EU Importation and VAT

[David_Old_Jersey]

Originally Posted by goboatingnow

A company and I am generalising here, must be a legimate concern. Its must be seen to be "trading". Hobby companies generally cannot exist as they fall foul of various corporate governance laws.............

............Ask yourself this, what legitimate reason could there be to wrap a purely leisure vessel in a corporate structure.

Appreciate that you are generalising - but IME nothing fundamentally wrong with a company existing that does not actually trade. nor is ever intended to.

Perfectally accepted business practice to hold whatever assets you want to in a company - whether it makes commercial sense to do so is another matter (not only on the costs involved, but also from the impact of doing so from the relevant tax authorities, on you and / or the company / assets.....including from them "looking through" the company. Sometimes that is actually a good thing!).

Why put a purely leisure vessel in a corporate structure? - it can be the equivalent of simply putting something into a seperate drawer marked "boat".

Could be that making transfering ownership simple is attractive to some (not just to 3rd parties, but amongst family / ownership structures - or to a lender, as makes repo slightly easier (and security better for the lender) - especially if they can be the Directors as well as the usual loan agreement). possibly that the vessel flagged somewhere with no skipper licensing requirements (no need to get training on how to Poop?!) and vessel not required to have "safety" equipment designed by a commitee.

Might be that privacy (of ownership) is important - sometimes a big boat does mean big money. Lots of folk around who would do stuff for a few dollars, let alone for a sniff at a couple of million - how much are your kid's eyes worth? Could be part of an asset protection strategy (Divorce / Bankruptcy / Govt) - unlikely to be bombproof, but sometimes more time / cost / complexity for someone coming after what you have (rightly or wrongly) buys useful time.

Could even be simply that you can't be bothered to deal with the dull end of boat paperwork - and can afford not to, with corporate ownership allowing others to get on with the job and not bother you (not to say that same could not be done with agreements, but there be a cost to those as well).

If the "owner" is (genuinely) a person who is internationally based, and with earnings worldwide makes sense to draw a line around assets bought with "foreign" money, park them somewhere that doesn't in itself generate a tax problem (Offshore "Tax havens" are ideal as they are tax neutral) - and then deal with the tax authorities of somewhere else that is foreign where they are currently based / visiting on a "pay unto Caeser" basis. but only that. Just because you visit somewhere doesn't mean your money also has to.

In practice, likely a combination of some of the above tipping the balance - for most it won't make sense.

If in doubt ask your tax lawyer or tax accountant. If you don't already have one (or both) of those then answers are likely that a) you don't need an offshore boat owning company and b) doing so likely to do more harm than good.

Of course if you are trying to hide ill gotten gains - you would be best advised to do what everyone else does. and keep the money / assets onshore.....the best way to hide a tree is in a forest.

[steve.garlick]

Great information, go boatingnow.

We've just purchased a VAT paid EU flagged (Dutch) boat. We will purchase the boat in Greece (EU), which I understand keeps its VAT paid status. We will be reflagging the boat to an Australian Flag. Is there any limitation to its VAT paid status?

Is there any other way to escape the 90 in 180 days? How do cruisers spend so much time in the Med, is it all overstaying? Do we need to spend 90 days out of 180 in non-schengen countries?

Thanks for great information,

Steve

[goboatingnow]

Originally Posted by David_Old_Jersey

Appreciate that you are generalising - but IME nothing fundamentally wrong with a company existing that does not actually trade. nor is ever intended to.

Perfectally accepted business practice to hold whatever assets you want to in a company - whether it makes commercial sense to do so is another matter (not only on the costs involved, but also from the impact of doing so from the relevant tax authorities, on you and / or the company / assets.....including from them "looking through" the company. Sometimes that is actually a good thing!).

Why put a purely leisure vessel in a corporate structure? - it can be the equivalent of simply putting something into a seperate drawer marked "boat".

Could be that making transfering ownership simple is attractive to some (not just to 3rd parties, but amongst family / ownership structures - or to a lender, as makes repo slightly easier (and security better for the lender) - especially if they can be the Directors as well as the usual loan agreement). possibly that the vessel flagged somewhere with no skipper licensing requirements (no need to get training on how to Poop?!) and vessel not required to have "safety" equipment designed by a commitee.

Might be that privacy (of ownership) is important - sometimes a big boat does mean big money. Lots of folk around who would do stuff for a few dollars, let alone for a sniff at a couple of million - how much are your kid's eyes worth? Could be part of an asset protection strategy (Divorce / Bankruptcy / Govt) - unlikely to be bombproof, but sometimes more time / cost / complexity for someone coming after what you have (rightly or wrongly) buys useful time.

Could even be simply that you can't be bothered to deal with the dull end of boat paperwork - and can afford not to, with corporate ownership allowing others to get on with the job and not bother you (not to say that same could not be done with agreements, but there be a cost to those as well).

