Which Flag?

[Heath68]

Hi all,
Our boat was boat by us in Spain and is an EU VAT paid boat (by that I mean it was bought in the EU from new and has stayed here ever since).
We registered it under a UK flag thinking it better than leaving it under its previous Dutch owner. We now have the opportunity to register it under a Malta flag and wondered what, if any, would be the advantages or disadvantages of doing this?
We plan to circumnavigate so we will bump into countries who may like or dislike a UK or Maltese flag but we don't know where they are or who they like/dislike.
Does anyone have any advice for us as to whether this would be a good idea??

Thanks in advance

[boatman61]

Well if circumnavigating an EU flag will be more advantageous than the Red Duster.. makes life easier as one travels via the French islands scattered round the world in the Atlantic, Pacific and Indian Oceans.

[more]

Originally Posted by Heath68

Hi all,
Our boat was boat by us in Spain and is an EU VAT paid boat (by that I mean it was bought in the EU from new and has stayed here ever since).
We registered it under a UK flag thinking it better than leaving it under its previous Dutch owner. We now have the opportunity to register it under a Malta flag and wondered what, if any, would be the advantages or disadvantages of doing this?
We plan to circumnavigate so we will bump into countries who may like or dislike a UK or Maltese flag but we don't know where they are or who they like/dislike.
Does anyone have any advice for us as to whether this would be a good idea??

Thanks in advance

i think is beter poland flag,becouse when sombody see maltese flag is automatic red flag to check passenger i think 90% maltese flag is russian owner. big yacht maltese flag criminal or money londrey.why poland only becouse dont have inspection, registration last lifetime for now

[BM2023]

Malta is one of the more expensive registrations to obtain and maintain. Unless you commercially exploit your vessel, there are more cost-effective registrations than Malta.

Poland can be interesting, but here to, it depends on the type of vessel you have and her age. Under certain circumstances you are subject to a survey and/or (periodical) safety inspection.

So what is a suitable flag for one yacht, does not automatically make it suitable for an other vessel. Vessel type, age and your nationality are all factors that influence the available registration options.

[SailingHarmonie]

Originally Posted by Heath68

Hi all,
Our boat was boat by us in Spain and is an EU VAT paid boat (by that I mean it was bought in the EU from new and has stayed here ever since).
We registered it under a UK flag thinking it better than leaving it under its previous Dutch owner. We now have the opportunity to register it under a Malta flag and wondered what, if any, would be the advantages or disadvantages of doing this?
We plan to circumnavigate so we will bump into countries who may like or dislike a UK or Maltese flag but we don't know where they are or who they like/dislike.
Does anyone have any advice for us as to whether this would be a good idea??

Thanks in advance

Picking your flag to be sure everybody "likes you" is just silly. For 99% of all yachts in the size range we are talking about here the simplest solution is to flag the vessel in your home country. If you decide to do something else, be sure you understand the hassle, cost, and tax consequences. As has already been posted here, those are HIGHLY specific to your situation, and anybody giving you an answer without asking you a dozen questions is very likely to be giving the wrong answer for your case.

Think about it for a second, if the local officials will "dislike" you because you are from the UK, you are going to be checking in with UK passports, so they will know anyway.

The idea that a 48 foot boat will be confused with a Russian oligarch is just about the funniest thing I have heard this week.

[Montanan]

The EU VAT paid status can be lost if the vessel is removed from the EU for more than 3 years. If you go circumnavigating for such a long time one can expect that the vessel will be a new import and subject to duties [if applicable] and EU VAT upon reentry to the EU if the owner / operator has EU residency.

If the owner / operator does not retain EU residency and say is a Brit then the vessel could enter the EU under temporary admission status.

Best check to see if a TA status can be realized if the vessel is flagged as an EU vessel. I believe an EU choice of flagging will cause the vessel to become subject to reentry taxation upon arrival.

It makes no sense for a vessel to have an EU country nationality but then not be subjected to EU taxation upon its import back to the EU.

The EU VAT is substantial and would be a harsh reentry cost if one can avoid such by retaining residency in the UK and flag the vessel with the UK.

Hey, even us Yanks are cool with y'all flying your Union Jack even though we were the first to Brexit back during King Georgy's era.


Can an EU VAT paid yacht lose its VAT paid status?

Yes - an EU VAT paid yacht can lose its VAT paid status. Examples of how a yacht might lose its VAT paid status include:

- The VAT paid is reclaimed (i.e. where the owner was VAT registered and able to reclaim the VAT they paid on vessel purchase); or

- The vessel is sold whilst physically located outside the VAT territory of the EU; or

- The vessel is physically located outside the EU for more than three consecutive years.

In addition, if a vessel is substantially improved or modified without EU VAT having been paid on the improvements or modifications it may no longer be considered as fully VAT paid. VAT will be due on the improvements and new appurtenances.

