VAT, EU Visas, and 90 days in 180 for us poor brits!

[Heath68]

Having read all that, my conclusion is that getting specialist professional advice is needed... does anyone know anyone they an recommend for such advice (on Shengen rules, VAT, Income Tax and whether Gibraltar helps or hinders any situation)??

Thanks

[geoleo]

Originally Posted by james_p

My situation is as follows: I’m a UK citizen and resident (habitually and tax) in the UK. I’m in the process of buying a yacht (an Elba 45 catamaran) that I’ll export from the UK to avoid VAT here as I don't like sailing in the cold!

I’m planning to bring the boat down to the Mediterranean, under Temporary Admission to avoid EU-VAT (yes, 18 months), with the first port from the UK most likely A Coruna in June 2022. I then have a mooring in Palma until May 2023.

Because this year I’ll want to spend more than 90 days (in 180) in the Schengen area, I’m planning to get a Spanish Non-Lucrative Visa which will allow me 12 months in Spain. Realistically I’ll only use up to 181 days which will suit just fine, and I really do not want to become a tax resident in Spain!

The NLV will make me a 'resident' (habitual, TIE card), and my initial first concern is that this will mean the Temporary Admission won’t be allowed and EU-VAT, and possibly Matriculation Tax would become due. Then i hear this is only true for an EU TAX Resident, which i won't be. I’d like to get this properly confirmed but it's not easy.

I can't be alone in either wanting to do this, having done this and got the t-shirt (or lost his shirt if it went badly).....

socialism is wonderful

[acunningham]

Originally Posted by Dockhead

For example, I have a four-year residence permit for Finland. At the very same time, I possess a so-called "Zero Tax Card" issued by the Finnish tax authorities -- officially certifying that I am NOT a Finnish tax resident and allowing me to receive payments from Finnish companies free of any Finnish tax. Nor does the existence of the residence permit make me established in Finland, even if I rent or own residential property there. Spain may or may not be different; only a qualified professional can say for sure.

Would you have any details of the Finnish residence permit and how to apply for it? I have a non-EU friend who may interested in doing this.

[goboatingnow]

Originally Posted by Dockhead

But why do you think it's a "grey area"? What makes you think that? If it's in fact a grey area, a competent advisor will so advise, and advise you on the risks. If it's not a grey area, and in all likelihood it's not, he will tell you yes, or no. If it's yes, and you have a formal legal conclusion in your pocket from a recognized firm, you are good to go. If questioned, just show the advice you relied on, and you can be almost entirely sure that they will leave you alone. That's the way it works. Spain is of course notorious for imperious petty bureaucrats, but Spain is none the less a civilized law based society, and those petty bureaucrats are not free to just make up whatever arbitrary interpretation they want. The imperious petty bureacrats like to pounce on people who don't know what they're doing, have done their own legal work, and who have done it badly. They leave alone those who have done their homework and who are well represented. The last thing in the world this kind of character wants is a fight with a good law firm who are obligated to stand behind a formal legal opinion. That's the way the world works. You just put the document on the table and say "any questions, call my lawyers."

You clearly have not spent much time dealing with vat and customs officials. The local official doesn’t care , their job to to make assessments and collect tax , they might do this 100s of time during the day.

The legal arguments take place during an arbitration phase and or at court. I know this protocol from real life experiences.

Simply slapping down a legal advice text , will be reacted to either as a challenge or a smile , the process of assessment will continue. ( they will “ offer “ placing the vessel in bond , or Ive seen it chained to a dock). An assessment is a legal bill , from this point on the clock is ticking , the official has the power to enter your property and or seize the “ contraband “.

For example there’s a court case currently where a large yacht was detained due to Covid restrictions , then allowed to slip away to correct the TIP overstay , she had to stop at another EU port and was assessed and then arrested for TIP violations.

I’m sure the owner had copious legal advice as I think he owns a small country or something , it’s still went to court

Note the EU text , does not mention tax residency or “ residency “. The text explicitly states “ established outside the territory of the customs union “ as has been pointed out in the commercially owned yachts , countries apply a whole series of criteria , all these criteria essentially have to be evaluated almost instantly by the customs agent.

Again I do absolutely advise getting really good reliable advice. I would add that my practical experience this will not prevent you having problems at local level. These problems can reappear every time you reappear at a port.

