EU boat reregistered outside EU can it stay in the EU tax free?

[CatNewBee]

Originally Posted by nwdiver

OK as usually most are missing the point entirely.........READ THE THREAD OR DONT ADD TO IT.......

if I buy a say 3 year old boat on Spain, that VAT has been paid during its purchase I need to reflag it.......I will register it as Canadian......... Got it so far?

Now the question, that has been sort of answered......can the boat stay in the EU indefinitely? That is the situation and question...........

I would say No, but you can ask the tax authorities in that country what happens when you leave the boat longer there.

You are a foreigner and the boat is under foreign registration. You have 18 months grace period. If you overstay, you will have to pay import taxes / re-flag the boat etc. I am not sure if the VAT paid status would help you to avoid a second time VAT charge for the import then at all, because after the foreign registration it will be probably void.

You can register the vessel under the flag of an EU country in the first place and then stay in the EU indefinitely, also the VAT status then could remain / help you. Also you can then give the boat to an European charter company if you like. With the canadian flag it would be more difficult.

As a foreigner you can own a EU flagged vessel (a country of your choice), that remains in the EU indefinitely, you cannot stay with a Canada-flagged vessel longer than 18 months..

The registration / flag means something. It is the jurisdiction / law that applies on board. The boat is then a piece of that country. As a piece of Canada you can stay not longer than 18 months, as a piece of an European country you can stay as long as you like in European waters.

If you sail with the European flag to Canada you will have a grace period too depending on Canadian regulations - you may have to import the vessel and pay all import duties as Canadian citicen + re-flag the boat.

Same applies to European citizen when buying a boat outside of Europe. As soon as we enter European waters we have to either import, tax and re-flag the vessel - or sailing under foreign flag - leave Europe after 18 months.

[crankysailor]

Originally Posted by CatNewBee

As a foreigner you can own a EU flagged vessel, that remains in the EU indefinitely.

Well, technically no. At least in none of the EU countries I am familiar with, YMMV. For example, as a Canadian, you can't just go to Germany, register a boat and put a german flag in it. In this case, to get a Flaggenzertifikat , the owner of (at least 51% of the boat) must be German, for example. And yes, I did ask them :-)

There are some schemes we all know about, particularly in the Netherlands and I reckon Belgium, etc.. for a few hundred bucks someone provides you with an address and a front company is registered, on which name the boat is then registered, etc. So yeah, there are loopholes. YMMV.

[CatNewBee]

Originally Posted by crankysailor

Well, technically no. At least in none of the EU countries I am familiar with, YMMV. For example, as a Canadian, you can't just go to Germany, register a boat and put a german flag in it. In this case, to get a Flaggenzertifikat , the owner of (at least 51% of the boat) must be German, for example. And yes, I did ask them :-)

There are some schemes we all know about, particularly in the Netherlands and I reckon Belgium, etc.. for a few hundred bucks someone provides you with an address and a front company is registered, on which name the boat is then registered, etc. So yeah, there are loopholes. YMMV.

You can do this in Germany too afaik, you need a kind of sponsor with an address in Germany for all boat related paperwork and later contacts. There is no registration necessary for vessel under 15m in Germany, there are alternatives to the "Flaggenzertifikat" issued by local sail clubs. Also you can go the whole nine yard and make a real registration even for small vessel to the ship register court as a foreigner, maybe you will then need some help by an attorney office for the paperwork / as an address for the later correspondence if necessary.

On the application template for the Flaggenzertifikat in Germany you are explicitly asked to enter the country of the owner / applicant - it is not necessary Germany - it could be a citizen from any European country - and in this case you have to fill out the second section of a local deputy if you are not a resident in Germany.

The real "ship registration" is more complex and expensive, but offers more flexibility I guess.

The Netherlands are even more relaxed in this case.

[valhalla360]

Originally Posted by CatNewBee

I would say No, but you can ask the tax authorities in that country what happens when you leave the boat longer there.

