Where to flag and pay VAT

[goboatingnow]

As to the flag, you may register it in the country anywhere you like or check annual costs.
It may be most simple to retain the flag of the charter boat.

This is simply not true , flag states have all sorts of restrictions on who can register under their flag and what specific boat papers are needed

For example Part1 uk ref requires a uk based ships agent to be appointed

Irish registration will require full ownership traceability right back to the builder plus proof of EU VAT paid for a private owner

French registry will require CE certs and VaT paid proof etc.

Nor is it possible to “ retain the flag of the charter “ , as many countries will require you to obtain their specific national competency certs or to maintain the boat to a national standard etc.

[acunningham]

I'm going to be in a similar situation when my boat is delivered in early 2022. I've had some preliminary discussions with some legal specialists in the Isle of Man. Jurisdictions they've mentioned as interesting are:

1. Poland, due to low registration costs, and the costs being one-off for the life of the vessel. It does however mean paying VAT since Poland is in the EU.

2. The UK. This is most likely the jurisdiction I'll end up choosing because registration lasts five years, and I see no reason to pay VAT as I'm not tax resident in any EU country.

3. The Isle of Man.

4. The Cayman Islands.

They suggest considering registering through a limited company to protect the owner from any financial liabilities arising from the boat, and to protect the boat from VAT claims if there's any risk that customs officials might (correctly or incorrectly) think that that the owner is EU tax resident.

These discussions are at a very early stage, and won't get finalised until probably this time next year. I can however put you in contact with the people I've spoken to if you like.

[goboatingnow]

Originally Posted by acunningham

I'm going to be in a similar situation when my boat is delivered in early 2022. I've had some preliminary discussions with some legal specialists in the Isle of Man. Jurisdictions they've mentioned as interesting are:

1. Poland, due to low registration costs, and the costs being one-off for the life of the vessel. It does however mean paying VAT since Poland is in the EU.

2. The UK. This is most likely the jurisdiction I'll end up choosing because registration lasts five years, and I see no reason to pay VAT as I'm not tax resident in any EU country.

3. The Isle of Man.

4. The Cayman Islands.

They suggest considering registering through a limited company to protect the owner from any financial liabilities arising from the boat, and to protect the owner from VAT claims if there's any risk that customs officials might (correctly or incorrectly) think that that the owner is EU tax resident.

These discussions are at a very early stage, and won't get finalised until probably this time next year. I can however put you in contact with the people I've spoken to if you like.

The key issue is your tax status , ie where are you personally established for tax.

If yiu are established in the uk , it makes no sense to pay EU vat , as you “ should “ be able to make use of the TIR provisions

If you are both not uk resident or eu resident , then uk registration offers you nothing and you’ll need to appoint a uk based ships agent to access part 1

Channel Islands or Isle of Man offer you no advantage for a boat kept in the EU

Wrapping it up in a company is only practical for very large very expensive boats typically where paid crew are involved

In EU law , the term “ beneficial “ owner is used. Hence if customs adjudicate that you are the beneficial owner, cause you and your family are sailing her , then the corporate wrapping offers no protection and can actually cause immense issues in places like Portugal. You also have all the costs of a company to bear as well as the boat

Oh , flag and vat are not inextricably linked , Poland does not require vat proof , if you are legally allowed to own the boat vat free , also polish registration is very cheap , of you read and write polish and have access to a polish address , it’s about 500-600 euros using a registration agent

[acunningham]

Originally Posted by goboatingnow

If you are both not uk resident or eu resident , then uk registration offers you nothing and you’ll need to appoint a uk based ships agent to access part 1

UK part 1 registration by individuals is actually based on citizenship. If you're like me and a UK citizen but not UK tax resident, then UK part 1 registration is a viable option either with or without registering a UK limited company. The same is true if you're a citizen of a commonwealth country, or fit various other qualifying criteria:


https://www.ukshipregister.co.uk/reg...n/eligibility/


If none of these apply to you, then you'll need to create a UK limited company or appoint an agent.

[goboatingnow]

Originally Posted by acunningham

UK part 1 registration by individuals is actually based on citizenship. If you're like me and a UK citizen but not UK tax resident, then UK part 1 registration is a viable option either with or without registering a UK limited company. The same is true if you're a citizen of a commonwealth country, or fit various other qualifying criteria:


https://www.ukshipregister.co.uk/reg...n/eligibility/


If none of these apply to you, then you'll need to create a UK limited company or appoint an agent.

Err you need to read your own link , the eligibility criteria contain the following provision

“ If none of the qualified owners are resident in the UK, a representative must be appointed who is either of the following:“

Hence even if you are qualified to register , you must have a ships agent if you dont live in the uk

Wrapping a private yacht n a company is big boys stuff, you can fall foul of dozens of company law and corporate tax issues. Benefit in kind , mandatory vat registration , Vat self supply issues , if you don’t understand these terms , don’t even think about corporate ownership in the uk or Europe

It would be useful to say where you are tax resident , vat law has nothing to do with the boat and everything to do with its owner’s situation

[acunningham]

Originally Posted by goboatingnow

Err you need to read your own link , the eligibility criteria contain the following provision

“ If none of the qualified owners are resident in the UK, a representative must be appointed who is either of the following:“

Hence even if you are qualified to register , you must have a ships agent if you dont live in the uk

Ah yes, you're quite right. My apologies.