[Joh.Ghurt]

Originally Posted by james_p

The NLV will make me a 'resident' (habitual, TIE card), and my initial first concern is that this will mean the Temporary Admission won’t be allowed and EU-VAT, and possibly Matriculation Tax would become due. Then i hear this is only true for an EU TAX Resident, which i won't be. I’d like to get this properly confirmed but it's not easy.

I can't be alone in either wanting to do this, having done this and got the t-shirt (or lost his shirt if it went badly).....

To sum it up:

• If you get a NLV in Spain, you aren't a resident immediately. This is true.
• Based on this, you are allowed to use a boat under Temporatry admission without committing VAT-fraud. Also True
• Many blue speed-boats with big light-blue lettering of the word "ADUANAS" are on the prowl along the Spanish coasts and they spend a good time checking foreign flagged pleasure-crafts. I see them often enough coming into the port on their Zodiac and they love to check boats with the Red Ensign. Better accept this as true.
• There's also a similar number of green/white speedboats labelled "Guardia Civil" doing targeted random checks. I'm not sure whether they will make your life miserable.
• If you show your papers and have a TIE, you better be prepared to have good arguments why being on a boat without VAT-paid-status is ok. From what I hear and my personal experience with Spanish authorities, this might or might not work, independently whether your behaviour is legal. So even if you're right, it can become a fight to get it and it'll ruin your stay.
• You can't do this same game next year. To renew the NLV you de-facto have to have tax-residency and then your boat needs the VAT-paid to be legal.

And to answer Dockhead:

Yes, it's rather easy to avoid paying the VAT. Get a Swiss residency (part of Schengen, not part of EU) and you can freely move around in the EU on a Temporary Admitted boat. This works even for EU-citizens.

[goboatingnow]

The issue is not TIP. The issue is trying to “game” the system. The “game” is using a residential visa to allow you to circumvent the tourist restrictions , whilst simultaneously claiming you are not a resident so as to avail of the TIP. You may fully believe you are compliant , but will the official believe it ?

Irrespective of legal advice , are you seriously, going to argue this out every time your challenged , running the risk of assessment or seizure.

There’s no way I’d be comfortable with that personally. Sure you might “ fly “ under the radar for a time , but every time you hear “ tout les documents” your heart will stop.

Arguing with these officials about the esoteric aspects of residency law , is simply a waste of time. Anyone who suggests you challenge them with legal advise , or stupidly shout “ call my lawyer “ will walk back to a boat being impounded , as a Saudi prince discovered.

You and the representatives of the Government of Spain will then calmly and legally argue it out in arbitration or in court, of course your visa will be scrutinised as will your personal tax position. I hope you have the stomach and funding for a good long process

[goboatingnow]

The problem is there are loads of technically legal ways for an Eu resident to own and use a vat free boat. Technically for example , I can register a company in Ireland , vat registered it , and wrap a boat up in it. I can then fully legally as a director sail that boat.

Of course I may fall foul of Irish company law , or may have benefit-in-kind payments to make etc. But the legal VAT situation is no different to entering Spain with a company ( vat reclaimed ) laptop, the VAT situation in Spain is entirely legal. The goods are in free circulation , my Irish corporation issues are of no concern to Spanish authorities and they have no jurisdiction over that aspect. ( only VAT is EU harmonised )

However that’s not the issue , the issue is making the official accept your story.

In the end that’s what matters. , not Dockheads reccomended expensive advice letter , or shouting “ call my lawyers “

This isn’t a legal issue , this is a function of the practical realities on the ground.

[Dockhead]

Originally Posted by goboatingnow

You clearly have not spent much time dealing with vat and customs officials. The local official doesn’t care , their job to to make assessments and collect tax , they might do this 100s of time during the day.

Sorry, I ran my first business in Europe in the 80's when I was a law student in Germany, and have been dealing with tax and customs in Europe all my adult life. These days I spend hundreds of thousands of euros every year on PWC and other advisors in connection with my business. I deal with this kind of question every day and know what I'm talking about, and it works just as I described.


