Where to flag without having to pay VAT/tax?

[acunningham]

Originally Posted by goboatingnow

I can’t remember where it is exactly but the rules reflect the famous 2006 European Court of
Justice (ECJ) ‘Halifax Case’

It became legendary in tax circles. It was the law that reinforced the concept of abusive practices in the context of VAT. It means that no person has the right to avoid VAT by setting up a commercial structure where the essential aim is to obtain a tax advantage, contrary to the intention of the law. The ECJ declared that:
...In that case, where an abusive practice has been found to exist, the transactions involved must be redefined so as to re- establish the situation that would have prevailed in the absence of the transactions constituting that abusive practice.


In essence , if the authorities believe the company structure was setup to avoid vat they can void that structure

Hence sailing around the med with all your kids , wife etc and claiming it’s company boat won’t wash ( not to mention the self supply vat issue and or benefit in kind)

EU tax law applies to EU residents irrespective of nationality or passports. If you do not reside in the EU your boat may avail of the temporary admissions procedures as regards EU VAT ( it would also allow you to buy a EU boat VAT free and keep it in the EU subject to the TPA process.

you may bizarrely avail of the EU freedom of movement which applies to EU citizenship not residency.

Thank you, that matches my expectations.

Originally Posted by goboatingnow

Just be careful to hand the U.K. passport to the tax people and the Irish one to the immigration !!

I will!

[TeddyDiver]

It's recidency based. I'm EU citizen living in Norway and have the same restrictions to Norway..

What comes to the "benificial owner" thing, you need a charter contract and pay for the use of the boat and not to talk you into trouble.

[hanjohuizing]

Originally Posted by gsalgado

Hi folks,


I've read through a lot of threads here but couldn't find a definitive answer for the questions below, so I thought it'd be worth starting a new one...


I'm about to purchase a sailboat registered in Canada and located outside of the EU (so no tax paid within EU). I don't intend to use it to sail within the EU. I'm an Italian/Brazilian citizen and tax resident in Portugal.



I thought I'd be able to register in Poland without paying VAT as the boat wouldn't be brought into the EU, but apparently VAT must be paid for a vessel to be registered in any EU country. Is that correct?


If that's case, is there anywhere I'd be able to flag it without having to pay VAT/tax?


Best regards,
Guilherme

It is not only a question about VAT but also about insurance, MMSI and radio license. At least in Europe you can not mix up everything. You might run into problems to get a yacht under Polish flag insured in another country. I don't know how it works for your country but worth to check. The same applies to get an MMSI number and radio license. The question is more complex than just VAT avoidance..

[LifesBetterWhenYoureBeating]

Originally Posted by hanjohuizing

It is not only a question about VAT but also about insurance, MMSI and radio license. At least in Europe you can not mix up everything. You might run into problems to get a yacht under Polish flag insured in another country. I don't know how it works for your country but worth to check. The same applies to get an MMSI number and radio license. The question is more complex than just VAT avoidance..

Actually, one of the insurance companies said they wouldn't insure a Portuguese (my country of residence) registered vessel but would a Polish one

[goboatingnow]

Originally Posted by hanjohuizing

It is not only a question about VAT but also about insurance, MMSI and radio license. At least in Europe you can not mix up everything. You might run into problems to get a yacht under Polish flag insured in another country. I don't know how it works for your country but worth to check. The same applies to get an MMSI number and radio license. The question is more complex than just VAT avoidance..

It’s not

For example polish registration will also allow you to get a polish call sign and MMSI. This is true with most registries.

Again you will not run into insurance issues either. The insurance company either accepts the boat or they don’t.

Lots of lots of boats in the med flying “ register of convenience” flags.

[pyrrano]

I recently purchased a sailboat in panama, I'm a dual (US/EU) citizen, just got my polish registration through a licence company. It costs $500 once and it's good for life, no annual registration fees. They also do radio licence if needed. I'm not planning to sail to the EU so VAT doesn't concern me.

https://yachtregistrationspoland.com/

Several insurance companies will insure your polish flagged boat just like any other EU registered ones, it's all about research.

[LifesBetterWhenYoureBeating]

Originally Posted by pyrrano

I recently purchased a sailboat in panama, I'm a dual (US/EU) citizen, just got my polish registration through a licence company. It costs $500 once and it's good for life, no annual registration fees. They also do radio licence if needed. I'm not planning to sail to the EU so VAT doesn't concern me.

https://yachtregistrationspoland.com/

Several insurance companies will insure your polish flagged boat just like any other EU registered ones, it's all about research.