Originally Posted by goboatingnow

Wrapping a private yacht n a company is big boys stuff, you can fall foul of dozens of company law and corporate tax issues. Benefit in kind , mandatory vat registration , Vat self supply issues , if you don’t understand these terms , don’t even think about corporate ownership in the uk or Europe

It would be useful to say where you are tax resident , vat law has nothing to do with the boat and everything to do with its owner’s situation

I'm not tax resident in any country, and haven't been since 2010.

[acunningham]

Originally Posted by goboatingnow

Poland does not require vat proof , if you are legally allowed to own the boat vat free

This is very interesting. Do you have more details?

[goboatingnow]

Originally Posted by acunningham

Ah yes, you're quite right. My apologies.





I'm not tax resident in any country, and haven't been since 2010.

The issue will then often be where you are regarded as an “ordinary resident “ of , or your domicile

Anyways , not prying further , if you are not EU tax resident , then you can avail of the TIR provisions , this is irrespective of what flag state you choose to place the boat with , assuming you meet the eligibility requirements

If your intentions are to keep the boat in an EU country, then the TIR provisions will suit you and facilitate a EU vat free boat. Uk registration would not add anything to the party. ( nor detract from it. )

[goboatingnow]

Originally Posted by acunningham

This is very interesting. Do you have more details?

No this was a comment by a registration agent , but it would be common , as I said if you are legally entitled to own a boat vat free in the EU , then the registration agencies cannot force you to pay the vat.

Remember vat law ( including the TIR provisions ) make no reference to the vessels flag ,it’s the status of the “ beneficial “ owner that matters, as vat is concerned your boat is a “ goods “ ( well actually it’s a vat category called “ new means of transport “) , goods like your TV and your boat don’t have a separate nationality as far as EU vat is concerned

[acunningham]

Originally Posted by goboatingnow

No this was a comment by a registration agent , but it would be common , as I said if you are legally entitled to own a boat vat free in the EU , then the registration agencies cannot force you to pay the vat.

Remember vat law ( including the TIR provisions ) make no reference to the vessels flag ,it’s the status of the “ beneficial “ owner that matters, as vat is concerned your boat is a “ goods “ ( well actually it’s a vat category called “ new means of transport “) , goods like your TV and your boat don’t have a separate nationality as far as EU vat is concerned

Thanks. I'll bring up the topic of Polish registration when discussing this in earnest with the lawyers next year. The one-time payment for Polish registration does look very attractive.

[carraigdog]

Originally Posted by goboatingnow

Post brexit , was the situation I was referring too. In that case the op is a uk tax resident and may of course purchase a vessel free of eu vat and keep it in the EU for 18 months , resetting the vat clock by leaving ( no specified minimum time ) and then returning

What passport you hold has no bearing on your tax status. In your case as EU citizens with a Uk boat , pre brexit , you are not normally entitled to own it in the eu vat free.

The 90 day schengen limit again has nothing to do with tax status . There are several ways you can be one “ established “ for tax purposes in the country , typically residing over 6 months is only one of those ways.

Thats quite disappointing . I live in Northern Ireland but am an Irish passport holder, and though that was the document that would help me retain my EU status ( I understand now that I am deemed to be a UK tax payer) currently negotiating a sale of an EU Vat paid boat in the Adriatic, I assumed my Irish passport would enable me to doodle around the Med unhindered. Would it make any difference if I bought the boat before the 1st of January when I get unwillingly dragged out of the EU against my (and the majority of NI,s) wishes ? I had also planned to reflag it as Irish, as its currently German, would it matter ?

[iabmatos]

Originally Posted by meirriba

As an EU subject you need to pay VAT within 30 days of purchase (or sail out of the EU). This is true notwithstanding what flag you carry.

Hi Mark,

Would you have a reference for this?

Many thanks,

Ismael

[goeasy123]

Buy the boat in the UK declared for export and don't pay the VAT. Sail it in Europe under TA rules, sailing in and out of EU27 waters to reset the clock when required. Assuming you are resident in the UK for tax purposes you won't be able to sail in UK water under UK TA rules. Later, if you want it permanently based somewhere, pay the VAT.... AT A LOWER PREVAILING RATE. This could be UK or EU or anywhere else you fancy.



This is effectively what Berthon are now advising a lot of clients to do.



The common wisdom has been that VAT paid boats are more desirable. People are beginning to realize that this is not the case. Not-paid boats have a larger market and as long as you can cope with the minor inconvenience of either bonding a boat of a long lay up or the TA rig-ma-roll you get a cracking good deal.... and some tax man doesn't get your hard earned pile.


Thoughts??

[goeasy123]

Where in Spain are you based?

[iabmatos]

Originally Posted by goboatingnow

Remember vat law ( including the TIR provisions ) make no reference to the vessels flag ,it’s the status of the “ beneficial “ owner that matters, as vat is concerned your boat is a “ goods “ ( well actually it’s a vat category called “ new means of transport “) , goods like your TV and your boat don’t have a separate nationality as far as EU vat is concerned

TIR? Or TOR?

SEE: TOR reliefs ( transfer of residence) to bring in personal possessions VAT free ( including your boat ) -
Imports free of VAT as personal property (see Directive 2009/132/EC)
https://eur-lex.europa.eu/legal-cont...LEX:32009L0132


Thanks

Ismael