Brexit - Let’s Focus on One Big Opportunity for British Sailors.
If you are heartily sick of the word “Brexit” you’d be in good company. There are still some loose ends, Northern Ireland and Gibraltar are certainly “not done” . The U.K. is as divided as ever. It’s a good idea not to bring the Brexit word up at a dinner party unless you know other guests’ stance on the matter. “Oven Ready” has taken on a new meaning!
Despite this British Citizens, who now do not reside in the EU, have a great opportunity to legally avoid paying VAT on yachts. This is because British Citizens are now viewed as “third country nationals” as far as the EU is concerned. Third country nationals have the legal right to have their vessels in the EU for up to 18 months at a time. So what happens at the end of the 18 months you may ask? You have two options import the vessel permanently or leave EU waters for some unspecified period to reset the VAT clock. At Gibraltar we are accustomed to seeing non-VAT paid yachts coming to the Rock for a few days to reset their VAT status. Any non-EU port can serve this purpose so Turkey, Montenegro or any North African port will do in the Med. This 18 month rule is of course specifically for the boat, not the person/owner.
In practice how can one take advantage of this benefit? If buying a new yacht in the U.K. or EU you need to register the yacht outside the E.U. for example in Gibraltar. Upon purchase make sure the manufacturer does not charge you VAT by making sure they understand your intention. Google “Sailaway VAT scheme” to understand the conditions imposed by U.K. HMRC to purchase a zero rated yacht. This scheme is open to anyone who plans to export the boat under its own power. EU countries also have similar schemes open to third country nationals.
What about second hand boats that do not have VAT paid status? Can Brits now acquire these without incurring VAT? The answer is a resounding yes! Where does one find such boats? - outside the EU. In the Med these boats are unsurprisingly to be found in Turkey, Montenegro and Gibraltar. Also boats within the EU that have been used for charter operations will not be VAT paid.
To summarise if you are a third country national, as Brits now are, inform yourself carefully to avoid paying more than you have to. If you want advice on this matter or want to find a boat which is not VAT paid get in touch with us via www.boatshedgibraltar.com.