VAT, EU Visas, and 90 days in 180 for us poor brits!

[Dockhead]

Originally Posted by Montanan

When do you become a resident in the country?

Reference: https://www.immigrationspain.es/en/r...-non-resident/

You will become a resident in the country after spending 183 days per year in Spain.

If you live in the country or stay for anything less than those 6 months, you are considered a non-resident.

This distinction is crucial for many reason, but perhaps the most important is taxes.

If you are regarded as a resident, you must pay resident taxes. This means paying income tax for the worldwide income generated in Spain.

Also, in order to renew certain residencies like the non-lucrative visa, you must stay in the country for 183 days minimum, hence you must become a resident.

So again you are a resident or a non-resident.

Spain may (or may not) be a special case, but generally in Europe what the OP writes is true -- tax residency is not necessarily required, and does not always ensue, just because you have a residency permit or long term visa. I know a lot of people with residence permits from this or that European country, who are not tax resident anywhere in Europe, and like that for years. Look up "digital nomads".


This does not however answer the OP's question. I sail a UK flag boat in EU waters and have an EU residence permit. The boat is actually EU tax paid because she was in Denmark on Brexit day, but I have never once been asked for VAT papers, not once in 12 years of owning this boat. Southern Europe might be more finicky.


If the long term visa doesn't trigger a VAT issue, then the OP will be fine -- just take the boat out of EU waters briefly once every 18 months, as many non-Europeans have been doing for years. But he should get a qualified answer to his question.

[goboatingnow]

Originally Posted by sailormed

The 90 days in 180 is a Schengen regulation. Many countries in Europe are part of the Schengen treaty. But, but, but every country that is part of the Schengen area is still an independant country that issues visas to foreign nationals that visit that country.

If you want to stay for more then 90 days in a country that is part of Schengen you can apply at the consulat of that country for a stay for longer then 90 days. That stay will then be grated (or not) by that country.

I have the impression that there is a lot of confusion over these rules.

Not really the vast majority of brits abroad on the Eu have been bombarded with publicity , the EU provided a concession that mandatory residency would be available for those proving establishment upto end of Dec 2021

Post that a country is not under any mandatory obligation to provide residency visas

For those in the U.K. , the 90 day rule is now well understood It does not affect most tourists and never did

It’s just there a small coterie of people trying to wheedle their way into thinking “ these rules don’t really apply to me “

Usually over time , they get roundly abused of that notion

[Dockhead]

Originally Posted by goboatingnow

. . . The fact is you need to pay vat somewhere

Well, not necessarily. We just bought a boat which had been in Spain for 10 years but for brief trips out to reset the temporary importation clock. Cayman Islands registered and VAT never paid anywhere.



The rules should be read carefully; some actual professional advice (not free forum jawboning) should be sought. If the rules allow it, it's not a "dodge". Depending on your specific circumstances, VAT need not always be paid. Just look at the hordes of Cayman, Bermuda, etc. flagged superyachts roaming the worlds' oceans, including the Med.

[goboatingnow]

The other thing to consider is you need to understand the Schengen rules for arrival by yacht , France has clarified this for U.K. boats but to my knowledge Spain has not.

Whilst Ireland is non Schengen we can arrive under EU freedom of movement rules in any port , as could the U.K. originally

But now the U.K. cannot avail of free movement rules and yachts will have to clear in at specific designated arrival ports. These are not typical yacht harbours or town quays and are often commercial harbours which have appropriate immigration officials , until France clarified the rules this limited yacht arrivals on its channel ports to two ports.

The issue for a U.K. registered boat is proving when you arrive that you arrived from a Schengen country if you are just “ sailing the med” , you must certainly ensure you have an entry stamp in your passport.

This works against you if you are claiming non residency

A non resident will have to show they abided by the 90 day rule ,anyone with longer days inside will have to justify their being in Schengen

“ ah you say it’s ok I have a NLV “ , OK fine , youre a resident of Spain , now let’s see that “ vat “ documentation again

Oops.

You can’t have your cake and eat it.

[Dockhead]

Originally Posted by goboatingnow

. . . A non resident will have to show they abided by the 90 day rule ,anyone with longer days inside will have to justify their being in Schengen . . .