If the "owner" is (genuinely) a person who is internationally based, and with earnings worldwide makes sense to draw a line around assets bought with "foreign" money, park them somewhere that doesn't in itself generate a tax problem (Offshore "Tax havens" are ideal as they are tax neutral) - and then deal with the tax authorities of somewhere else that is foreign where they are currently based / visiting on a "pay unto Caeser" basis. but only that. Just because you visit somewhere doesn't mean your money also has to.

In practice, likely a combination of some of the above tipping the balance - for most it won't make sense.

If in doubt ask your tax lawyer or tax accountant. If you don't already have one (or both) of those then answers are likely that a) you don't need an offshore boat owning company and b) doing so likely to do more harm than good.

Of course if you are trying to hide ill gotten gains - you would be best advised to do what everyone else does. and keep the money / assets onshore.....the best way to hide a tree is in a forest.

David , hobby business ones that in essence make continual losses are difficult to remain on the right side of corporate law in most European countries. IN the Uk its is very very difficult. Then add in benefit in kind, directors restrictions, etc

dave

[goboatingnow]

Originally Posted by steve.garlick

Great information, go boatingnow.

We've just purchased a VAT paid EU flagged (Dutch) boat. We will purchase the boat in Greece (EU), which I understand keeps its VAT paid status. We will be reflagging the boat to an Australian Flag. Is there any limitation to its VAT paid status?.

Is there any other way to escape the 90 in 180 days? How do cruisers spend so much time in the Med, is it all overstaying? Do we need to spend 90 days out of 180 in non-schengen countries?

Thanks for great information,

Steve

re flagging the boat will not in itself change its VAT status, however technically as you are not a EU tax resident , once you exit the territorial waters of the EU you have exported it, and as a non tax resident you cannot apply the Returned Goods Relief when you bring the boat back, So yes in practice its hard to retain the Vat status. You are protected as you have 18 months VAT exception as a non EU tax resident.

In reality as you are non EU tax residents VAT is of no consequence, The boat has value X. thats it really,

Remember VAT accounting is due on any sale , purchase import or export in the EU, then you look at what reliefs or exceptions apply, VAT can legitimately be charged multiple time depending on the nature of the transaction

IN selling the boat back in the EU you can of course argue that the boat is VAT paid, and the documentation will be there so its difficult for some to argue against it. Technically however if the boat has been exported it has lost it VAT status.


As to the Schengen 90 day. If you are Australian or New Zealand, there are longer tourist visas available on a nation by nation basis, but not available to other nationalities.

Yes of course there are some that overstay, consequences vary depending on how you leave the Schengen Area.but overstaying is illegal, So your milage may vary. ( note days at sea generally are not counted in the 90 days)

Yes you need to spend the other 90 days in a non-Schengen country

Dave

[amelis]

Hi all, I'm also confused about what I should do with my new boat.
I'm a Dutch citizen and I have a business in Gibraltar. I intend to buy a new EU boat and take her to the Caribbean where she will go into charter management for a few years. I don't want to pay VAT on the purchase and I understand I can't bring the boat back to the EU without paying the tax.

Should I just flag her in Holland, in my private name, and export her?
Should I flag her in Gibraltar, in name of my company?
Or is an EU flag not a good idea if I am not paying VAT?
In this case is a BVI company and flag a good option?

Does the fact that she will chartered affect the choice?
Does the fact that in 2 years time I will no longer charter her and live aboard affect the choice?

Complicated! Any advice would be very much appreciated.
Thank you.

[Jeannius]

I did the same as you but ten years ago and I'm British, not Dutch, which may make a difference.

If you are not bringing the boat back to Europe then just flag her as Dutch in your own name. Your accountant will make sure the boat never earns enough in charter to offset the depreciation so there are no tax issues and - when you are cruising - it is cheaper in most countries to be on a privately owned boat.

If you might want to bring the boat back to Europe, then register it using a BVI International Company with nominee Directors so your name doesn't appear on the boat registration papers. That way you can come to Europe for up to 6 months at a time without payong VAT. You'll just have to go to Gibraltar, Morocco, Turkey or somewhere else outside of the EU for a day every 6 months.

I'm not a professional so check my advice.

[Sander]

Someone told me there was a liability issue if the boat was in charter and in your personal name and therefore a company would be better but this seems strange as I assume the charter company would have fleet insurance to cover any liability arising from charter accidents. Maybe I am missing something?
Anyway, it sounds complicated and very important to make the right choice from the outset.

[Jeannius]

Originally Posted by Sander

Someone told me there was a liability issue if the boat was in charter and in your personal name and therefore a company would be better but this seems strange as I assume the charter company would have fleet insurance to cover any liability arising from charter accidents. Maybe I am missing something?
Anyway, it sounds complicated and very important to make the right choice from the outset.

Fleet insurance covers that. If it doesn't don't place your boat in that fleet.