VAT Free Sailing
VAT Free Sailing
As tax authorities everywhere tighten their grip on our wallets it is important to understand how to sell a yacht with the dreaded “VAT not paid” status.
Let me immediately demolish one big fallacy: that VAT is always payable on all yachts navigating in European waters. VAT is only payable if the owner of the yacht is resident in the EU. It is the status of the owner which is important not the status of the yacht. In most EU countries you become tax resident by spending 183 days of the year in the country either ashore or living aboard. In some countries the tax authorities will deem you resident if you own a holiday home in that country regardless of the time you spend there.
Most EU countries will allow you to buy a VAT tax free vessel if you export yourself with the vessel within a defined period normally 90 to 180 days after delivery. This is a perfect way to avoid paying VAT on a new vessel if you are planning for example to cross the Atlantic or engage in a circumnavigation away from Europe. The problem arises when you return to Europe. There are a number of ways to avoid or mitigate the impact of this:
1. Do not enter the EU for a period of more than 6 months. Not all of Europe is part of the EU. Indeed there are some parts that are in the EU but are not part of the EU Customs Union. The most convenient of these for those entering or leaving the Mediterranean is Gibraltar.
2. Pay the VAT – but do so in a country with a low rate which varies from 25% in Sweden to 5.4% in Malta. Payment will be on the depreciated value of the boat not the new value.
3. Set up a Gibraltar based company to own the vessel which you then charter/lease back from the company for a nominal rate. This last option is only effective on high value boats as the legal costs of maintaining the corporate structure run into around £750pa.
It is not surprising that the Boatshed Gibraltar (International Yacht Brokers) are involved in many transactions with yachts that do not have VAT paid status. Gibraltar is a VAT free zone because even though it is part of the EU it does not belong to the EU Customs Union. Sellers bring their VAT not paid boats to Gibraltar to sell. Buyers planning an ARC or Blue Water Rally circumnavigation find Gibraltar an ideal place to locate, purchase and fit out a yacht for such an endeavour.
VAT does not have to be taxing if you work with Boatshed Gibraltar!
Sell your boat with Boatshed Gibraltar