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EU boats to pay VAT again after 3 year absence

By webmaster last modified Aug 07, 2005 03:37 PM

Published: 2005-08-07 15:37:25

A shocking news published initially in the German magazine Die Yacht has now been confirmed by the German Ministry of Finance: EU flagged yachts that have been absent from the EU for over three years must pay VAT on the assessed value of the boat on their return. This regulation applies even to boats that had paid VAT already! There is already one case of a German yacht that had to pay VAT twice.

The one exception to this ruling is for boats that have been outside EU waters during the three year period for "commercial reasons", in other words that have been engaged in chartering. In such a case the owner must contact the Ministry of Finance to obtain a waiver.

The best solution for ordinary cruising yachts is to make sure they visit a EU country (including such overseas territories as one of the French Antilles islands) before the expiry of the critical period, and to make sure they obtain proof of their visit. However, one should ensure that such a teritory is indeed regarded as being part of the EU (the Canary islands, for example, are not considered to be part of the EU for Customs reasons).

It is not yet known if this ruling is to be applied by all EU countries, but German flagged boats are definitely warned to take the ruling seriously!

Hugo Tiberg of the Institute of Maritime Law, Stockholm University, responds:

Under the 6th EG VAT Directive, goods may be charged import VAT either if they are reimported within a period which Member States may set between three years and ten years. What EC countries apply this to yachts I do not know, but neither England nor Sweden do. However, if goods - or a yacht - change hands and are reimported by another than the exporter, VAT is due irrespective of the period of absence. These are rules adopted from the individual States before their accession to EC and are no news.