Where to flag and pay VAT

[colombo]

Hi All,

I've had a read through the forum and it does seem that it might be worth posting my question, with specifics to me, rather than co opting the various bits of (albeit excellent) feedback others have had.

I am a tax resident of the UK. I reside less than 6 months of the year in Spain, and I have the paperwork to continue doing so post Brexit.

I am expecting to receive a German passport in the next 12 months. I am assured my application will be successful, but I have yet to receive confirmation or said passport.

I want to buy a boat for use around Spain/The Med. I am licensed to Coastal Skipper level and have an ICC.

I am mostly looking at the ex charter Bavaria 40s that are knocking around. There are a few dotted across the Mediterranean - with Greece having the cheapest ones. I am ready to buy and am keen to do so soon.

My questions are:

Where should I flag it?

Where should I pay VAT? - assuming the boat I get is not VAT paid. I figure the answer to this may be contingent to where the best place is to flag it.

Are there other considerations I should take in to account (ie post Brexit rule changes/vat implications)

Thankyou for any and all input

[boatman61]

If you plan on staying in the E Med.. Sicily and points E I would suggest flag it UK SSR or Part 1..
This gives you 18mths in Schengen/EU and a weekend in Turkey or Tunisia will reset your clock for another 18mths.
A plus is no VAT will be liable till the boat enters the UK.. a big plus if the boat is an untaxed ex charter.
This is my understanding/opinion and what I will be doing if/when I get another boat.. others such as GBN may have other views.

[goboatingnow]

If you are confidant you will remain " established " for tax purposes in the UK , then you can after Brexit buy a VAT not paid boat and avail of the TIR provisions to avoid VAT unless you leave the boat in the EU for more then 18 months. However this assumes that the TIR provisions will apply to UK residents in the EU , that part is not yet clear ( its likely it will apply as per other non EU countries )

Your German passport will not aid you in convincing the authorities that you are UK resident , so you will need to carry proof of domicile ( a utility bill , work pay slip etc )

again you must be a UK resident ( tax residency can be held separately without actually being domiciled , but usually the two go together ). The SSR is only available to UK residents , i.e. people deemed to be domiciled in the UK . You have to show that its a genuine change of residence etc

as boatman61 says , you will have to reset the VAT clock by taking the boat out of the EU for a day , IN greece this is easily done , Albania , Montenegro etc , in some other places its rather more difficult .

Note that if at any stage you are deemed to be established in any EU state, VAT will become immediately due !!, however you can use TOR reliefs ( transfer of residence) to bring in personal possessions VAT free ( including your boat ) , there is a bit of a palaver with the documents but that provision is there for people transferring residence into the EU

Spain does present some issues as Im not sure Id go anywhere near the North African coast at the moment . Hence " getting out" of the EU is a wee bit awkward ( its not clear as to the status of Gibraltar in this regard as the Spanish are disputing things and may refuse to accept that as evidence that you set the VAT clock

I reside less than 6 months of the year in Spain, and I have the paperwork to continue doing so post Brexit.

be very careful that that " paperwork " does not deem you to be resident in spain, you can be resident and only send 1 days there !!

For example you can hold a residency card , yet only visit for a week , but for spanish tax purposes you are a resident.

equally if you own a house or other property in Spain or have a NIE number, then you will be deemed to be a spanish tax resident and the TIR provisions will not apply

[colombo]

Originally Posted by goboatingnow

Your German passport will not aid you in convincing the authorities that you are UK resident , so you will need to carry proof of domicile ( a utility bill , work pay slip etc )

Sorry I should have clarified - I also hold a British passport. I just mentioned the German one as an additional incoming option regarding being an "EU citizen".

[colombo]

Thanks to both of you for your informative responses.

Flagging in the UK and delaying VAT payment is really tempting, but it feels like it may not be prudent, given I cannot be deemed to be resident in Spain for my tax status. Increasing my ties to the UK would be helpful to further my argument that I am tax resident there, and not in Spain. Presumably that would only really be the case if I flagged it as British vessel and then paid the VAT immediately rather than delayed it under the TIR provision.

I am tax resident in the UK in that my centre of economic operations is here, I file a tax return here, and I can demonstrate I was in the UK for 6 months of this year.

However I have lived in air bnbs during that period having moved out of my rental earlier this year. I have bought a holiday home in Spain, prior to owning a home in the UK, or renting here long term. It is registered as a holiday rental (I can't legally live in it and it will be on the market to be rented out), and in order to do so, I had to have a NIE number. I am not classified as a Spanish resident, but I can see why further ties to Spain should be avoided, and ties to the UK should be increased.