The local official very much cares whether he is collecting tax in a correct (that is, legal) way, because an incorrect attempt to impose a tax, which is then challenged and overturned, is first of all a waste of his time, and second of all harmful to his career. He picks easy targets -- best of all, clear violations, by unknowledgeable people who aren't represented. If you are well prepared and well represented, and right, they will leave you alone other than in exceptional cases. I'm sorry, but that's how the world works.

Originally Posted by goboatingnow

. . . The legal arguments take place during an arbitration phase and or at court. I know this protocol from real life experiences.

Because you can't see it, doesn't mean it doesn't exist. The collection of taxes is based on laws, regulations, and practice notes, so the law is behind the process from square one. The assessors are trained (to varying levels of competence). The local official you deal with is the lowest level of the food chain, is not a lawyer himself, and might not be the sharpest tack in the box, but one thing he does know is that he does not want to claim that you owe a tax which you don't actually legally owe, and which you are prepared to defend with expert backup.

Originally Posted by goboatingnow

Simply slapping down a legal advice text , will be reacted to either as a challenge or a smile . . .

Not correct. The process stops right there unless the local official either (a) really has it in for you, and is willing to suffer the lost time and career harm of being later proven wrong, just to screw you over (and this is an actual risk if you are nasty or wilfully uncooperative -- never do that); or (b) you're really wrong and he feels confident that you will lose. (b) will not happen if your legal or tax opinion is written by a competent and well known firm. Showing that you have been competently advised on the matter is the best way to short-circuit problems; that's what those advisors get paid for. Do it politely and respectfully of course; don't "slap it down".


None of this works if you are genuinely in a grey area. But you won't get a formal written opinion telling you it's ok, if it's in a grey area.

[Anders]

Originally Posted by james_p

My situation is as follows: I’m a UK citizen and resident (habitually and tax) in the UK. I’m in the process of buying a yacht (an Elba 45 catamaran) that I’ll export from the UK to avoid VAT here as I don't like sailing in the cold!

I’m planning to bring the boat down to the Mediterranean, under Temporary Admission to avoid EU-VAT (yes, 18 months), with the first port from the UK most likely A Coruna in June 2022. I then have a mooring in Palma until May 2023.

Because this year I’ll want to spend more than 90 days (in 180) in the Schengen area, I’m planning to get a Spanish Non-Lucrative Visa which will allow me 12 months in Spain. Realistically I’ll only use up to 181 days which will suit just fine, and I really do not want to become a tax resident in Spain!

The NLV will make me a 'resident' (habitual, TIE card), and my initial first concern is that this will mean the Temporary Admission won’t be allowed and EU-VAT, and possibly Matriculation Tax would become due. Then i hear this is only true for an EU TAX Resident, which i won't be. I’d like to get this properly confirmed but it's not easy.

I can't be alone in either wanting to do this, having done this and got the t-shirt (or lost his shirt if it went badly).....

A Spanish non lucrative visa does not get you 12 months in Spain but you get 3 months to become resident then you can stay for 12 months.
Any tax official anywhere in the EU VAT area can challenge your boats VAT status. The usual way for them if they think you are wrong is to decide on how much you should pay. Keep something more than that to make sure you can pay and then you often have to pay the tax before you can appeal his decision! Tax lawyers are not cheap and it's likely to cost you even if you win your appeal.
VAT checks on old boats are almost non existant but it does happen on newer boats.

I would not do what you are trying to do.

[Montanan]

Originally Posted by Heath68

Having read all that, my conclusion is that getting specialist professional advice is needed... does anyone know anyone they an recommend for such advice (on Shengen rules, VAT, Income Tax and whether Gibraltar helps or hinders any situation)??

Thanks

Gibraltar is in a state of flux having made an agreement with Spain but which needs to be approved by the EU and the Schengen countries.

Snipets:


Spain and the UK have agreed to further extend Gibraltar agreements to 2022, due to the lack of a satisfactory decision being made. Spain and the UK have agreed to extend the validity of current regulations regarding Gibraltar, which were set to come to an end on December 31. The extension aims to guarantee a “framework of cooperation” until the new agreement is signed by the two countries. This was determined last night by the Minister of Foreign Affairs, José Manuel Albares, and his British counterpart, Elizabeth Truss, who attended a business dinner to discuss post-Brexit negotiations, according to a statement from the Ministry.

