Buying an EU boat - registration/tax/other issues

[Endless time]

Originally Posted by goboatingnow

Vat is a transaction tax. It must be accounted for every time goods are purchased , sold , imported or exported and can be paid multiple times on the same item.

I have Google researched this multiple times and found many descriptions of how VAT on 'used' goods is applied. For private sales my understanding is that VAT is only paid beyond the original VAT payment when the current value of the used good is greater than the original value the VAT was paid upon. So in my case this would mean that I would not owe VAT again as I am only looking at used boats which are somewhat older and for sale at far less than the original price. (A new boat purchase is dependent on that lottery win I am owed - payment of which keeps getting delayed).

If my understanding is not correct I would appreciate someone with EU experience buying used straightening me out. Txs.

[Montanan]

Originally Posted by AntibesBVI

New to forum so I apologize if protocols are not followed. European purchase to be sailed and flagged in BVI: I didn’t read of an exact scenario that I am contemplating. We are considering buying a new Hanse through a BVI corporation to be built to USCG standards and US systems for resale value and delivered to Med where we can enjoy for a period of time (6 - 18 mo. Is what I have read) before the boat must leave EU to avoid VAT. At such time we will sail to BVI where it will stay. As I understand it, this would avoid any immediate US duty taxes or state sales taxes. We would pay all duties and fees required by BVI which are minimal. I would ask any EU friends if by owning a house in France complicates the avoidance of paying French VAT even though we are non-EU citizens. Great information on this site. Thank you.

[QUOTE=goboatingnow;3577972]Yes owning a house can complicate things if the French decided to press the case. The likelihood is they won’t bother. The vat law is not related to EU citizenship , it’s related to whether you are established inside or outside the EU

Note that Tip is based on importing the boat , in theory if you buy the boat in the EU you need to export it and then import it to claim tip[/QUOTE]



To avoid paying VAT, the vessel would need to be delivered for purchase outside of the EU and then can be imported under the TIP arrangement if the owners are not EU residents. If the vessel is purchased in the eU it will be subject to VAT due upon sale, which can be clawed back by a prompt export by a non-EU resident.

[Anders]

Originally Posted by Endless time

I have Google researched this multiple times and found many descriptions of how VAT on 'used' goods is applied. For private sales my understanding is that VAT is only paid beyond the original VAT payment when the current value of the used good is greater than the original value the VAT was paid upon. So in my case this would mean that I would not owe VAT again as I am only looking at used boats which are somewhat older and for sale at far less than the original price. (A new boat purchase is dependent on that lottery win I am owed - payment of which keeps getting delayed).

If my understanding is not correct I would appreciate someone with EU experience buying used straightening me out. Txs.

VAT is never charged when sold from a private seller. VAT is charged when sold from a VAT registered company or when imported. The exception is some schemes where VAT was never paid.

[Montanan]

Originally Posted by Endless time

I have Google researched this multiple times and found many descriptions of how VAT on 'used' goods is applied. For private sales my understanding is that VAT is only paid beyond the original VAT payment when the current value of the used good is greater than the original value the VAT was paid upon. So in my case this would mean that I would not owe VAT again as I am only looking at used boats which are somewhat older and for sale at far less than the original price. (A new boat purchase is dependent on that lottery win I am owed - payment of which keeps getting delayed).

If my understanding is not correct I would appreciate someone with EU experience buying used straightening me out. Txs.

You would not need to pay VAT is the vessel was of proper VAT Paid Status. If VAT had not been paid, or if the vessel lost its VAT paid status then you will need to make a VAT payment.

Depends on the particulars of the vessel.

[goboatingnow]

Originally Posted by Montanan

You would not need to pay VAT is the vessel was of proper VAT Paid Status. If VAT had not been paid, or if the vessel lost its VAT paid status then you will need to make a VAT payment.

Depends on the particulars of the vessel.

While it’s commonly used moniker , goods do not have a VAT status as the vat situation applies to the transactions associated with the goods

Where goods are sold by people who are not vat registered , and who are not “ habitually “ engaged in such sales , that the vat laws allow an exemption and vat does not have to accounted for. In theory this is irrespective of the “ vat status “ as that issue is the legal responsibility of the seller of the un vat registered vessel.

But for the common situation of a vat paid boat , sold by EU non vat registered individuals , the exemption provides for no further vat accounting , except where importation / exportation takes place. for example a EU resident selling a vat paid vessel abroad ( outside the EU) to another EU individual who reimports the boat, vat is due again . It doesn’t matter if the asset is sold for more money either ,no additional vat is due as the sale is covered by the vat exemption, of course capital gains tax could apply !!

Once you enter realm of vat registered individuals or companies , that’s a whole other body of vat law.

But the point remains , it’s not illegal per se to sell a vat not paid boat in the EU. The vat situation depends on a number of things and clearly must be legally resolved during the sale.