@goboatingnow the paperwork I refer to is a permiso. Not an empadronamiento. I just have the paperwork you require if you're in Spain for longer than 3 months and less than 6. I may rescind the permiso when the EU passport arrives, in order to further diminish any argument the hacienda may make.

[AZUS]

Check out Malta. I have known a number of yachties who chose Malta as a Valletta as a home port for their boat for several reasons: 1) the VAT tax there is supposedly less, and 2) they set up their boat as a captained charter out of there and found, for income tax purposes, the deductibility of expenses was liberal. The former reason may apply to you.

[barnab]

You might consider setting up a company that owns the boat, which, as I remember, is the standard setup if you flag in the channel islands for example. In this case your status of resident or non-resident is not important for VAT - might be the safest option if you do not want to pay VAT.


If you want to pay consider that the boat has to go where you want to pay, so you have to sail to the country you want to import - Germany might not be the best option if the boat is in the med, even if it were the cheapest. The flag does not matter for this.



Be aware that you are actually importing, not paying VAT. What you pay in the end is VAT plus another bunch of taxes and fees - When I asked in Mallorca (was just curious) it ended up being some 25% of the boat value.

[meirriba]

Basically you really have only one important question, i. e. where to pay VAT.
It is not dependent on the flag.
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.
So find where the VAT is lowest, sail over there within 30d of taking ownership and pay VAT there.
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.

[kas_1611]

Your German passport will mean you are automatically liable for VAT on any purchase within the EU.

This is exactly what happened to us when Croatia joined. Our boat was VAT unpaid and UK flagged but because we were EU Citizens there was no way to avoid the VAT issue.

Make it simple for yourself and buy a VAT Paid boat. Or ditch the German passport.

By the way you would be liable regardless of what flag you fly unless you can prove you are NOT and EU Resident which would be difficult if you reside for more than 90 days in Spain, which would also be illegal under Schengen.

[acunningham]

Originally Posted by meirriba

As an EU subject you need to pay VAT within 30 days of purchase (or sail out of the EU).

By "EU subject", do you mean EU citizen, or do you mean tax resident in an EU country? I was under the impression that the rules are based on tax residency.

[acunningham]

Originally Posted by kas_1611

Your German passport will mean you are automatically liable for VAT on any purchase within the EU.

This is exactly what happened to us when Croatia joined. Our boat was VAT unpaid and UK flagged but because we were EU Citizens there was no way to avoid the VAT issue.

Make it simple for yourself and buy a VAT Paid boat. Or ditch the German passport.

By the way you would be liable regardless of what flag you fly unless you can prove you are NOT and EU Resident which would be difficult if you reside for more than 90 days in Spain, which would also be illegal under Schengen.

Slightly confused by this. "Your German passport" refers to citizenship, while "unless you can prove you are NOT and EU Resident" presumably refers to tax residency. Citizenship and tax residency are independent concepts. Can you please clarify?

[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.

[George DuBose]

When I imported my US-flagged sailboat into The Netherlands, I pay the VAT and put my 1973 Pearson through a Post-Construction Assessment survey and the boat is now CE-marked.

I still fly the Stars & Stripes and since I have a permanent German visa, I can travel throughout the EU, with no hassles. Although the French Douane once told me that I paid too little for my boat in the US. I told them that they didn't see the boat when I bought her.

So now due to Brexit, I can only sail around the UK for 90 days at a time. That's enough for me. I want to head south, not colder...

[goboatingnow]

Originally Posted by kas_1611

Your German passport will mean you are automatically liable for VAT on any purchase within the EU.

This is exactly what happened to us when Croatia joined. Our boat was VAT unpaid and UK flagged but because we were EU Citizens there was no way to avoid the VAT issue.

Make it simple for yourself and buy a VAT Paid boat. Or ditch the German passport.

By the way you would be liable regardless of what flag you fly unless you can prove you are NOT and EU Resident which would be difficult if you reside for more than 90 days in Spain, which would also be illegal under Schengen.

This is the situation pre brexit , it’s not the situation post brexit for a person who is established solely in the UK for tax purposes , irrespective of their nationality. Nationality has no bearing on tax status.

[acunningham]

Beware that if you register in Spain, and are a Spanish resident, you'll need to pay the Matriculation Tax, which appears to 12% of the boat's value, in addition to VAT.

https://www.nauticalegal.com/en/repo...iling-in-spain