Bon voyages.

[Heath68]

Originally Posted by Montanan

The EU VAT paid status can be lost if the vessel is removed from the EU for more than 3 years. If you go circumnavigating for such a long time one can expect that the vessel will be a new import and subject to duties [if applicable] and EU VAT upon reentry to the EU if the owner / operator has EU residency.

If the owner / operator does not retain EU residency and say is a Brit then the vessel could enter the EU under temporary admission status.

Best check to see if a TA status can be realized if the vessel is flagged as an EU vessel. I believe an EU choice of flagging will cause the vessel to become subject to reentry taxation upon arrival.

It makes no sense for a vessel to have an EU country nationality but then not be subjected to EU taxation upon its import back to the EU.

The EU VAT is substantial and would be a harsh reentry cost if one can avoid such by retaining residency in the UK and flag the vessel with the UK.

Hey, even us Yanks are cool with y'all flying your Union Jack even though we were the first to Brexit back during King Georgy's era.


Can an EU VAT paid yacht lose its VAT paid status?

Yes - an EU VAT paid yacht can lose its VAT paid status. Examples of how a yacht might lose its VAT paid status include:

- The VAT paid is reclaimed (i.e. where the owner was VAT registered and able to reclaim the VAT they paid on vessel purchase); or

- The vessel is sold whilst physically located outside the VAT territory of the EU; or

- The vessel is physically located outside the EU for more than three consecutive years.

In addition, if a vessel is substantially improved or modified without EU VAT having been paid on the improvements or modifications it may no longer be considered as fully VAT paid. VAT will be due on the improvements and new appurtenances.

Bon voyages.

Wow, lots to think about here. I juat thought its my boat, I am using it to slowly have a look at the world and when i get back i either will sell it or find a permanent mooring somewhere in the EU for it. I didn't realise that I'd have to start paying for it all.over again. What is temporary admission status? Can I or how would I take advantage of that when I get back?

[Loredo]

Ehmmmm... how would the EU know that the boat has left the "home waters" if you don't tell them? IF you transmit on AIS then "they" could know. Otherwise... I know a couple EU boats that went 'round the globe and did not pay VAT again once they returned. I never said this, right?
Then again, define "leaving EU waters". There are several overseas territories that belong to the EU. The best I know is that entering in those territories resets the three year clock.

[Ratbasher]

Although I strongly agree with SailingHarmonie's comments (particularly the first sentence) you really must consult a specialist in the taxation of marine craft and not rely on uncredentialed opinion in a forum. I suggest joining/contacting the Cruising Association as I'm certain they'll already have advised a great deal of people in a similar position to you.

Its a sign of the times that we seem to have to spend far more hours battling with bureaucracy than we do on passage planning.

[boatman61]

Originally Posted by Heath68

Wow, lots to think about here. I juat thought its my boat, I am using it to slowly have a look at the world and when i get back i either will sell it or find a permanent mooring somewhere in the EU for it. I didn't realise that I'd have to start paying for it all.over again. What is temporary admission status? Can I or how would I take advantage of that when I get back?

Theoretically when you reach the Caribe and visit the French islands that sets your EU 3yr vat clock back to the start, same again with the Marqueasas and other French islands in the Pacific.. then you have the French islands in the Indian ocean..
That's how the French get round it..
Although the pedantic will quote the scripture..

Temp admission is if you lose VAT status on the boat, are a foreign national and non EU resident and want to keep the boat in the EU.
Basically the boat is allowed to stay in the EU for 18mths then be removed to a non EU country ie: Turkey, Morocco etc for a minimum of 24hrs after which on return to the EU the clock is reset.. the Owner however will be restricted to the 90 days in, 90 days out as per the normal visa.

[Montanan]

Originally Posted by Loredo

Ehmmmm... how would the EU know that the boat has left the "home waters" if you don't tell them? IF you transmit on AIS then "they" could know. Otherwise... I know a couple EU boats that went 'round the globe and did not pay VAT again once they returned. I never said this, right?
Then again, define "leaving EU waters". There are several overseas territories that belong to the EU. The best I know is that entering in those territories resets the three year clock.

You need to learn the regulations thoroughly else could trigger compliance issues at great expense.

Reference for TA in the EU.

https://taxation-customs.ec.europa.e...ats-faq_en.pdf

If you are a non-resident of the EU then one can pursue a TA.

If you are a resident of the UK and bring the EU VAT paid boat into the UK then you will likely trigger UK VAT / duty upon its import.

Additionally, you will have to deal with Schengen Territorial immigration issues if you are a Brit. That applies to the visa status of the persons not the custom's VAT status of the boat

As to how do the customs know. Well when you arrive and have to clear customs and they ask questions and request documentation. Don't even think about misinformation in that regard, that would induce double trouble.

