GB boat homeowners could have extra choices to assert EU VAT paid standing than they realise
A consortium of British and European marine organisations, together with the RYA and British Marine, has printed a set of eight situations to assist boat homeowners unravel the complexities of post-Brexit VAT standing on second-hand boats.
As beforehand reported in PBO, since 1 January 2021 British owned/registered boats are solely permitted free circulation (VAT paid) in EU international locations beneath particular situations.
Long term UK cruisers in Europe face paying VAT twice on boats
Furthermore, a few of these boats could turn out to be liable for VAT upon re-entry to the UK – even when they’ve already paid earlier than.
So which used boats will retain EU VAT-paid standing and which of them gained’t?
WHY DOES IT MATTER?
Loss of EU VAT-paid standing might be pricey, as a result of on the a lot larger EU27 market, a ship that solely has UK VAT-paid standing shall be taxed upon import to the EU – a value that can hit the resale worth of UK boats.
JARGON BUSTER
TA – Temporary admission granted to visiting boats from third international locations for as much as 18 months
RGR – Returned Goods Relief is an avoidance of VAT that applies to any yacht that’s re-imported to a territory and which hasn’t modified fingers whereas being ‘overseas’ for lower than three years.
Losing EU VAT paid standing
Scenario 6 (see full press launch beneath) illustrates the truth of Brexit for the overwhelming majority of British boat homeowners. Basically anybody whose boat was in GB (Northern Ireland is being handled in another way) on Brexit day and who’s unable to show that their boat had been in a EU27 nation within the final three years just isn’t eligible for returned items reduction (RGR) and has ‘misplaced’ EU VAT-paid standing (in the event that they even knew that they had it).
Any EU purchaser could be taking a look at having to pay an extra quantity of VAT to formally import the yacht.
Scenario 5 illustrates a continuation of a VAT reduction association for a ship belonging to an individual who usually lives in GB, however who owns property or a enterprise in one of many EU27 international locations.
Maintaining EU VAT paid standing
The different six situations illustrate how sure boats can probably preserve their EU VAT-paid standing.
Scenarios 1-4 illustrate probably the most simple circumstances: any pleasure craft that was in a EU27 nation on Brexit day and hasn’t modified fingers since being ‘exported’ from the UK (all cross-Channel passages are actually classed as import/export) is allowed to maintain its EU VAT standing.
Those similar yachts can now additionally return (be exported) to GB with out paying VAT once more (claiming RGR) in both of two circumstances: in the event that they’ve been out of GB for lower than three years, or in the event that they’ve been away longer, however are returned earlier than 30 June 2022 (it is a one-off Brexit concession).
Thereafter, till the boats change fingers in both of the jurisdictions, or three years passes with out a new import/ export, these yachts are permitted to assert RGR in each the UK and the EU.
Marine VAT professional Simon Anslow has written a complete information to understanding the subject for berthoninternational.com explaining that a number of the boat homeowners referenced above could successfully have the ability to preserve twin standing.
But he additionally references an extra group of boat homeowners which will profit from the RGR/import/export loop, which is illustrated in situations 7 and 8.
He states: ‘Going again to our proprietor whose VPS yacht [VAT-paid status in UK or EU] was within the UK at Brexit – we all know that that yacht now has UK standing and successfully misplaced its EU27 standing, BUT if that proprietor has had the yacht inside the EU27 at any time and they return to the EU27 inside three years of the final departure (and this may be evidenced), then they’ve a possible eligibility for RGR and reviving their EU27 VPS.
‘Further in the event that they return to the UK inside three years… and so on, so whereas they can’t technically have twin standing, they do for all sensible functions.’
Cruising Manager on the RYA, Stuart Carruthers, provides: “This is one other post-Brexit minefield that a lot of our members have had problem in negotiating. We hope this set of situations will assist with that.”
The full press launch follows…
Following the UK’s withdrawal from the EU, there have been many questions which have precipitated confusion and uncertainty for the leisure marine sector each within the UK and within the EU27.
Arguably, the largest has been across the VAT standing of recreational craft on the finish of the transition interval.
In an unprecedented stance, the International Council of Marine Industry Associations (ICOMIA), European Boating Industry (EBI), European Boating Association (EBA), British Marine (BM) and the Royal Yachting Association (RYA) have joined forces to offer clarification on VAT and customs for recreational boating firms and customers.
The 5 organisations have taken the distinctive resolution to launch this steerage to members and non-members.
The group put ahead the important thing situations affecting boaters and are happy to substantiate that the Commission has now responded, validating the interpretation of the steerage and how VAT needs to be utilized beneath the varied examples.
This follows a push led by the EBI with the European Commission to offer this essential clarification. For the unique doc, please contact the taking part organisations.
The optimistic affirmation of the situations ought to now even be recognised by every EU nation of their dealings beneath this matter. Failure to take action may end in formal complaints being made to the Commission.
Further clarification shall be sought from the European Commission on the documentation required and interpretation of firm of “particular person established within the customs territory of the Union.”
Philip Easthill, Secretary General of the EBI, mentioned: “We are delighted to have acquired the responses from the Commission that firms and boaters urgently want. Given the influence of Brexit on companies and provide chains, readability on VAT for second-hand boats is very essential. The cooperation of EBI with our companions has been key and we are going to proceed to advocate for readability on VAT points via our channels at EU stage.”
