The Ultimate in Red Tape!

[ssullivan]

Background of Red Tape Question: I am a US citizen. I am also an Irish citizen awaiting his paperwork back from that process. This means I'm a citizen of the EU. My wife will be a citizen of the EU in approx 6 yrs, since that is the waiting period for her to gain Irish citizenship by marriage.

Also, we purchased this boat under her name - she is the sole owner of the boat.

Questions:

1) We plan to eventually reside in the EU permanently. Will there be any issue bringing our boat there, since it's a US documented vessel?

2) Will my 100 Ton Master's License hold any merit?

3) Can we just set up shop and charter in the Med?

4) We'd like to locate in France or Italy - the border area between the two. Does anyone have any suggestion as to which might be best? We have spent a fair amount of time there by airplane, but we are not familiar with regulations pertaining to small business in each country.

5) Can you set up a business in an EU member state if you are a resident of another EU member state? As in... can I set up a business in say... Italy if I'm Irish? Specifically a charter business? Or do I have to register my boat in Ireland and just do charters as a foreigner?

6) How about that scary VAT tax? Am I going to have to pay 10% of whatever some customs guy thinks my boat is worth? (get out the coal and dirty up the boat!) ha ha ha

Any other things to watch out for in this type of move? We do plan to purchase a cottage over there as well, but would probably not do so right away... we would be immigrant liveaboards.... pretty tricky stuff!

PS: This is a 10 year plan, so no need for speedy replies.

[BC Mike]

You will likely have to do some research on moving the boat.
Qualifications are not easy to transfer, might be different for a captains licence, you will have to check. My understanding is if you have a passport from an EU country you can work in any other EU country. English foks are going to Portugal and Spain where it is warmer. I have a British passport as that is where I am from originaly. Consult the appropriate consulate in your area, that is what they are for. Ireland did pretty good in the Euro rugby championship.
Michael

[Talbot]

You will be subject to VAT dependent on which country you arrive in first. in some countries it is 22%.

You will also need to get CE approval (much more difficult) dont remember the exact procedure but some boat manufacturers are set up for this and others arent,

If your boat is going to be part of the business, it will be subject to further requirements (again depending on country)

EU was supposed to be about open borders etc, but a number of countries seem to be ignoring that regarding boats and find additional ways to raise revenue. The greeks seem to have different rules in different harbours.

[ssullivan]

Thanks for the heads' up. I will certainly look into where the VAT is lower. 22%... ouch! Certainly couldn't well afford that.

Also, will look into CE approval. Maybe we won't be able to charter in the EU since it looks to be far too expensive.

[Boracay]

This might be a silly question but why would you want to take a boat that seems just set up for the US/Carribean (which seems to be about the most business friendly environement on the planet) to a part of the Mediteranean that must be about as business antagonistic and rife with petty thievery as it is possible to get.
I travelled through that part of the world recently (not by boat) and I have seen better situations in third world countries.

[ssullivan]

Well... if you want to get into the details...

Where I live is quickly turning into a 3rd world country anyway, so there's not much to miss. I am not enjoying losing my cultural heritage to whatever it is America is becoming. And... I prefer the EU's form of government to that which I'm in right now.

It may be expensive and there may be plenty of problems there, but at least they are, for the most part, known. You speak of petty thieves. I live in NY!! I have to use a huge steel cable to lock up my tender every time. I have to watch everyone. I know several people in organized crime (not as friends, but know who they are.) These "mobs" in many flavors... Italian, Russian, Chinese, etc... There is PLENTY of crime here.

Plus, I like the socialist slant in Europe that puts humanity before corporate greed.

Good enough reasons? I could go on...

But, I do agree with you regarding the business climate there. Seems daunting. So... maybe this will be more than a 10 year plan for us. This is why I'm asking these questions. To try and get an understanding of how difficult it would be. Seems like it will be quite difficult, so we may only go over for retirement. Depends how things turn out... and if our economy continues to crumble here....

[CaptainK]

Hey Sean.

I have some important questions to ask you about qualifications for a skipper in the charter business.

Now that we are on the subject of "Red Tape"? I just thought I'd ask that question.

I have some very important questions for you. And since you are in the charter business. I need to ask you some very important questions. As to what federal regulated qualifications, do you need in order to go into charter business?