I don't think this is right, and speaking from experience. Right of residence and tax residence and establishment are all different things, one not necessarily implying either of the others.


If you have a residence permit to one Schengen country (as I have), you have the right to spend 90 out of 180 in all the other Schengen countries, and an unlimited amount of time in the country which issued your residence permit. The established practice is that if you show a Schengen residence card in another Schengen country, they don't even stamp your passport. Theoretically they should check whether you are obeying the 90/180 rules in other Schengen countries, but as they will tell you themselves they have no way of doing this and so don't. With a Schengen residence card you are treated like a European citizen. And this has nothing to do with establishment or paying taxes. The right of residence alone triggers these rights of movement.


Again, the OP needs qualified professional advice. The answer to his question cannot be produced like this, by abstract reasoning -- it is a specific legal/tax question which can only be answered by a qualified reading of the rules.

Originally Posted by goboatingnow

. ..

“ ah you say it’s ok I have a NLV “ , OK fine , youre a resident of Spain , now let’s see that “ vat “ documentation again

Oops.

You can’t have your cake and eat it.

Whether having a Spanish NLV automatically makes you a resident of Spain is an objective, technical question, which cannot be answered by abstract reasoning based on folklore-type principles like "you can't have your cake and eat it".


This is definitely not the case for at least most Schengen residence permits. For example, I have a four-year residence permit for Finland. At the very same time, I possess a so-called "Zero Tax Card" issued by the Finnish tax authorities -- officially certifying that I am NOT a Finnish tax resident and allowing me to receive payments from Finnish companies free of any Finnish tax. Nor does the existence of the residence permit make me established in Finland, even if I rent or own residential property there. Spain may or may not be different; only a qualified professional can say for sure.

[goboatingnow]

Two things

My comment about arrival , was arrival by yacht. Arrival via airport is entirely different.

Secondly please stop talking about “ tax residency “ the term does not exist in the Temporary import rules.

The term is “ establishment “. This is not “ tax residency “ establishment is a deliberately vague term that has different connotations in different circumstances


Again you will NOT get a definite ruling on this subject from a tax official. Tax officials do not engage in “ whataboutry “ other advisors like the tax departments of auditors will merely issue an “ opinion“ and unless the person has very specific domain experience , such opinions are just that.

As I said to at the end of the day the only decision that matters is the local customs official that issues the tax demand. You’ll then end up fighting this through the arbitration system and the courts.

As I said all the OP has to ask themselves is “ are they living on their boat in Spain “ for significant periods.

If honestly the answer is yes , you’ve reached the same conclusion a customs official will reach.

The rest you can argue in front of the judge.

[goboatingnow]

Originally Posted by Dockhead

I don't think this is right, and speaking from experience. Right of residence and tax residence and establishment are all different things, one not necessarily implying either of the others.


If you have a residence permit to one Schengen country (as I have), you have the right to spend 90 out of 180 in all the other Schengen countries, and an unlimited amount of time in the country which issued your residence permit. The established practice is that if you show a Schengen residence card in another Schengen country, they don't even stamp your passport. Theoretically they should check whether you are obeying the 90/180 rules in other Schengen countries, but as they will tell you themselves they have no way of doing this and so don't. With a Schengen residence card you are treated like a European citizen. And this has nothing to do with establishment or paying taxes. The right of residence alone triggers these rights of movement.


Again, the OP needs qualified professional advice. The answer to his question cannot be produced like this, by abstract reasoning -- it is a specific legal/tax question which can only be answered by a qualified reading of the rules.






Whether having a Spanish NLV automatically makes you a resident of Spain is an objective, technical question, which cannot be answered by abstract reasoning based on folklore-type principles like "you can't have your cake and eat it".


This is definitely not the case for at least most Schengen residence permits. For example, I have a four-year residence permit for Finland. At the very same time, I possess a so-called "Zero Tax Card" issued by the Finnish tax authorities -- officially certifying that I am NOT a Finnish tax resident and allowing me to receive payments from Finnish companies free of any Finnish tax. Nor does the existence of the residence permit make me established in Finland, even if I rent or own residential property there. Spain may or may not be different; only a qualified professional can say for sure.

