Buying a Yacht in Europe

[stinger9]

Can anyone confirm if one was to buy a used yacht in Europe and the buyer was not from the EU/GB and registers the boat in a non EU/GB country then VAT is not required. However if that boat was to remain in Europe longer than 18 months after purchase then VAT would have to be paid. How long does the yacht have to stay out of Europe after the 18 months before the clock can start again to return. This whole tax thing is a minefield and would appreciate views of owners who have gone thru this.

[haiqu]

Hi stinger9,

It certainly is a minefield. VAT is payable if the yacht stays in the EU zone for longer than 18 months, so one has to exit to a non-EU country to "reset the clock". This can be as simple as traveling to Morocco or Turkey and getting your entry / exit visa stamp to prove you've been there. While Gibraltar is not part of the EU zone many countries won't accept this as a reset, either for VAT or Schengen visa purposes.

An extension of up to 6 months is allowable if the yacht is placed in bond while you return home for a holiday, but some countries - notably France - don't recognize this so it's best to just reset the clock.

If you plan to tour the Med over several seasons it's best to put the yacht up on the hard in a non-EU country while traveling home or doing extended inland trips.

As an Australian citizen you will be charged approx. 20-25% of the value of the yacht on re-entry to Australia, payable immediately. This comprises 5% import duty, cost of shipping from the last port of call and finally 10% GST on the whole lot. Even if you are continuing through on a world tour or plan to sail forever this applies unless you can prove residence in another country. Such proof should include a valid resident visa, rent and utilities receipts and marina fees.

[stinger9]

Thanks haiqu. So if you intend not to bring it back to Australia and travel to north Africa once every 18 months then you don't pay any tax on the boat whilst remaining in the Med?

[haiqu]

Correct. The other complication is related to the Schengen visa. With one of those you personally can only stay in the Schengen zone (which is different from the countries for which VAT applies!) for a maximum of 90 days in any 180 day period. That means your visa stamps in and out of the Schengen zone must add up to less than 90 days on a rolling basis for each day you're there.

A Schengen multi-entry visa can't be "reset" by just leaving for a couple of days. However there are countries such as Albania, Turkey, the UK, Georgia or even Germany (which is a special case for Australians) where you can stay for at least 90 days.

Holders of NZ passports have a much better deal, since they had bilateral agreements with most EU countries prior to the Schengen agreement, and can stay in most of them for 90 days regardless.

[stinger9]

How do they keep track of yachties who infrequently use marinas? Flying the Q flag but anchored of the coast of say Greece or Croatia and going ashore via tender seems a bit of hit or miss if you get a visit from Customs especially during high season. They must be overun.

[haiqu]

There are specific entry points and they do watch carefully. In Croatia for instance yachties have been fined for heading past the first entry point and going for the next one. They can spot your AIS signal a long way off, for one thing. Good reason to turn it off I reckon ...

Still, it doesn't pay to mess with them too much, they have enough problems with millions of Syrian refugees arriving in leaky barges. Don't expect any of them to know all the rules or have the slightest bit of patience.

[stinger9]

I understand that those countries on the western shores of the Adriatic which would allow people to extend or reset the visa are about to join the Schengen group. That would mean for any noneuropean wishing to stay in the Med longer than 3 months would need to rotate 3 months Nth Africa/GB/Norway and 3 months Mediterranean Schengen countries. It will be interesting to see what happens with the yacht market when those countries join the Schengen visa group.

[stinger9]

Sorry, that should have read "Eastern Shores of the Adriatic".

[haiqu]

Yes indeed. Bulgaria, Croatia, Cyprus and Romania are on the table to join Schengen soon. Turkey is still an option, or if you get really adventurous you could also try Georgia which allows 365 days on their visa. Ukraine is not really an option since Russia took over the Sebastopol peninsula.

Australia has pre-existing agreements with Belgium, Netherlands, Denmark, Germany and Norway for 90 days out of 180 regardless of Schengen but once you leave you'd either have to go to the next country on that list or head over to the UK for 90 days. There are also a few countries in which we can legally work, which is interesting.

I've been making up a spreadsheet with all the rules but it's complicated to the max. For instance, as an Aussie you can get visa exemption from the USA through the Visa Waiver Program if arriving on an aircraft or cruise ship, but arriving by yacht is an entirely different matter. In that case you have to apply for a B1 B2 visa at an embassy (180 days but extendable), and a 12 month multi entry cruising permit for the yacht on arrival at either Puerto Rico or Florida. These rules do make life difficult, but the good news is that the visa is valid for 10 years.

The EU has been reviewing the rules for non-EU cruising yachts for a couple of years but no changes have yet been made.