You are a foreigner and the boat is under foreign registration. You have 18 months grace period. If you overstay, you will have to pay import taxes / re-flag the boat etc. I am not sure if the VAT paid status would help you to avoid a second time VAT charge for the import then at all, because after the foreign registration it will be probably void.

You can register the vessel under the flag of an EU country in the first place and then stay in the EU indefinitely, also the VAT status then could remain / help you. Also you can then give the boat to an European charter company if you like. With the canadian flag it would be more difficult.

As a foreigner you can own a EU flagged vessel (a country of your choice), that remains in the EU indefinitely, you cannot stay with a Canada-flagged vessel longer than 18 months..

The registration / flag means something. It is the jurisdiction / law that applies on board. The boat is then a piece of that country. As a piece of Canada you can stay not longer than 18 months, as a piece of an European country you can stay as long as you like in European waters.

If you sail with the European flag to Canada you will have a grace period too depending on Canadian regulations - you may have to import the vessel and pay all import duties as Canadian citizen + re-flag the boat.

Same applies to European citizen when buying a boat outside of Europe. As soon as we enter European waters we have to eiter import and tax the vessel - or under foreign flag -leave Europe after 18 months.

OP: This whole post has so many issues, please ignore it.

- EU VAT and registration/flagging are two separate issues.
- You can keep a Canadian boat in the EU as long as you like but eventually, the EU VAT needs to be paid (if not already VAT paid) and it may incur local taxes. It's fairly easy to avoid the issue by taking the boat out of the EU for a short period and resetting the clock for another 18 months.
- Visas to stay in the country run on a totally unrelated system where you get 90 out of the last 180 days in the EU (UK & Ireland are separate, search the Schengen for threads with more details).
- An EU citizen who is a resident, doesn't get to take advantage of the 18 month temporary import regardless of the flag on the boat. It's ownership residency that counts.
- Non residents generally can't flag the boat in an EU country.

[CatNewBee]

Originally Posted by valhalla360

OP: This whole post has so many issues, please ignore it.

- EU VAT and registration/flagging are two separate issues.
- You can keep a Canadian boat in the EU as long as you like but eventually, the EU VAT needs to be paid (if not already VAT paid) and it may incur local taxes. It's fairly easy to avoid the issue by taking the boat out of the EU for a short period and resetting the clock for another 18 months.
- Visas to stay in the country run on a totally unrelated system where you get 90 out of the last 180 days in the EU (UK & Ireland are separate, search the Schengen for threads with more details).
- An EU citizen who is a resident, doesn't get to take advantage of the 18 month temporary import regardless of the flag on the boat. It's ownership residency that counts.
- Non residents generally can't flag the boat in an EU country.

So what would be the status of a foreign flagged boat imported after overstaying the18 months in the EU and paying the import duties and taxes?

When you leave and re-enter will you have to re-import it and re-tax it again and again and again?

[valhalla360]

Originally Posted by CatNewBee

So what would be the status of a foreign flagged boat imported after overstaying the18 months in the EU and paying the import duties and taxes?

When you leave and re-enter will you have to re-import it and re-tax it again and again and again?

In the example, a Canadian boat over 18 months having paid EU VAT would be an EU VAT paid Canadian boat.

If the boat leaves and re-enters, you have to clear customs but assuming you continue to own the boat, retain evidence of being VAT paid and it hasn't been years outside the EU, the boat is still an EU VAT paid Canadian boat with no new VAT due.

VAT and Registration are two different things.

[CatNewBee]

Originally Posted by valhalla360

In the example, a Canadian boat over 18 months having paid EU VAT would be an EU VAT paid Canadian boat.

If the boat leaves and re-enters, you have to clear customs but assuming you continue to own the boat, retain evidence of being VAT paid and it hasn't been years outside the EU, the boat is still an EU VAT paid Canadian boat with no new VAT due.

VAT and Registration are two different things.

Its not only the VAT, but also the import duties of several percent. There will be CETA in the future, but for now you'll have to pay the import tax too.