I never said that the mere existence of a residence visa means your are established

What I said is that a custom official will take it as significant proof that you are or could be a resident , you’ll need lots of backup proof there and then to counter that.

For example in Spain if you own property you will have to have a NIE tax number and pay property taxes. But you may not be a resident or established in Spain. ( or you may be adjudicated so)

There’s no standards , the situation of the persons individual circumstances are significant in determining what happens. ( along with the supporting proof , if you are challenging the assessment )

The fact is TIP provisions are clearly aimed at people established outside the customs union that’s exactly what the EU legislation says. Equally where a “ doubt “ exists in VAT determination the law says you must err on the side of collecting VAT.

The custom agent on the ground is the one charged with interpreting all this not some “ expert” you find.

I say again based on what the OP is stating , he runs a serious risk of having a vat assessment levied. And should any level of predetermination be detected , a charge of VAT fraud also.

Again , the determination is not made by people pouring over legal texts and comparing all sorts of documents. It’s made by the customs agent on the spot and based on his or her assessment at that point.

Do you really want to run that sort of risk.

I’ve spent nearly 3 decades involved in shipping product and doing business in the eu. The default is unless you know exactly your ground , you collect vat and remit it to the relevant authorities. If you have a dispute you pay the vat and argue the issue afterwards. Don’t believe me Ask Apple.

[goboatingnow]

Note for the absence of doubt the customs agent merely has to adjudicate that you are established within the custom union. They do not have to adjudicate that you are specifically established in Spain ( though in practice that’s what they’ll do).

[Dockhead]

Originally Posted by goboatingnow

Two things

My comment about arrival , was arrival by yacht. Arrival via airport is entirely different.

Secondly please stop talking about “ tax residency “ the term does not exist in the Temporary import rules.

The term is “ establishment “. This is not “ tax residency “ establishment is a deliberately vague term that has different connotations in different circumstances


Again you will NOT get a definite ruling on this subject from a tax official. Tax officials do not engage in “ whataboutry “ other advisors like the tax departments of auditors will merely issue an “ opinion“ and unless the person has very specific domain experience , such opinions are just that.

As I said to at the end of the day the only decision that matters is the local customs official that issues the tax demand. You’ll then end up fighting this through the arbitration system and the courts.

As I said all the OP has to ask themselves is “ are they living on their boat in Spain “ for significant periods.

If honestly the answer is yes , you’ve reached the same conclusion a customs official will reach.

The rest you can argue in front of the judge.

"Establishment", like tax residency, has specific, technical meaning. The OP should not ask tax authorities - I never suggested that. He should consult a competent local tax lawyer or tax adviser and should not guess about this based on amateur speculation. The answer, whatever it is, is not obvious, and the consequences of getting it wrong, as you correctly pointed out, could be serious.

[goboatingnow]

Originally Posted by Dockhead

"Establishment", like tax residency, has specific, technical meaning. The OP should not ask tax authorities - I never suggested that. He should consult a competent local tax lawyer or tax adviser and should not guess about this based on amateur speculation. The answer, whatever it is, is not obvious, and the consequences of getting it wrong, as you correctly pointed out, could be serious.

The definition of “ not established in the customs union “ in relation to a boat being imported under TIP rules by a non EU citizen intending to spend considerable time in Spain in possession of a residency visa will require domain expertise that you will not find largely because disputes and subsequent resolutions do not commonly exist around this topic.

Hence no advisors worth his fee will give you a definitive answer. He can,t . What he will outline are the risks associated with the route being suggested and the potential for cost ,

I’ve got eu vat advice for 25 years from the big 4 down wards to specialists. Unless there is a body of dispute and resolution case law or specific Revenue/customs briefings on the matter the answer will be on the form of “ well on one hand ….”

Why

Because customs and revenue cases are unique you must prove your innocence not the other way around.