Captain's license? six pac or 100 ton license? Which is better?

Do you need to know EMT 1?

Do you have to know about Admirality laws?

What are the minimum about having diving charters. And do you have to be a master diver certifified? (That's if you do know?)

Does the skipper of the boat have to know how to cook?

What's the minimum amount of sea miliage does one has to have in order to be certified?

What kind of business insurance does your boat/business needs. Say to operate over seas. Or in an area that is a American territory?

Sean. I believe you have some of the answers. Maybe not all of them. But, I wrote to you because you are in the business. Could you help out with any information on this subject. I would really want to go into this business some day down the road.

Any info, would be much appriciated.

Thanks!!

[ssullivan]

Hey Captain K! Good to hear from you.

I'll send you a PM with the answers to all those questions... I'll go into some details for ya.

[CaptainK]

Thanks Sean for the information.

[coot]

4) We'd like to locate in France or Italy - the border area between the two. Does anyone have any suggestion as to which might be best?

In all seriousness, I suggest you give substantial preference to whichever country has a language that you speak fluently. i.e. Choose France if you speak French.

In the US, there are a lot of foreigners working in computers, and I can attest that it is extremely difficult to conduct business across a language barrier -- and these are people who (supposedly) speak English. You will surely have to deal with government officials as well as your customers, and being able to communicate will be very important.

If you don't know the language and you are planning 10 years ahead, it is not too early to start learning.

Also, be sure to learn the culture. It's amazing how easy it is to be terribly rude if you don't know the local customs. For France, I recommend the book "French or Foe?" as a start. By the end of the book, I had decided the answer was "definitely foe" , but on visiting France I was glad to have read it and I'm sure it helped my interactions there.

6) How about that scary VAT tax? Am I going to have to pay 10% of whatever some customs guy thinks my boat is worth? (get out the coal and dirty up the boat!) ha ha ha

Last time I looked, the import tax and VAT are due when the boat has been in the EU for 18 months. This is independent of whether it is flagged in the EU or not. I understand that people shop around for a venue with lower VAT, but you're looking for a few percent difference. Still, that's a lot of money when you talk about a boat. If I remember correctly, the lowest VAT that I ever saw listed was 17.5%.

b.t.w. They know you are going to crap up the boat before the appraiser gets there.

Any other things to watch out for in this type of move?

The CE approval that Talbot mentioned is for compliance with the "Recreational Craft Directive". That defines the Class A, Class B, etc ratings that you see on new boats. How much this would apply to you is a whole topic of research, keeping in mind that you are importing the boat for commercial use.

For that matter, are you allowed you import a boat for commercial use? The US does not allow imported boats to be used commercially. Maybe the EU has something similar.

[Weyalan]

I only just noticed this thread and was wondering how you were going with finding out answers to your questions, Sean?

I will also echo the sentiments of a previous poster regarding language difficulties. If I were attemtpting to operate out of France or Italy, I would want to speak the native language reasonably fluently - not so much for communication with your clients, because I'm guessing that the bulk of your clients will probably not be local people, but for dealing with local tradespeople, government officials, shops, port officials etc.

The French, in particular are infamous for their resentment of having to speak english. They have a particular gallic pride, and will often feign incomprehension even if they speak good english. If you at least make an attempt to speak their native language, they are far more inclined to speak to you in english, and you will almost certainly meet with a warmer and friendlier response even if your french is rather bad. I spent quite a lot of time in france & Corsica, and my high-school french was good enough to get by and I always got better treatment than others around me who didn't speak french at all.

[Euro Cruiser]

Sean:

You are asking a series of questions, each of which is complicated and none of which is best addressed via BB posts. It's hard to get full, complete answers to these questions even when talking at length with officials in the various countries (a bit of which I've done). Based on our 3 years cruising inside the EU, looking at the dual citizenship option (which I'm also eligible for), and hearing from a lot of other EU/non-EU sailors, my sense is that none of the info posted above is fully correct nor fully inaccurate. This is not because the other posters are ill informed but rather because all these topics depend a great deal on one's individual circumstances, the specific officials of the individual member state who are providing the answers, and the point in time when you face them - EU legislation is a moving target, Big Time, as are the understandings that local officials have and what local influences they are under.