Lesley Robinson, CEO of British Marine, mentioned; “Collaboratively working along with different leisure marine trade our bodies is a extremely profitable means of collectively garnering outcomes, and this latest readability acquired on VAT points post-Brexit will drastically profit British Marine members and the UK leisure marine trade. The solutions to those situations shall be welcomed specifically by UK boat retailers and brokers to help in sustaining a wholesome commerce of second-hand boats throughout the UK and EU.”
Udo Kleinitz, Secretary General of ICOMIA, added; “The trade is affected by the adjustments in VAT regime via lack of boaters expenditure in marinas and tourism. Our members have requested us for help on this matter which is why the collaboration with EBI, BM and the consumer organisations helps in elevating the profile and relevance of the subject with the relevant companies.”
The following acronyms are used:
TPE = The time at which the transition interval ended – 31 December 2020, 23:00 UTC
VPS = VAT Paid Status: i.e. in free circulation
EU28 = EU earlier than TPE, i.e. together with UK
EU27 = EU after TPE, i.e. excluding UK
GB = England / Scotland / Wales excluding Northern Ireland
TA = Temporary Admission
RGR = Returned Goods Relief
UCC = Union Customs Code
The Union Customs Code referred to inside this doc could be discovered here.
Scenario 1
- GB owned/registered pleasure craft
- In free circulation (VPS) inside EU28 pre-TPE and has supporting documentary proof)
- Within EU27 as at TPE
Impact on VAT Paid Status (VPS) = ✓ EU VAT Paid Status
The boat retained EU VPS standing.
Scenario 2
- GB owned/pleasure craft
- In free circulation (VPS) in EU28 pre-TPE (and has documentary proof)
- Within an EU27 as at TPE
- Boat leaves EU27 (for GB or elsewhere) and then returns to the EU27
Impact on VAT Paid Status (VPS) = ✓ RGR & EU VAT Paid Status
Boat is eligible to RGR on return to the EU27 and may have EU VPS, offered that every one the situations established in Article 203 UCC are fulfilled and, for VAT, that the boat is imported by the identical one that exported it.
Scenario 3
- EU27 owned/registered pleasure craft
- EU28 VPS pre-TPE (and has documentary proof)
- In EU27 as at TPE
- VAT paid on authentic new buy in GB various years in the past
- Subsequent possession and location inside the EU27
Impact on VAT Paid Status (VPS) = ✓ EU VAT Paid Status
The boat retains its Union standing and it’s due to this fact in free circulation with EU VPS.
Scenario 4
- GB owned/registered pleasure craft
- Business owned
- EU VPS earlier than TPE
- In EU27 as at TPE
- Kept and used inside the EU27
- Long-term lease to particular person for non-public use
- GB VAT accounted for on annual lease cost
Impact on VAT Paid Status (VPS) = ✓ EU VAT Paid Status
According to the knowledge offered, the boat has Union standing and retains it except the boat is taken outdoors the customs territory of the Union.
Scenario 5
- GB owned/registered pleasure craft
- Owner is ordinarily resident in GB
- Using boat inside EU27 on TA
- Owner has an EU27 vacation property the place they preserve the boat moored (of their identify)
Impact on VAT Paid Status (VPS) = ✓ Temporary admission
An individual is established within the customs territory of the Union if he/she fulfils the situations established in Article 5(31) UCC. If the particular person just isn’t established within the customs territory of the Union, then he/she will declare the boat for short-term admission if it has non-Union customs standing.
Scenario 6
- GB or EU27 owned/pleasure craft
- In free circulation inside EU28 pre-TPE (and has documentary proof)
- No proof of getting been within the EU27 beforehand; or
- Ownership has modified because it was final within the EU27
- In GB as at TPE
Impact on VAT Paid Status (VPS) = EU VAT Paid Status Lost
Article 203 UCC requires proof of a earlier export to the UK. The Commission steerage signifies that, within the absence of an export declaration, proof of the earlier motion of the boat to the UK is required. If the boat has by no means been in EU27 it’s unattainable to offer proof of motion to the UK.
Scenario 7
- EU27 owned/pleasure craft
- In free circulation inside EU28 pre-TPE (and has documentary proof)
- Had beforehand been evidenced as being inside the EU27 inside the final three years
- In GB as at TPE
- Same proprietor who introduced it out of EU27, returned to the EU27 inside three years of departure
Impact on VAT Paid Status (VPS) = ? Documentation required
It is for the Member State to resolve whether or not the situations for RGR is feasible (Article 203 UCC) are met.
Article 203 UCC requires proof of a earlier export to the UK. The Commission steerage signifies that, within the absence of an export declaration, proof of the earlier motion of the boat to the UK is required. Member State authorities should due to this fact assess whether or not that passable proof could be offered on this state of affairs.
Scenario 8
- GB owned/pleasure craft
- In free circulation inside EU28 pre-TPE (and has documentary proof)
- Had beforehand been evidenced as being inside the EU27 inside the final three years
- In GB as at TPE
- Same proprietor who introduced it out of EU27, returned to the EU27 inside three years of departure
Impact on VAT Paid Status (VPS) = ? Documentation required
It is for the Member State to resolve whether or not the situations for RGR (Article 203 UCC) are met. Article 203 UCC requires proof of a earlier export to the UK. The Commission steerage signifies that, within the absence of an export declaration, proof of the earlier motion of the boat to the UK is required. Member State authorities should due to this fact assess whether or not that passable proof could be offered on this state of affairs.
Any questions could be directed to the related leisure marine consultant physique by way of the main points beneath:
RYA: [email protected]
British Marine: [email protected]
EBA: [email protected]
EBI: [email protected]
ICOMIA: [email protected]