In this case the boat was already in the EU registered, so the next statement does not apply - but for a foreign built boat imported after 18 month in the EU you may also have to pay and refit the boat to meet CE certification, this could add up another 6.000€ to the bill.

It is really easier to sail away every 18 month and come back to re-trigger the counter. Its not that bad either. Just go to Algeria, Turkey, Malta, Cyprus, Gibraltar or what ever. It's not too far away.

[crankysailor]

Originally Posted by CatNewBee

You can do this in Germany too afaik, you need a kind of sponsor with an address in Germany for all boat related paperwork and later contacts.

Yeah that's true .. but not if you are not an EU national.. this option works only if you are let's say from Spain, etc... which means you are subject to EU VAT etc anyway, etc, etc....

There is no registration necessary for vessel under 15m in Germany, there are alternatives to the "Flaggenzertifikat" issued by local sail clubs.

True.. as long as you are only going to be in Germany.. the moment you start cruising around the EU you should have a registration to avoid issues. Also, the ADAC, etc registration etc doesn't entitle you to fly the german flag etc.. you end up (at least in theory) with a german registered boat flying the canadian flag.. and trust me, that is going to confuse the hell of portuguese officials. In fact, some officials in the southern part of the EU don't even know the EU exists, let alone the intrincancies of these loopholes and gotchas :-)

Like I said, don't ask me how I know :-) ..

[valhalla360]

Originally Posted by CatNewBee

Its not only the VAT, but also the import duties of several percent. There will be CETA in the future, but for now you'll have to pay the import tax too.

Import duty is different from the discussion regarding VAT.

It's an interesting thought but I've never heard of anyone ever suggesting an import duty was assessed on top of VAT. Not sure if it's true or not or if the authorities are just happy to get a 20% cut on the value of a foreigners boat so they don't push it. I would expect similar to VAT, once you've paid any import duties, as long as you retain the paperwork,
they are unlikely to challenge it.

In this case the boat was already in the EU registered, so the next statement does not apply - but for a foreign built boat imported after 18 month in the EU you may also have to pay and refit the boat to meet CE certification, this could add up another 6.000€ to the bill.

If you leave it as Canadian flagged, you don't have to worry about CE certification (I don't think Canada enforces CE). If you change to an EU flag, it needs to be CE certified and as you say, it can be expensive if the boat wasn't originally certified from the manufacturer. Plus you left out if it even can be CE certified. To retrofit a boat may be impractical in the extreme.

It is really easier to sail away every 18 month and come back to re-trigger the counter. Its not that bad either. Just go to Algeria, Turkey, Malta, Cyprus, Gibraltar or what ever. It's not too far away.

If the VAT will be high, playing the 18 month rule and staying non-VAT makes more sense. Non-EU citizen/residents have to be out of the EU 90 out of 180 days anyway. The end result is you take the boat out to reset the clock or have the boat sealed extending the 18 months.

[nwdiver]

The new Canada-EU free trade deal prevents double taxation, if the VAT has been paid its paid and it's a Canadian flagged vessel from the EU.........we will see.....

[valhalla360]

Originally Posted by nwdiver

The new Canada-EU free trade deal prevents double taxation, if the VAT has been paid its paid and it's a Canadian flagged vessel from the EU.........we will see.....

If it works, it may be a cheap way to import a VAT paid boat to the EU. I believe the federal Canadian VAT is only 5% if you can dodge the provincial VAT (by immediately leaving after purchase), that's darn cheap if legal. Even with provincial vat it's still only around 13%. The low end in the EU is around 20%.

The big question is if they consider VAT an import duty or a local sales tax. Free trade deals are usually about import duty. If you import products from Canada for resale, it should get you out of the import duty but the end buyer still pays VAT. The question is since you would be both the importer and the end buyer, how do they treat you in regard to VAT.

I would definitely get a legal opinion as it could be an expensive mistake if they decide Canadian VAT doesn't count under the free trade deal.

[CatNewBee]

Well it's easy.

You are a Canadian, you buy a Boat in the EU and register / flag it with Canadian Flag.

That means you export the boat from the EU to Canada.