Albares and Truss analysed the problems and progress made in the negotiations between the EU and the UK. They made the decision to extend the period of negotiation until 2022, the government of Gibraltar informed on Wednesday, December 15. The definitive agreement regarding post-Brexit regulations surrounding Gibraltar should have been determined by the end of 2021. According to the statement from the Ministry, Albares and Truss discussed topics such as the free circulation of citizens, the exchange of goods, environmental issues, the coordination of social security systems and the rights of citizens.


and another snipet.

The new UK/Spain deal for Gibraltar means that the British colony will indeed join the Schengen Area for passport-free travel, and will now be included in the Schengen Agreement between the other 26 member countries. The 271,000 inhabitants of the 8 municipalities of Gibraltar will now be permitted freedom of movement to Spain and the other Schengen countries, and all Schengen nationals will be able to travel to Gibraltar without undergoing passport checks. However, as the UK is not and has never been a part of the Schengen Area, British citizens will still be required to go through passport controls to gain entry to Gibraltar. The agreement will be valid for a transition period of 4 years during which the EU will deploy Frontex border guards to Gibraltar’s land border to facilitate the free movement treaty. González Laya has also confirmed that the new deal between the UK and Spain will also mean that Gibraltar will need to comply with EU fair competition rules shared by the other members of the Schengen Agreement, in areas such as financial policy, the environment and the labour market. The new Gibraltar UK-Spain deal puts the territory on the same level as Liechtenstein, which enjoys the benefits of visa-free travel within the Schengen Area despite not being a full part of the Schengen Information System maintained by the European Commission. It also means that Gibraltar’s air and sea port will now be a de facto part of the external borders of the Schengen Area, although González Laya did not specify whether Spanish border guards would eventually be posted at Gibraltar's airport and/or seaport.

Brexit is a complication that has yet to be fully resolved.

[goboatingnow]

Sorry, I ran my first business in Europe in the 80's when I was a law student in Germany, and have been dealing with tax and customs in Europe all my adult life. These days I spend hundreds of thousands of euros every year on PWC and other advisors in connection with my business. I deal with this kind of question every day and know what I'm talking about, and it works just as I described.

it does not work as you describe sitting in a local customs office in the back of beyind. Several people have countered that opinion

Because you can't see it, doesn't mean it doesn't exist. The collection of taxes is based on laws, regulations, and practice notes, so the law is behind the process from square one. The assessors are trained (to varying levels of competence). The local official you deal with is the lowest level of the food chain, is not a lawyer himself, and might not be the sharpest tack in the box, but one thing he does know is that he does not want to claim that you owe a tax which you don't actually legally owe, and which you are prepared to defend with expert backup.

yes and know , the issue depends on his belief and your proof , it may fly , it may not

Not correct. The process stops right there unless the local official either (a) really has it in for you, and is willing to suffer the lost time and career harm of being later proven wrong, just to screw you over (and this is an actual risk if you are nasty or wilfully uncooperative -- never do that); or (b) you're really wrong and he feels confident that you will lose. (b) will not happen if your legal or tax opinion is written by a competent and well known firm. Showing that you have been competently advised on the matter is the best way to short-circuit problems; that's what those advisors get paid for. Do it politely and respectfully of course; don't "slap it down".

in arbitration yes, maybe , I know from harsh experience this is BS at the point of VAT and customs collection

[Montanan]

Originally Posted by Heath68

Having read all that, my conclusion is that getting specialist professional advice is needed... does anyone know anyone they an recommend for such advice (on Shengen rules, VAT, Income Tax and whether Gibraltar helps or hinders any situation)??

Thanks

On 4 March 2019, Spain and the UK signed an International Agreement on Taxation regarding Gibraltar, the purpose of which is to improve cooperation in the field of taxation and the protection of financial interests between Spain and Gibraltar.

The Agreement has now been ratified by all parties and its provisions became law on 4 March 2021. The Government of Gibraltar has now also incorporated the text of the Agreement into the Gibraltar Income Tax Act 2010.

The Agreement will improve tax cooperation between the Tax Authorities of Spain and Gibraltar. It provides rules for resolving conflicts over tax residency and enables administrative cooperation through sharing of information and addressing disputes by means of a Joint Coordination Committee.

