probably find you worse off than just paying the tax now or perhaps latter when you have to sell the boat and prove clear title.

Obviously your forum and your rules - but just to point out that not everything when it comes to avoiding taxes is illegal or bad and when involving differing countries whose tax rules can often conflict it can be quite useful to hold assets somewhere "tax neutral" as a way of trying to deal with only one set of tax rules at a time. of course simply not telling a country where you are going what you have also works well and sometimes quite legally.

Although I will admit that often tax planning (ok) can look a lot like tax evasion (bad).

[hellosailor]

David, our own IRS are the first to tell the suckers, ergh, I mean, respected citizens and taxpayers, that tax avoidance is entirely legal. Tax evasion is not. And they'll even help us with the first, sometimes.

Of course they also follow the saying "Give 'em enough rope and they'll hang themselves." < G >

[David_Old_Jersey]

"Those who have nothing to fear have nothing to hide"

[TaoJones]

Originally Posted by David_Old_Jersey

it is quite possible to legally use offshore or other "onshore" countries to plan for taxes. Very much depends on personal circumstances and what is being tried to achieve. (but broadly speaking if yer US, yer fooked - which may explain the reaction to this sort of thinking / planning from the US view point??).

~ ~ ~ ~ ~

Obviously your forum and your rules - but just to point out that not everything when it comes to avoiding taxes is illegal or bad . . .

~ ~ ~ ~ ~

Although I will admit that often tax planning (ok) can look a lot like tax evasion (bad).

Your observation is perfectly valid, DOJ. Many, many Americans have swallowed, hook, line and sinker, the propaganda that paying tax is patriotic, and that, somehow, paying tax in excess of one's legal obligation is even more patriotic.

Of course, there are also many Americans who don't see it that way at all. As Justice Learned Hand of the United States Supreme Court so aptly put it, "There is nothing sinister in so arranging one's affairs as to keep taxes as low as possible." Thus the tug-of-war between tax avoidance and tax evasion, and there is no bright line between them.

It is in that dense, gray area where a tax strategy is neither clearly avoidance nor evasion, that an industry has grown to offer guidance to both the meek and the bold. Not unlike using the various tax structures in the different countries of Europe, Americans can shop the various tax structures in the different states.

Some states have designed their tax laws to give them an advantage over other states: Delaware for corporations; South Dakota for sales tax; several states have no income tax. The use of offshore entities in tax-advantaged countries is a perfectly legal use of the available options to avoid paying more tax than one might pay otherwise, but many politicians can't resist holding the practice up to public scorn and opprobrium.

There are many perfectly legal avenues to minimize the tax bite that most taxpayers don't even know exist, and finding the tax professional who can enlighten a timid taxpayer is important. Of course, as in finding a competent, honest diesel mechanic, or yacht broker, or even a babysitter, a consumer possessing a basic education in the essentials going in, stands a much better chance of finding the diamond in a pile of coal.

TaoJones

[DeepFrz]

Pier;
Interestingly not one suggestion so far that you consult a "Tax Consultant" in Italy. It could be worth your while to do that so that you may be able to minimize the tax paid, if not entirely eliminate it, and stay legal.

[David_Old_Jersey]

Originally Posted by DeepFrz

Pier;
Interestingly not one suggestion so far that you consult a "Tax Consultant" in Italy. It could be worth your while to do that so that you may be able to minimize the tax paid, if not entirely eliminate it, and stay legal.

Ooops, I kinda forgot about OP

[TaoJones]

Originally Posted by DeepFrz

Interestingly not one suggestion so far that you consult a "Tax Consultant" in Italy.

I never suggested that Pier locate a tax consultant in Italy for the simple reason that the best such professionals in Europe are usually to be found in Switzerland, and the best in Switzerland are to be found in Zurich. There may well be equally competent tax professionals in Italy, but I wouldn't be at all surprised to learn that the "gnomes of Zurich," in JFK's famous words, have already found them and hired them.

I reiterate, though, that it is in a consumer's best interest to educate him or her self before seeking the services of any professional. Only an informed consumer has a fair chance to know good advice when he hears it.

TaoJones

[David_Old_Jersey]

Originally Posted by pier

Hallo everybody,
I've been reading the forum for some time but this is my first question.
I'm going to buy a new cruising cat for delivery 2011. VAT is a big amount of money that I would save for cruising around when will retire.
As italian citizen, buying the boat in south africa and not sailing in EU waters I should be not requested to pay any VAT.

I dunno whether South Africa has some form of Vat or GST, but if so it should be quite normal to buy the boat ex tax, on the condition that it is exported in the same way as any other SA goods (TV's and Fridges etc etc) are exported free of SA taxes.........you just have to physically move the boat out of SA.

Ok, so the boat is then "Out of Africa" ........if you are not importing the boat into the EU / Italy you do NOT need to pay any Italian VAT - in the same way as you are not required to pay Canadian or Brazilian or Swiss VAT........because you are also simply NOT importing the boat into these countries.

It is all quite legal (and indeed normal!) not to pay VAT / GST on goods you buy to countries you are not bringing the goods into (whether you are a citizen or not).......Remember that in the EU if you pay VAT in 1 EU country it is recognised within all other EU member states, but the EU is not part of some worldwide VAT agreement / scheme. Each country outside the EU has it's own VAT / GST (and other taxes?) which have nothing to do with EU VAT. So paying VAT in Italy does not automatically mean you do not have to pay VAT / GST in Canada, the US or Timbucktoo......it just means you do not have to pay VAT in Germany, the Uk, Spain etc etc. (It's the single market!).

Now, you could elect to pay VAT / GST in countries you have not visited, "just in case" - but it would be a very long and expensive list!

Of course places like Jersey will be very cheap to pay VAT in. We do not have any! This is why we are one of the places that are attractive to register a boat in - because in some countries (and possibly Italy is one of them) having a boat registered in that country would trigger VAT or other taxes being due (or would require the boat to be in that Country before registration and therefore have to pay VAT - even if the boat was intended to never return) or at least complications when it comes to explaining why no VAT is payable.......plus, like the UK, a Captain of a pleasure boat does not require any formal qualifications to navigate the high seas - which is accepted elsewhere in the world, even if the locals are required to have bits of paper.

What will happens when I will cruise in south pacific, australia and new zeland? Is there any limit for the lenght of stay in this area without pay any VAT (for example, what about french polynesia)?

Lets pretend you have now bought the boat and are now mid atlantic (and are VAT free!).........each country (and the EU as a whole) has it's own rules......but essentially all have a period of time that allows a boat to visit and to not regard the boat as having been "imported" (which would trigger VAT being paid)......and the rules in all countries vary - in the same way as they do for VISA's (No VISA's within the EU is a huge benefit that folk easily forget / dismiss)...........some Countries will be more relaxed than others........just a matter of planning your trip accordingly and not selling your boat in a country without understanding whether it will trigger an import duty / VAT bill - although I have not been around the world in a Boat I suspect that the biggest impediment to length of stay in a country will not be the risk of paying VAT on your boat, but will be length of a VISA.

Any advice where to register the boat?

Jersey?

[TaoJones]

Sorry, DOJ, I should have said "the best such professionals in Europe are usually to be found in Switzerland and Jersey."

TaoJones