Here are some specific answers I do have confidence in...tho' perhaps at the risk of violating my own cautions above.
1. Your USCG license will have no absolute reciprocity over here nor relevance. It might help you in certain circumstances, both official and in marketing, but it carries no specific legal authority of which I'm aware inside the EU. There's much detail related to this issue.
2. There is no direct correlation between how Customs/Zoll/Toll/Duane/etc. officials will treat your vessel re: VAT and how the Immigration/Polite/etc. officials will treat you as EU citizens; the two are totally separate. Similarly, you won't automatically be eligible to reflag your vessel based on your citizenship alone. E.g. if you wanted to reflag (for insurance, chartering or other reasons), you'd face the same new requirements as any other Irish citizen buying a new unflagged boat.
3. You will not need to necessarily pay VAT, and under current EU guidelines you can avoid it indefintely...if you want to keep the boat moving. OTOH if you want to set up shop in a specific locale indefinitely inside the EU, you may find paying VAT to be more desirable - at which point it can remain inside the EU without further VAT liability or geographic restriction. (For more on VAT see the article I wrote at http://www.svsarah.com/Whoosh/Whoosh.htm And since you mention this as a 10-year plan, remember that the EU is slowly swallowing up almost all of Western Europe. Aside from the N African countries, most non-EU countries either bordering the Med (not counting the Middle East) are in process of seeking EU membeship status.
4. While EU citizenship MAY allow you to work, there is no guarantee that will be the case in a specific location for a specific type of work. General EU-allowed worker rights are further governed by the local labor laws in each country, let along informal local practice. Similarly, you may e.g. find no restrictions to setting up a charter company in the UK but find inpenetrable bureaucracy to doing so in Greece. The biggest single conceptual mistake we North Americans make when trying to understand the EU is to apply our view of a federal national govt. system to the EU; it doesn't work like that over here. Rather, it's more like the Confederation national govt. structure that the USA first set up before the Constitution was written. Moreover, the EU is still trying to figure a lot of things out...and as you can appreciate, implementation towards uniformity can take years even after EU agreement. To this already-dynamic state, add the impact of mostly poorer countries recently being added to the EU and you can see that it is a very hard environment from which to find iron-clad practicies.
5. Bureaucracy is one of the major products produced by most (not all) EU countries. I may sound glib when saying that but I mean it seriously. It provides immense employment, its viewed as a positive, constructive element in most societies (unlike how we regard bureaucrats in the U.S. as a necessary evil - or worse), and so this becomes a part of both the culture and the 'process' of living here. As stated in a post above, you therefore are much better equipped if you can deal with the locals in their own language, since their ability with English increasingly dissipates as a thorny issue materializes. This is independent from how much satsifaction and mutual appreciation one engenders when struggling with a bit of the local tongue; we are doing terribly with Portuguese right now (it looks like Spanish but sounds like Russian!) but everyone surely appreciates our efforts.

When you get to the right time in this plan, I'd encourage you to pick up the SSCA CD of previous Bulletins, wherein there is a great deal of information available on this topic, little of it totally consistent. I've also found official websites to be both very helpful and terribly inconsistent, and I've also found various officials in a number of countries to offer conflicting views. It's a tough nut to crack and my best advice is to consider it one of those intellectual tasks you'll never fully complete but, the more you narrow your focus to a given issue and for a given locale, you'll cement an understanding with the local folks that will be fairly clear and reliable (tho' not necessarily satisfactory from your point of view).

Accepting life inside the EU is an acquired taste, IMO - and often (tho' not always) quite a departure from the free-form, less regulated and entrepreneurial nature of life in N America. Along with many pleasures, of course.

For an excellent overview of cruising inside the EU, consider reading Walt Paul's write-up at the CCA website - http://www.cruisingclub.org/ In fact, all his articles are well-researched and would be useful info for a charter captain who is assuming legal responsibilities related to GMDSS.