Awesome, it's good to hear from someone in the same situation as me and with first-hand experience! Would you mind also sharing which insurers you contacted and which one you ended up choosing?


Thanks a bunch!

[pyrrano]

It's not mandatory to get insurance where the boat is at so I didn't get one but I've been told by local sailors and charter operators that there are several online agencies that can insure your boat if needed.

[blubaju]

Many posts here, some right, some wrong, some missing.

For EU citizen it is illegal to sail in EU Waters on a EU registered vessel without VAT paid, no grace period

VAt you pay in your country of residence or first port of entry, there are landlocked EU members, no way to sail there.

For registration you will need a CE certificate or proof of being homebuild. Further you will need a pollution conformity certificate from your engine supplier. Guess why I know this, I went through this procedure.

Cost of registration and validity varies extremely, some like my one only registers residents, some everyone. Forgot, you may register in EU anytime without the yacht being in EU, then no VAT to pay. VAT is due when you enter EU Waters.

My case, boat build in Philippines 10 years ago, registered in Austria, renewal 10 years, no tax paid, radio license Austria, no survey needed

Information is from 2010, legal requirements change occasionally

Fair winds & following seas!

[acunningham]

Originally Posted by blubaju

For EU citizen it is illegal to sail in EU Waters on a EU registered vessel without VAT paid, no grace period

VAt you pay in your country of residence or first port of entry, there are landlocked EU members, no way to sail there.

Are you sure that you mean "EU citizen" rather than "EU resident"? If so, what if your country of residence is not an EU country? What if you have no country of residence?

[blubaju]

Yes, permanent resident is/might be correct, but EU still allows for country specific rules in an EU frameset, for a final decision ask local authority, I am not a lawyer. As you read, Poland and other countries accept non-residents. Austria not.

But anyway, the thread starter is EU-citizen and does not want to sail in EU, so it easy

[blubaju]

EU registered & VAT paid: whenever you leave the EU for more than 3 years your VAT-paid status is lost. Again, no rule w/o local exemption, ask your BIR for an extended period of export before you leave and do not loose it ��

Even Germanies Tax enforcers have some understanding and usually do not tax twice I was told.

[andrewsailor]

Hi,


In the EU there is a convention that boats built 1986 and before won't need to prove their EU-VAT paid status.


For more recent builds EU-VAT needs to be proven/paid if the boat is to be stationed in the EU without exceptions but for age.


The cheapest EU-country for boat-VAT has been Malta for some time not only for companies but also for private individuals.


VAT won't be your only problem if you want to register a non-EU flagged boat in the EU. The real problem may turn out not VAT but the EU-conformity certification for the boat along with all installations including the engine. According to my information this certification may turn out VERY expensive and complicated especially if the boat was not built in the EU.


In view of all problems connected I would suggest you either


- buy a EU flagged boat if you want to register/station it in the EU and register it in the EU, or


- buy a non EU-flagged boat if you want to station it outside the EU and flag it outside EU.


Residency of the owner is irrelevant for flagging or VAT as far as I know, but VAT-status is most relevant for flagging with the exception of older boats as mentioned.



VAT-status paid is lost once the boat is stationed outside the EU for more than 3 years.


Good luck!

[Riggerman]

Same here. Bought My boat 12 years ago in Curacao, it was Dutch flagged, Now is Canadian flagged. Have not paid VAT yet on it, because the boat never been to Canada.

[Belliure 50]

Originally Posted by pyrrano

I recently purchased a sailboat in panama, I'm a dual (US/EU) citizen, just got my polish registration through a licence company. It costs $500 once and it's good for life, no annual registration fees. They also do radio licence if needed. I'm not planning to sail to the EU so VAT doesn't concern me.

https://yachtregistrationspoland.com/

Several insurance companies will insure your polish flagged boat just like any other EU registered ones, it's all about research.

Just to add to that, there is an EU mandate that states if the boat was built prior to 1984 then the vessel is not subject to VAT in the EU.
That said, it also depends on which Med country you arrive at because there are EU rules, then country specific rules that while they claim to be in accordance with EU rules, there’s more paper work involved that if not correct will lead you foul of the authorities. Spain and Italy in particular.