The Agreement is intended to pave the way for Spain to remove Gibraltar from its list of tax havens (“paraiso fiscal”). There is no timetable fixed for the removal of Gibraltar from Spain’s list but the expectation of being removed from Spain’s list of tax havens underpins the Agreement.

The Agreement contains important changes on taxation for residents of Spain and Gibraltar. We summarise below some of the most relevant aspects of the Agreement.

Key aspects of the Agreement

Tax residency for individuals

Natural persons will be considered to be tax residents in Spain or in Gibraltar in accordance with their domestic law. In the case of conflict, that is to say, where an individual is considered to be a resident of both Gibraltar and Spain, the following rules (“tie-breaker” rules) will apply and an individual will be considered to be a tax resident only in Spain if any one of the following conditions exists:

(i) if the individual person spends over 183 overnight stays of the calendar year in Spain; or

(ii) in the event that an individual’s spouse or similar relationship, or any dependent ascendants or descendants reside habitually in Spain; or

(iii) if the only permanent home at the individual’s disposal is in Spain; or

(iv) if 2/3 of the individual’s net assets determined pursuant to Spanish tax legislation are located in Spain.

Where the above rules are not conclusive, an individual will be considered tax resident only in Spain unless he/she is able to provide reliable evidence that he/she has a permanent home for his/her exclusive use in Gibraltar and remain in Gibraltar over 183 days. The Joint Coordination Committee will resolve any doubts in this respect.

The following special rules for determining residency will apply in all cases in relation to a change of residency to Gibraltar:

(i) Spanish nationals who move their residency to Gibraltar after the date on which this Agreement is signed (4 March 2019), shall in all cases only be considered tax residents of Spain;

(ii) Non-Spanish nationals who have spent at least one complete tax year in Spain, retain their tax residency in Spain during the year in which the change of residency is made and during the four subsequent tax years; and

(iii) Registered Gibraltarians who have spent at least four years in Spain, retain their tax residency in Spain during the year in which the change of residency is made and during the four subsequent tax years.

Significantly, the Agreement provides that “special tax residency schemes” for High-Net-Worth Individuals, Category 2 Individuals and High Executive Possessing Special Skills (“HEPSS”) will not, of itself, constitute proof of tax residency for the purposes of the Agreement.

[iabmatos]

Hello all,

Hijacking (or adding to the) the original question:

How about an EU-flagged boat (say Poland, with an open registry)?


Thanks,

Ismael

[Joh.Ghurt]

Originally Posted by iabmatos

How about an EU-flagged boat (say Poland, with an open registry)?

If the country lets you flag without VAT - which most do - then the question is exactly the same: As a EU-resident, using a privately owned yacht without VAT in EU waters is tax-fraud.

[iabmatos]

I've been compiling info from various sources regarding EU VAT considering a future move to EU as a Brazilian resident and Portuguese citizen.

This is what I think applies in the case someone plans to move to EU, and may apply to the case of the original question.


Transference of Residence to EU (TOR)

When transferring of residence from a foreign country into EU, you are allowed to bring in personal possessions VAT free, including your car and your boat. The imports are free of VAT as personal property and if the permanent importation of the boat coincides with transferring your residence from outside the EU, it may qualify for VAT relief. As an example, a Turkish boat imported into EU coinciding with taking residence in Portugal. (Any other import duty charged in Portugal or Spain?)*****

Your EU residency would result in EU VAT on import of vessel, unless the vessel is considered "household goods".

If you are moving your normal home from a non-EU country to an EU country, you may import your vessel free of customs duty and VAT providing that you:*

- have lived outside the EU for a continuous period of at least 12 months;
- have possessed and used the vessel outside the EU for at least 6 months prior to importation;
- did not get the vessel under a duty/tax free scheme (???);*
- declare the vessel to an officer;
- will keep the vessel in the EU for private use (12 months?);
- do not sell, lend, hire out or otherwise dispose of the vessel in the EU within 12 months of importation.

Note that if at any stage you are deemed to be established in any EU state, VAT will become immediately due! However you can use TOR reliefs to bring in personal possessions VAT free, including your boat that TOR provision is there for people transferring residence into the EU.*

SEE:

TOR reliefs - Directive 2009/132/EC - https://eur-lex.europa.eu/legal-cont...LEX:32009L0132

Am I going to jail for VAT fraud or not?

Cheers

Ismael