To spell it out

*Non vat sale to EU resident for immediate export , legal
* Non vat sale to vat registered buyer , (a) across inter community border , no vat , (b) within two domestic parties vat paid and reclaimed
* non vat sale to non eu resident , legal
* non vat sale to certain lease arrangements , legal
* non vat sale to certain special designated EU territories , legal.

* non vat sale to EU tax resident not vat registered , vat must be paid either before the sale ( this is most advantageous ) or be paid on completion of the sale. But again the seller is NOT prohibited from actually selling the boat vat not paid. The buyer must resolve that situation ( even though in theory it’s the seller legal obligation to pay the vat, but the buyer hasn’t good title )

[AntibesBVI]

Thank you. Very helpful! Yes, we reside in the US, both have US passports, and spend several weeks in France but vast majority in US. I don’t see us bringing the boat to US other than a visit. So, as I understand it, although we would not be responsible for US taxes so long as vessel stays offshore, despite the long arm of the US, a buyer importing to the US could not show where VAT was previously paid and so they would need to deal with US Customs duties and any local taxing authority. This is what I understand from what I just read. This works for me. I think that it’s a great plan worth pursuing.
Log some hours in the Med exploring ports there, and then, with some help, maybe join the ARC to sail across with company. Does this sound like a proper course? Thank you, again, for the information.

[letsgetsailing3]

Originally Posted by AntibesBVI

Thank you. Very helpful! Yes, we reside in the US, both have US passports, and spend several weeks in France but vast majority in US. I don’t see us bringing the boat to US other than a visit. So, as I understand it, although we would not be responsible for US taxes so long as vessel stays offshore, despite the long arm of the US, a buyer importing to the US could not show where VAT was previously paid and so they would need to deal with US Customs duties and any local taxing authority. This is what I understand from what I just read. This works for me. I think that it’s a great plan worth pursuing.
Log some hours in the Med exploring ports there, and then, with some help, maybe join the ARC to sail across with company. Does this sound like a proper course? Thank you, again, for the information.

Please post your experiences on this forum. I'd be very interested to follow how your purchase, registration, and adventures go!

[greenlantern]

Originally Posted by Endless time

Hi DS. Thanks.

I am strictly learning here so I may be wrong on many items.

However I have read that the yacht import duty to the US is not 5% but rather 1.5%. Here is a link to that:

https://cbpcomplaints.cbp.gov/s/arti...rm%203520%2D21.

Re: entering the US temporarily. I have read that a foreign registered yacht is issued a US cruising permit that is good for 1 year. I cannot find any info that this is affected by the citizenship of the owner. This is my question for my scenario.

Regarding the need for a EU tax number to register a boat in the EU I just came across the below link regarding a Polish registration which states that they will register and flag a boat for a non-EU passport holder directly in the owners name (for 575 euros). It does not mention the need for a tax number.

https://yachtregistration.navy/?gcli...YaAi1iEALw_wcB

Comments, corrections, omissions, misunderstandings?

...This is basically correct; There is no need for a tax number or proof of VAT paid status to register a boat in Poland. A non-EU passport holder can register their boat in their name in Poland; yes. There are no renewals required, so it is a lifetime registration. More info here:

https://www.polishyachtflag.com/blog...he-polish-flag

[Montanan]

Originally Posted by AntibesBVI

Thank you. Very helpful! Yes, we reside in the US, both have US passports, and spend several weeks in France but vast majority in US. I don’t see us bringing the boat to US other than a visit. So, as I understand it, although we would not be responsible for US taxes so long as vessel stays offshore, despite the long arm of the US, a buyer importing to the US could not show where VAT was previously paid and so they would need to deal with US Customs duties and any local taxing authority. This is what I understand from what I just read. This works for me. I think that it’s a great plan worth pursuing.
Log some hours in the Med exploring ports there, and then, with some help, maybe join the ARC to sail across with company. Does this sound like a proper course? Thank you, again, for the information.

Your bringing the boat for a "visit" would be an importation into the USA and become subject to customs clearance upon entry and subject to federal tariff duty. State taxes could become imposed depending on the laws of the specific state into which waters you are using and for how long you stay. Again 50 States, 50 sets of rules, all of which are readily available for review on line, if and when you decide to bring your vessel into the USA.

Any VAT paid on the vessel has no relevance to taxation in the USA as there is no VAT in the USA, only sales and use taxation and only in specific states of the USA. VAT may be due upon purchase in the EU, if the vessel is purchased in the EU and / or if you overstay your temporary admission period if you import the vessel into the EU.

Don't confuse the subjects and the taxations.

[Montanan]

Originally Posted by Endless time

Hi DS. Thanks.

I am strictly learning here so I may be wrong on many items.

However I have read that the yacht import duty to the US is not 5% but rather 1.5%. Here is a link to that:

https://cbpcomplaints.cbp.gov/s/arti...rm%203520%2D21.

