Can I leave my boat in the EU post Brexit?
QI bought my boat in Spain in 2018 and paid Spanish VAT. It was Spanish registered and I have since changed this, so it’s now on the UK Small Ships Register. Post Brexit, am I sailing under EU VAT rules as I paid VAT in Spain or UK rules because I am UK registered? I ask the question because I want to know if I can leave my boat in the Mediterrean for a few years. I then want to cruise to the USA. What happens with VAT if I then want to return to the Med? If I am under EU VAT rules, I guess I can return to the EU without having a VAT issue? If I am under UK VAT rules, should I re-register as a Spanish vessel? Melanie Wrinch
AStuart Carruthers, RYA Cruising Manager, responds: According to the information we have received, if at the end of the transition period a boat is lying in the EU and that can be proved, its Union status in the EU27 will be kept as long the boat remains in the EU27. As long as the boat is in the EU27, the EU VAT Directive and the Union Customs Code (UCC) apply. Taking the boat out of the customs territory of the Union generally results in its Union status being lost. If the boat then returns to the EU27, the VAT Directive and the UCC become applicable again. On return, VAT and import duty become payable, unless the importer is entitled to relief. This is usually returned goods relief (RGR).
The conditions that must be met for the boat to be treated as returned goods are set out in Articles 203 Union Customs Code (UCC) and 158 UCC Delegated Act. However, if the person importing the boat is not established in the customs territory of the Union they should check if the customs authority responsible for the import, will allow an exception under Article 170(3)(b) UCC. Provided the conditions for Returned Goods Relief are met, then the goods (boat) should be exempted from VAT according to Article 143(1) (e) of the VAT Directive. Assuming EU RGR is applicable, the conditions that must be met are that the boat: had Union status when it was taken out of the EU; and was exported from the EU by the same person as is importing it; and is in the same condition as when it was exported; and returns within three years of export.
Customs and VAT legislation is determined by a boat’s location, not its flag state. If a maritime administration is content that a boat under a foreign registry is permanently berthed in its waters then there is no reason why this should change. While many EU administrations have been content to permit UK flagged boats to be kept in their waters while we have been part of the EU that may not be the case at the end of the transition period and it would appear that there is nothing to prevent a maritime administration from requiring a boat to transfer to its flag. Clearly, once a recreational boat is transferred to another flag then it undoubtedly becomes subject to that administration’s maritime law and jurisdiction.