The customs authority will issue an assessment based on their understanding , it will not be based on your understanding , you will then have to fight their assessment in court and win to assert your assessment

Paying the vat is cheaper

You also miss the point that the assessment is not a function of precise interpretation , it’s the opinion of the local assessor and you might not even be in Spain , you could have sailed into Portugal from Spain

Of course once the issue is before a commercial court , you will be able to proffer your highly paid professional advisor views. !!!

[Dockhead]

Originally Posted by goboatingnow

The definition of “ not established in the customs union “ in relation to a boat being imported under TIP rules by a non EU citizen intending to spend considerable time in Spain in possession of a residency visa will require domain expertise that you will not find largely because disputes and subsequent resolutions do not commonly exist around this topic.

Hence no advisors worth his fee will give you a definitive answer. He can,t

Why

Because customs and revenue cases are unique you must prove your innocence not the other way around.

The customs authority will issue an assessment based on their understanding , it will not be based on your understanding , you will then have to fight their assessment in court and win to assert your assessment

Paying the vat is cheaper

Beg to differ. There are rules, guidance notes, enforcement practice, and court practice, which govern decisions of customs and revenue officials, all accessible to practicing professionals. "Establishment" is an everyday, bread and butter question for international tax lawyers, and a formal legal opinion can be relied upon. Wouldn't think it should cost more than a few boat bucks. If the VAT would be at least tens of thousands, it would be abundantly worthwhile to do it right and get proper advice, and not pay the VAT unless the rules really require.

There's a saying - person who does his own legal work [comes to his own conclusion on legal matters] has a fool for a lawyer. Eminently appropriate to this situation.

[goboatingnow]

Again not to go on about it.

The issue is not seeking professional advice. I’m not arguing against that

The issue is in any “ grey “ area like this the definition of establishment , but more importantly the convincing of the particular customs agents on the day in the particular place, is what matters. Vat is accessed locally that’s how it works

That’s the risk. Your advisors may say “ do x or y, it’s Ok” the issue is does the local customs officier agree. You simply can’t know.

In real life , this is taken care of with “ custom and practice “ approach’s. Ie business undertaking regular transactions know what procedures will be followed.

In esoteric situations like this , especially where you are trying to walk a fine line. You simply don’t take the risk in the first place , standing there waving your expensive advisors opinion around is useless.

If you really think you have right on your side you pay the VAT and argue the case in court.

If you are nervous , you pay the vat

If your wrong you pay the vat.

Get the drift , it generally involves “ paying the vat “ the arguments come later.

[Montanan]

In order to renew your NLV you will have needed to reside in Spain for 183 or more days during the calendar year and thus have become a tax resident.

As a resident of Spain you are thus a resident of the EU and all the taxations associated with being an EU resident, including VAT and customs duties upon importation of your vessel.

When you declare for a temporary importation waiver of your non-EU VAT paid status boat you are declaring that it is not your intention to be a resident of the Union and that you will discharge the importation before 18 months have occurred.

One could face perjury charges and penalties if making a false representation to EU customs upon clearing into the territory. Be careful.

I don't know EU customs laws and taxation penalties.

But if Florida is an example, the penalties could be harsh.

If one does not pay sales or use taxation on a vessel for Florida, one will owe the tax that would have been due, plus 200% of the tax that was due, plus interest from the time it was due, and also face a $5,000 fine and up to 5 years in prison.

I think it is a simple matter to just purchase an EU VAT paid status boat if you intend to use it in the EU and reside in the EU. Leave the UK VAT paid status vessel in the UK where the tax paid status has some residual valuation arising from having Brexited.

And then file your tax returns in Spain since you will have become a resident of Spain.

[Dockhead]

Originally Posted by goboatingnow

Again not to go on about it.

The issue is not seeking professional advice. I’m not arguing against that

The issue is in any “ grey “ area like this the definition of establishment , but more importantly the convincing of the particular customs agents on the day in the particular place, is what matters. Vat is accessed locally that’s how it works

That’s the risk. Your advisors may say “ do x or y, it’s Ok” the issue is does the local customs officier agree. You simply can’t know.

In real life , this is taken care of with “ custom and practice “ approach’s. Ie business undertaking regular transactions know what procedures will be followed.

In esoteric situations like this , especially where you are trying to walk a fine line. You simply don’t take the risk in the first place , standing there waving your expensive advisors opinion around is useless.