And yes one does invoke a digital record with AIS and clearances and visas, electronic payments, so it is a simple matter to review.

One needs to review in detail the nature of visas that you may need to arrange for with each of the countries you wish to enter. By way of example, to enter the USA and its territories one will need to have a B1 / B2 visa issued by the US Department of State for each non-citizen [non-pemanent resident] of the USA because arrival by private vessel does not provide for the standard ESTA / visa waiver program VWP for residents of the EU or of the UK. The B1/ B2 visa requires an application, and an interview appointment at the US embassy or consulate in the country of your permanent residency. There can be considerable wait time for an interview appointment depending on which country you need to have your interview take place [weeks, months or years leadtime]. Be sure to obtain the B1/B2 visa while you are in the country of your permanent residence, else you will need to return to the country for the interview. You will not get a B1/B2 visa from the USA upon arrival to the USA by private vessel or airplane. Plan ahead, FAR ahead for everyone that will be onboard.

Ditto for the other countries you intend to go wondering about in your navigating. Each has its own visa requirements. No visa, no entry.

[Montanan]

FYI:

Reference to the EU customs and VAT rules by country and territory.

https://taxation-customs.ec.europa.eu/territorial-status-eu-countries-and-certain-territories_en


Guide to the turnover taxes of France's territories.

https://taxation-customs.ec.europa.eu/turnover-taxes-french-outermost-regions_en

Turnover taxes in the French outermost regions

The French outermost regions and Community VAT legislation
The French outermost regions are not part of Union territory for the purposes of VAT (Article 6 of the VAT Directive).

The harmonised rules on VAT do not apply to the French outermost regions and the application of turnover taxes is a matter for the national or local authorities subject to respect for the general principles of the Treaty on the Functioning of the European Union (TFEU) and, notably, the absence of discrimination in the taxation of products.

The French outermost regions (other than French Guiana and Mayotte) apply a local VAT system closely resembling the Union system but with certain adaptations (reduced rates).

[Montanan]

Originally Posted by Heath68

Wow, lots to think about here. I juat thought its my boat, I am using it to slowly have a look at the world and when i get back i either will sell it or find a permanent mooring somewhere in the EU for it. I didn't realise that I'd have to start paying for it all.over again. What is temporary admission status? Can I or how would I take advantage of that when I get back?

You were making assumptions when thinking. Do not think that way.

You know what they say, to assume is to make an ass out of u and me. Well in this case, just U.

A 20+% VAT fee due immediately upon your return arrival into the EU after a three-year export circumnavigation would be an unpleasant occurrence even if you were aware that would be required; to have such applied without expecting such would be a harsh reality to contend with. The vessel would not be cleared by customs until the fee was paid; it would be impounded. So be forewarned.

And use caution as to similarly triggering the UK VAT on an EU VAT paid status vessel by wandering into the UK customs / VAT territory if you have UK residency.

VAT is one of the types of privilege taxes that arise when one is a resident of a VAT territory. Enjoy the privilege and paying its obligations.

In the USA, many of the States have what is called a Sale and/or Use tax on goods and services [generally about 6 to 10% of the sales value]; there are no VAT in the USA. Sales / Use tax is not as high of percentage as is customary of VAT. Each State has its own taxation laws, not all States have such privilege taxation on a sale or the use of a good. 50 States, 50 rules to contend with. All clear as mud.

Bon voyages.

[Heath68]

I have decided to leave it as it is.. looks like a bit of a minefield to me. Thank you very much for the insight from some of you who told me about tax and french island keeping me within a 3 year rule etc... super useful and money saving! I will be looking into that more.

In the meantime we have had horrific news of a 25,000 euro bill for 2x new SD40 sail drives, so I am trying to get advice on another forum thread about that at the moment.

Fair winds and thanks

Heath & Pookie
S/v Sawasdeekat

[Montanan]

Originally Posted by Heath68

I have decided to leave it as it is.. looks like a bit of a minefield to me. Thank you very much for the insight from some of you who told me about tax and french island keeping me within a 3 year rule etc... super useful and money saving! I will be looking into that more.

In the meantime we have had horrific news of a 25,000 euro bill for 2x new SD40 sail drives, so I am trying to get advice on another forum thread about that at the moment.

Fair winds and thanks

Heath & Pookie
S/v Sawasdeekat

As I posted in #12 above, use caution and gain clarity as to if the French territories may be used to toll the clock as to VAT and keeping the good [the vessel] within EU territory exporting beyond 3 years.

"The French outermost regions and Community VAT legislation
The French outermost regions are not part of Union territory for the purposes of VAT (Article 6 of the VAT Directive)."

As to expenditures:


BOAT - Bring Out Another Thousand.