Eu Vat Liability

[Peter Owen]

With funds showng some small signs of recovery, I'm again dreaming about boats and have seen some attractively priced possiblities in Turkey and Croatia on which EU VAT has not been paid.

One seller has suggested that it is quite possible enter and remain in an EU country for a period of three months before leaving for a non-EU destination and then returning for another three months bite of the cherry without incurring a VAT liability - this ad infinitum if not nauseum!

The specific example quoted was a circuit from Turkey to Greece to Croatia to Greece to Turkey but if you add Egypt and Tunisia to the non-EU set ....well, the whole of the Mediterranean's virtually your oyster!

Has anyone got any ideas or, more importantly, first hand experience of the reality of such an approach?

Thanks for your help

Peter

[Nausikaa]

Hi Peter,

Quite simply, if you are a citizen of an EU Member State you are liable for VAT on your boat upon entry into the Community. This applies no matter what flag the boat flies.

Aye // Stephen

[redbopeep]

Originally Posted by Peter Owen

With funds showng some small signs of recovery, I'm again dreaming about boats and have seen some attractively priced possiblities in Turkey and Croatia on which EU VAT has not been paid.

Well, isn't this one of the reasons they're attractively priced--EU VAT not paid? Simply calculate the VAT and figure out if they're still attractively priced after that.

It's never fun to avoid the tax man--how can you find pleasure in a free boating experience w/o schedules etc when you'll be stuck with schedules to enter and leave your home? Doesn't sound good.

[Nausikaa]

One other bit of bad news, if you have a yacht in the EU on which VAT is paid and leave the Union with that boat and are away more than 3 years then you are liable to pay VAT again. Crazy but there you go. You can end up paying VAT on the same boat several times.

Another point to watch out for is if an EU VAT paid yacht is sold outside the EU and then re-imported then VAT should be paid on re-import. Again, you could buy, say. my boat on which I have already paid VAT and is lying in Turkey (its not but just for the sake of discussion). If you did this you would be liable for VAT when you entered the EU with her.

Under the 6th EG VAT Directive, goods may be charged import VAT either if they are reimported within a period which Member States may set between three years and ten years. It is up to the Member State to decide the period. All vessels purchased outside the EU are, however, liable for VAT irrespective of how long they have been abroad.

Great stuff isn't it?

Aye // Stephen

[Peter Owen]

Thanks, Stephen. Couldn't actually believe what the Dutch seller was claiming cos he actually said that he'd sailed the boat back from the BVI to Holland, encountered problems and sailed on to Turkey; sounds like he never actually got to Holland - or was lucky to get out!

Redbopeep, sorry I thought I'd conveyed my understanding of the obvious better - another example of George Bernard Shaw's "two peoples separated by a common language" problem perhaps!

[redbopeep]

My original point was that one wouldn't want to have to have one's schedule dictated by running away from taxes, that's all.

The issue of paying VAT / taxes more than once on your boat also exists here in the USA--but in a different form. If you've been out of country for a while, the government wants to tax you for all the work you've had done on the boat while out of country. This is, in theory, to cover sales tax that you would have paid here. I'm rather amazed by it since our sales tax is a state-by-state thing and the federal government normally doesn't give a hoot about it. When I 've heard cruiser talking about this issue, I've yet to figure out if it is the particular state they re-enter the US in or if it is the federal government collecting money...

In these cases, if you cannot prove exactly what you spent out of country (on maintenance or improvements), then, they'll do an estimate based upon period of time out of country and value of boat. Therefore, always a good idea to keep good records of maintenance while abroad!

I imagine the 3 year thing for VAT is somewhat similar.

Always something.

[Peter Owen]

You're very right, Red. There's always something and Stephen's point about having to pay VAT twice when a boat has been out of Europe for three to ten years is very worrying - especially when on e of the boats I'm viewing in Turkey next week originated in the UK and is described as "tax paid" but has been circumnavigating for the last 12 years!

Something of a comedy really cos ya can't imagine that there's much money in it by tax man's standards - thereagain .......!