EU Ports or Indeed Non-EU Ports?
On the 31/12/2020 the location of your yacht was fundamental to its future tax status. If the yacht had VAT paid status on that date (meaning it was in free circulation within the entire EU) then, so long as it was in the U.K. it maintained VAT paid status within U.K. waters. However it lost free circulation within the EU. Conversely if the yacht was in EU waters on that date then it conserved VAT paid status within the EU but lost it as far as the U.K. was concerned. If the yacht was outside both the U.K. and the EU on 31/12/2020 then VAT status was lost in both the U.K. and EU.
There is a “get out of jail” card which makes the situation more palatable for British boats that do not have EU VAT paid status. This includes all yachts sitting in U.K. ports. Boat owners who do not reside in the EU have the concession of 18 months free circulation within the EU for their non VAT paid yachts but at the end of this period the yacht has to leave EU waters in the Mediterranean. This could be to Turkey, Montenegro, Morocco or Gibraltar. The legislation does not specify the length of the period of absence but it goes without saying that simply one overnight stay in Gibraltar is unlikely to satisfy anyone but the stay does not have a specified minimum requirement.
So what do you do if you own a boat that does not have EU VAT paid status and it’s sitting in an EU port? Leave before your 18 month period is up. Incidentally be sure to always conserve berthing invoices so that you can provide evidence of length of stay in or out of the EU.
What if your sailing days are up and you want to sell your boat. Selling within the EU to an EU resident will incur a VAT liability. You need to be aware of this because sooner or later the tax authorities will arrive to claim their taxes. Selling to a non EU resident is your best option remember this now includes U.K. citizens residing in the U.K.
There are big advantages for U.K. citizens to buying a non VAT paid boat. For a start they tend to be cheaper. Why buy a VAT paid boat in the U.K. if this means that it’s only applicable to U.K. and your plans are to cruise in the Med?
Boatshed Gibraltar has for years been selling yachts with VAT and non-VAT paid status. We understand the rules and will make sure that you buy or sell safely. A big advantage to buying a boat via Gibraltar is that there are no taxes on the purchase or sale of yachts in Gibraltar.