You enter / stay with the boat in Europe, that means the boat can stay 18 months from the day of sale / entry in EU waters.

If you not leave the EU before 18 months you overstay the legal period. Then the boat has to be imported, and this would trigger import tax, CE-certification and if you are considered a resident in the EU, you have to pay the VAT. If you can prove, the VAT is already paid in the EU with original Invoice, you will be fine.

If you are not a EU resident, the VAT of all products you buy in the EU AND EXPORT you can claim a VAT refund - if you have an Invoice to You from a business with a VAT stated on it. You are only subject to VAT payment if you not export the product (e.g. invoices from grocery stores you not show to the Toll when leaving). You can stock up your Yacht toll-free when leaving!

If you buy from private you would not get an Invoice with VAT stated, because private trades are not subject to VAT payments / refunds. The VAT is paid only by the end-consumer, companies claim and transfer the VAT to the TAX authorities and get the VAT paid on products refunded by the tax authorities, so companies in fact do not pay VAT, they only collect the VAT for the TAX authority along the value chain, and only the end user cannot get it refunded.

This is the game.

When companies buy / sell products across the EU borders they do not add VAT on invoices, but have to report inner-EU sales to the Tax authority of their country to prove the export, along with the amount and the European TAX-ID of the buying company. The VAT is collected only within the country of jurisdiction of the Seller.

[nwdiver]

Originally Posted by valhalla360

If it works, it may be a cheap way to import a VAT paid boat to the EU. I believe the federal Canadian VAT is only 5% if you can dodge the provincial VAT (by immediately leaving after purchase), that's darn cheap if legal. Even with provincial vat it's still only around 13%. The low end in the EU is around 20%.

The big question is if they consider VAT an import duty or a local sales tax. Free trade deals are usually about import duty. If you import products from Canada for resale, it should get you out of the import duty but the end buyer still pays VAT. The question is since you would be both the importer and the end buyer, how do they treat you in regard to VAT.

I would definitely get a legal opinion as it could be an expensive mistake if they decide Canadian VAT doesn't count under the free trade deal.

The boat is Will be purchased VAT paid in the EU, the treaty prevents collection of VAT a second time, and yes import from Canada of a Canadian built boat with Canadian taxes paid maybe cheaper.........

[nwdiver]

Originally Posted by CatNewBee

Well it's easy.

You are a Canadian, you buy a Boat in the EU and register / flag it with Canadian Flag.

That means you export the boat from the EU to Canada.

You enter / stay with the boat in Europe, that means the boat can stay 18 months from the day of sale / entry in EU waters.

If you not leave the EU before 18 months you overstay the legal period. Then the boat has to be imported, and this would trigger import tax, CE-certification and if you are considered a resident in the EU, you have to pay the VAT. If you can prove, the VAT is already paid in the EU with original Invoice, you will be fine.

If you are not a EU resident, the VAT of all products you buy in the EU AND EXPORT you can claim a VAT refund - if you have an Invoice to You from a business with a VAT stated on it. You are only subject to VAT payment if you not export the product (e.g. invoices from grocery stores you not show to the Toll when leaving). You can stock up your Yacht toll-free when leaving!

If you buy from private you would not get an Invoice with VAT stated, because private trades are not subject to VAT payments / refunds. The VAT is paid only by the end-consumer, companies claim and transfer the VAT to the TAX authorities and get the VAT paid on products refunded by the tax authorities, so companies in fact do not pay VAT, they only collect the VAT for the TAX authority along the value chain, and only the end user cannot get it refunded.

This is the game.

When companies buy / sell products across the EU borders they do not add VAT on invoices, but have to report inner-EU sales to the Tax authority of their country to prove the export, along with the amount and the European TAX-ID of the buying company. The VAT is collected only within the country of jurisdiction of the Seller.

You don't understand Canadian vessel registration, it allows a Canadian registered vessel to remain abroad forever........ The boat is not exported to Canada.........

[CatNewBee]

for the EU point of view, it is sold to Canada, it is exported to a foreigner / non EU country.