Jack

[Euro Cruiser]

Sean, after posting the above, I remembered an event that occurred just last night that, tho' minor, perhaps gives a first hand flavor to some of what I was describing. The British crew 'next door' had their oven rust out on them and so they are looking for a new replacement. Sourcing products in Portugal is often a problem (the 21% VAT keeps buyers away, which tends to make the shelves fairly empty) but finding the oven was not the challenge for Ian & Rowena. Instead, it was needing to find an 'inspector' that could both hook up their stove AND be viewed as qualified back in the UK so they have insurance coverage. (They were agast to learn that I tossed out the old alcohol stove and did the LPG installation myself; unheard of, they exlaimed!) Moreover, UK (but not all of Continental Europe) practice is to put a 'bubbler' in the LPG line. This is to assure 'safety' as, if routinely inspected by the crew, it can reveal the presence of a leak from the bottle thru to the stove. OTOH we N Americans might view it as a safety inpediment since it creates 4 new joints, each of which can be a leak source. LPG hose is also a no-no for the hose run; UK officials want to see copper (so add in more connections in the name of safety).

Ian's dilemma, as he heads for Lagos and on to Morocco, is not so much to get a new stove working in his boat as making his UK officials - insurance adjuster and future surveyor - happy. This is just another small hurdle to jump, in Ian's mind, and I don't mean to make too much of it. OTOH it might strike a non-EU sailor as yet another unnecessary nuisance.

Jack

[Talbot]

Not true about UK and LPG. - except for the inland waterways which have their own rules and regulations, many of which make little sense for a sea going boat.

for a private boat, you are still able to do your own lpg work within the recommendations from the gas authorities. copper pipe is the preferred option for runs.

If you are chartering your boat, it has to meet a strict code, one of the provisions being inspection of the gas system , and certification as safe by a qualified gas engineer.

[Roaring Girl]

There seem to be several different questions here, which overlap but can be seperated:

The boat
(i) if you want to keep a non-EU boat in the EU in one place for a long time, eventually you will need to deal with the VAT issue. This applies whether leisure or commercial, but definitely unavoidable if commercial, as your business will probably have enough turnover to itself be VAT-rated. (This means that if your turnoiver exceed x per year, currently about 56GBP in the UK, your business must itself charge VAT to be passed on to the national authorities.) In the UK currently 15%, but 20% in Italy. VAT rates can change, depending on national government decisions, so you would need to check this at the appropriate time.
(ii) Recreational Craft Directive (RCD) applies if you sell a boat younger than a certain date (can't remember the date exactly). The onus is on the buyer. There is a lot of complaint about the RCD but if you are selling a boat it must comply and be certified accordingly (you can self-certify). If you do not, then you are liable to significant fines.
(iii) any legislation relating to the boat, or to the skipper, consequent of the country in which you are flagged, normally the skipper/owner's country: UK legislation is extremely minimal compared to eg Spain, which requires fairly tough qualifications and safety equipment even for private leisure craft. Your insurer may impose additional requirements, but those are not legislative.
(iv) the supra-national and national legislation relating to a boat in commercial use - ie for chartering. These will vary hugely between the different countries of the EU.

Setting up a business
(i) I heartily agree about the language issue. I (Sarah) speak pretty good French and I would quail at dealing eg with suppliers in French. So you want an inox widget made for your stern anchor. Can you describe it, specify it, negotiate the price, and argue it out if it goes wrong? Why should your supplier be able to speak a foreign language?
(ii) setting up a business in any country, especially one you don't know, is a specialist business. The US might be easier (I wouldn't know), Portugal is a nightmare - but I know people who have done it. You might look at having an Irish business which runs a charter yacht in whichever country. One friend who ran a sailing school in Portugal did so using a UK registered biz and that worked fine. I'd want to get professional advice pretty early on.
(iii) documentation does matter, and not only because many of the people you will be dealing with will find you an unusual case,so they don;t always know the rules themselves.

Your immigration status
If/when you are EU citizens you do have rights of freedom and movement. But be aware that some countries in some places require you to become a resident (and pay appropriate taxes) if you live there over 183 days. This is also a much argued over topic, and to my knowledge has only been enforced in Spain. Jim's website, which he refers to above, has a lot of up to date info on this.

The EU is not and never has tried (save arguably under the Romans) to be one country. It's 27 countries, with a long and bloody history between them, trying a new way to promote peace and prosperity. There are three more candidate countries at the moment, and a few others who have signaled a long term interest (such as Morocco). This leaves some of the states of the former Yugoslavia, the eastern coast of the Black Sea, and the Middle Eastern countries, and Norway. (Switzerland doesn't have a coast.)

It sounds like a great adventure, and lots of hard work, but well worth doing.