[stinger9]

Wouldn't mind a copy of the spreadsheet when you finish. Thanks

[haiqu]

Oops, forgot to mention that a few Muslim counties are on the USA's "sh*t list" so if you enter them you won't get into the states. This includes Libya and Syria.

If you go to Israel you won't get into any Arab countries easily. If you go to Northern Cyprus you won't get into Greece.

Politics.

Monaco isn't in Schengen either, but the likes of you and me couldn't afford to live there for 90 days.

[haiqu]

Originally Posted by haiqu

As an Australian citizen you will be charged approx. 20-25% of the value of the yacht on re-entry to Australia, payable immediately. This comprises 5% import duty, cost of shipping from the last port of call and finally 10% GST on the whole lot. Even if you are continuing through on a world tour or plan to sail forever this applies unless you can prove residence in another country. Such proof should include a valid resident visa, rent and utilities receipts and marina fees.

I've just had a PM in which the author took me to task, saying that only 15.5% tax is payable on entry to Australia. While I have no argument with this simplistic viewpoint, what I actually said was "You will be charged approx. 20-25% of the value of the yacht." (see above)

This is partly taxes, but that ignores all the other costs. I'm attaching a snapshot of the typical import costs of a 34' cat purchased in the UK for AU$73,800 and brought to Australia. This is a real world example of a yacht I was looking at a few weeks ago. Even if the invoice value isn't queried by customs - and often an assessor is called in to put a local value on the yacht for tax purposes - a typical landed cost would be AU$92,641 after some minimal improvements to make a safe journey.

In the example below the spreadsheet figures show 16% overall costs including taxes, but excluding the value of improvements made.

(3257 + 8584) / 73800 = 16.04%

In a way he was right, because in his case the left column costs would be vanishingly small when taken against the purchase price of his Lagoon 450. However, in the case of a 35' monohull bought for AU$30,000 they become significant, and the overall costs might easily exceed 20% of purchase price.

At the time I made the statement I was also under the impression that voyage costs from port of purchase were included, but on digging a bit further it appears that only voyage costs from the last port of call before Australia are taxed by customs.

Cost of Australian compliances for gas, electrical, refrigeration, EPIRB and so on hasn't been factored in at all. If it was easy or cheap everyone would be doing it.

[Auzzee]

When I bought my vessel, I spoke with Oz authorities who told me that if I bought overseas, then registered it in Oz, then sailed it to Oz,without 'too much' delay, I could reduce the value of the boat for tax, by the amount of money it cost for delivery.

Every little bit helps. But, of course, I still haven't got it back to Oz because I'm having loads of fun in the Caribbean and off the coast of Florida.
So there!

[haiqu]

That's backwards Auzzee. Perhaps you misunderstood them, or possibly they were talking about some undocumented "depreciation" figure due to the wear and tear of the journey. Personally I wouldn't try that on unless I was absolutely certain that if they used an assessor the figures would fall my way.

Total import cost applied at the border is (cost of yacht + improvements + shipping + 5% duty on the last three) * 10% GST + the fees in the left column, as applicable. Voyage costs i.e. cost of shipping are never deducted.

In your case the 5% duty may not apply since we have a reciprocal arrangement with the USA and NZ.

And if you leave it a long time - I'm unsure what is meant by a long time but I'd hazard a guess at this meaning "not immediately shipped" - they're required to have the value assessed and tax applied against the notional local resale value, since the invoice value would be irrelevant due to maintenance and improvements done in the interim.

That also applies automatically if the sale wasn't at arm's length, or if the invoice value looks too low to be believable.

As for having fun in the Carib ... bastard!

[Auzzee]

I was told, quite unequivocally, that the cost of delivery was a legitimate deduction. This was in 2011 and may well have changed.

Meanwhile, Me, having a stinking time.....

[haiqu]

You're still wearing the same hat!

Here it is from the horse's mouth ...

https://www.border.gov.au/Trav/Ente/...orting-a-yacht

In the case of a local valuation being necessary the tax amounts and transport costs are deducted to arrive at the value to be taxed. That's the only use of "deduction" in the whole scheme of things.

[Auzzee]

The old hat was a gen-you-wine Chappelli cricket job. The new one is from West Marine, made by Colombia, and as far as quality is concerned, it's not on the same hat rack. I think the original was from 1994-ish.

And, of course, I haven't aged a single day.

[LeoH]

Just make sure the yacht is still afloat. No, seriously have somebody experienced a decline in quality of boats in last few years? Keep bumping to this topic in other forums and articles. Even found this hilarious website. But I find it really hard to believe one boat had so many problems.