If you really think you have right on your side you pay the VAT and argue the case in court.

If you are nervous , you pay the vat

If your wrong you pay the vat.

Get the drift , it generally involves “ paying the vat “ the arguments come later.

But why do you think it's a "grey area"? What makes you think that? If it's in fact a grey area, a competent advisor will so advise, and advise you on the risks. If it's not a grey area, and in all likelihood it's not, he will tell you yes, or no. If it's yes, and you have a formal legal conclusion in your pocket from a recognized firm, you are good to go. If questioned, just show the advice you relied on, and you can be almost entirely sure that they will leave you alone. That's the way it works. Spain is of course notorious for imperious petty bureaucrats, but Spain is none the less a civilized law based society, and those petty bureaucrats are not free to just make up whatever arbitrary interpretation they want. The imperious petty bureacrats like to pounce on people who don't know what they're doing, have done their own legal work, and who have done it badly. They leave alone those who have done their homework and who are well represented. The last thing in the world this kind of character wants is a fight with a good law firm who are obligated to stand behind a formal legal opinion. That's the way the world works. You just put the document on the table and say "any questions, call my lawyers."

[Montanan]

Temporary Importation Regime

The EU Customs Code allows the use of yachts in EU waters without paying VAT, in the following case:

1) If the yacht flies the flag of a non-EU country.

2) If the users are not residents of the EU.

3) If the yacht is for private use.

In Spain, under the same circumstances, IESDMT tax (Matriculation Tax) is not payable. Yachts that meet these conditions can spend a maximum of 18 months in EU waters, unless the period is expressly extended; however, failure to meet the above conditions will lead to the payment of the relevant taxes. Up until the implementation of the new EU Customs Code, on 1 May 2016, if conditions (1) and (2) above were met, the Temporary Importation regime applied, immediately, from the moment the yacht entered EU waters. With the new Code, the application of the Temporary Importation Regime is subject to presenting a written declaration, curiously named "Oral Declaration", which marks the start of the 18-month period. The stay must end with an Oral Declaration in writing to be presented at the Customs Office of the EU country within 18 months. This new system offers more security, as it clearly documents the date in which a yacht enters and leaves a country. Previously, the yacht owner had to demonstrate, using any means admitted by the law, that they had stayed in EU waters less than 18 months. Unfortunately, it seems that some EU countries have not implemented the system yet, apparently because not aware of its existence. It is worth mentioning that in Spain some customs are aware and apply the new regulation, while others are not aware of its existence. As usual, nothing is simple when it comes to boating.

Temporary Importation boats staying in Spain

If the requirements are met, as we mentioned above, a yacht can stay in EU waters, in the same country or in different countries, for 18 months. This doesn't mean that users can stay on board all this time, as they could become residents and have to pay taxes, if they stayed more than 183 days per a year. Many boats stay moored in a certain port and are used by their owners only for short periods, while the rest of the time a captain or a crew member takes care of the vessel. It is worth mentioning that the Customs Code allows the owner to recruit a crew member resident in the EU, without this affecting the requirements for the application of the favourable fiscal regime. This is obviously an essential crew member; not a user, but an employee.

However, this arrangement has been contested by the Spanish Tax Office when the owner of the yacht is a company and the vessel remains almost permanently in a Spanish port (within the 18-month period, of course), for the following reasons:

· When the captain of the yacht, or another member of the crew, has the power to act in the name of a company, the company is considered to have a permanent base in Spain.

· When the user, whether or not a stakeholder of the company, uses the boat receives a remuneration in kind, the company is thus considered to be conducting a mercantile activity and to be based in Spain.

· When the vessel is the only asset of the company – which is the most common scenario – the company is considered to be based in Spain, the place where its only asset is located.

https://www.nauticalegal.com/en/repo...erio-en-espana


FYI: Articles 222 through 224 provide for computerized customs declarations and Articles 225 through 229 provide for oral declarations. More information on the SAD can be found under Single Administration Document EU Customs Code: The Union Customs Code (UCC) was adopted in 2013 and its substantive provisions went into effect on 1 May 2016