Re: entering the US temporarily. I have read that a foreign registered yacht is issued a US cruising permit that is good for 1 year. I cannot find any info that this is affected by the citizenship of the owner. This is my question for my scenario.

Regarding the need for a EU tax number to register a boat in the EU I just came across the below link regarding a Polish registration which states that they will register and flag a boat for a non-EU passport holder directly in the owners name (for 575 euros). It does not mention the need for a tax number.

https://yachtregistration.navy/?gcli...YaAi1iEALw_wcB

Comments, corrections, omissions, misunderstandings?

Endless, you are a US citizen as such any importation of the boat will be subject to Customs clearance and import tariff duty.

"According to the official CBP website, sequential cruising licenses can be issued to US residents sailing a foreign-flagged boat if it was made in the U.S. or if duty has been paid on its importation." Reference: https://www.noonsite.com/place/usa/f...uments-section





https://help.cbp.gov/s/article/Artic...language=en_US
Cruising licenses are normally valid for up to a year. These licenses can be obtained from the U.S. Customs and Border Protection (CBP) Port Director at the first port of arrival in the United States.

Under CBP policy, non-U.S. residents are not eligible for successive cruising licenses. A new license will not be issued unless the following two conditions have been met: (1) at least 15 days have elapsed since the previous license either expired or was surrendered, and (2) the vessel arrives in the United States from a foreign port or place. (Customs Directive 3130-006A) CBP will want to see foreign clearance paperwork as evidence that you are arriving from a foreign location.

Non-residents are cautioned to plan carefully so that the mandatory 15-day period does not fall in the middle of a planned stay in U.S. waters. It may make sense to surrender your cruising license to a CBP Officer when you leave the United States waters and then obtain a new one when you re-enter the United States.

Traveling outside of U.S. waters while your cruising license is still in effect does NOT fulfill the 15-day requirement.

[Endless time]

Originally Posted by Montanan

You would not need to pay VAT is the vessel was of proper VAT Paid Status. If VAT had not been paid, or if the vessel lost its VAT paid status then you will need to make a VAT payment.

Depends on the particulars of the vessel.

Ah yes this I know. In my OP in this thread I mentioned that I was looking at VAT Paid boats particularly, so I am good now on my particular situation as my questions have been answered. Txs All.

[Endless time]

Montanan

I guess I was not done after all. Re: from your last post.

Endless, you are a US citizen as such any importation of the boat will be subject to Customs clearance and import tariff duty.

"According to the official CBP website, sequential cruising licenses can be issued to US residents sailing a foreign-flagged boat if it was made in the U.S. or if duty has been paid on its importation." Reference: https://www.noonsite.com/place/usa/f...uments-section

That quote from the CBP website is immediately followed by the following:

Vessels are not required to obtain a cruising license, but foreign-flagged yachts without cruising licenses must file an additional CBP-1300 for each time the vessel changes ports and must clear in and out of each port. There is an additional filing fee for each CBP-1300 (approx. $20). This includes each arrival into the USA, departing from the USA to a foreign port, and ANY movement within the USA.

So this begs the question on how this applies to my description from the OP. Since the only reason I was even thinking of stopping in the US at some future date with the boat was to resupply to return to Europe can I not take advantage of the scenario in the 2nd quote and just pay the fee for the CBP-1300 so I can stop in a port?

[krismatski]

When you buy a boat to sail in the EU or elsewher it is the most convinient to register it in Poland. The registration is lifetime, no renewals and technical/inspection free, as long as it is for your own pleasure use and the bare hull is not longer than 15m. If longer, two technical inspections over a 5 year period are obligatory . Email me, if any help required.

[Mariefred]

"Vat is a transaction tax. It must be accounted for every time goods are purchased , sold , imported or exported and can be paid multiple times on the same item."


That's not correct. There's no more VAT on a good once the tax people have the VAT and keep it. It may be a one time transaction tax, but it's not charged every time something changes hands.

Basically, if they don't have the cash in their account for something sold in their jurisdiction, they'll want it (so imported goods, stuff where the VAT's not been paid, or the seller has claimed the VAT back). If they have the cash, you can sell it without charging VAT.

[Anders]

Originally Posted by Mariefred

"Vat is a transaction tax. It must be accounted for every time goods are purchased , sold , imported or exported and can be paid multiple times on the same item."


That's not correct. There's no more VAT on a good once the tax people have the VAT and keep it. It may be a one time transaction tax, but it's not charged every time something changes hands.

Basically, if they don't have the cash in their account for something sold in their jurisdiction, they'll want it (so imported goods, stuff where the VAT's not been paid, or the seller has claimed the VAT back). If they have the cash, you can sell it without charging VAT.

VAT is a transaction tax and is charged everytime it's sold by a VAT registered company(with a few exceptions).
It's also charged everytime you import anything unless there is a relief.