You may think that VAT does not affect you because you are NOT a citizen of any EU jurisdiction that charges VAT. You couldn’t be more mistaken!
If you wish to retain “VAT paid status”, changes in ownership must occur in EU Waters. If the vessel is outside the EU for 3 years it will lose its VAT paid status with some possible exceptions.
When a boat is advertised as VAT paid:
If you purchase a vessel in an EU jurisdiction, the first thing you need is PROOF of VAT payment, no matter where the vessel is registered, or proof that the vessel would not be subject to VAT.
You might find a vessel advertised as VAT paid, but in fact ALL of the VAT has not been paid. Often, boats are bought on lease payments and each payment removes VAT, but if the lease is not fully paid, then neither is the VAT, so be careful.
When a boat is not VAT paid:
A foreign flagged yacht on a cruising permit in an EU jurisdiction can be marketed for sale “No VAT” to a non-European resident or passport holder. That is legal. What is not legal is for the yacht that is for sale might have overstayed it’s welcome in the EU, and if that is the case, then VAT is due, or should have been due.
If you take title to a yacht that has overstayed her cruising permit, and are stopped, regardless of your citizenship or flag, you can get tagged for VAT and/or your boat seized.
Your broker, or you, should find out where the Customs Office is in that jurisdiction, make enquiries as to whether it would be subject to VAT if the vessel is sold in that jurisdiction. This could add as much as 20% to the purchase price of the vessel. See VAT rates.
If the vessel is not VAT paid and you are planning to remove the vessel from the EU, you could also arrange with the seller to move the vessel to a jurisdiction with a lower rate. Even better, you could move the vessel to Gibraltar, Turkey or Tunisia, or another non-EU entity to close the sale…or even close in international waters.
Most brokers offering a boat for sale in an EU jurisdiction will have documents to show VAT status.
You also need to know how long you may cruise EU waters without becoming subject to paying VAT if the vessel has not been VAT paid. There are time limits.
As personnel at each VAT office changes, interpretation of the rules change with them, as does interpretation from country to country. The same question can be answered completely differently depending upon the party you speak to at the office of the VAT collectors.
It’s confusing…so…go straight to the source…the VAT office in the jurisdiction where you will be taking delivery of your vessel, and be fully informed before taking possession of the vessel.
You don’t want to be sitting at the dock without an export document.
