See full version: VAT on boats: a guide
Complications also arise because a VAT paid boat can lose this status. This will happen, for instance, if it’s sold outside the EU – even if purchaser and vendor are EU residents. VAT must then be paid if the boat is brought back into the EU. Equally, boats that are kept outside the EU for more than three years may be required to pay VAT again. [links]
Before committing to buying a second-hand boat it’s important to ensure the VAT paperwork is available, or that the price reflects the lack of documentation. more
When it comes to buying a boat, it’s important not to underestimate the complexity of VAT and yachts, especially for higher value craft. There are situations in which a boat that appears to have appropriate paperwork may not in fact be VAT paid.
The Association of Brokers and Yacht Agents (ABYA) recommends that its members should obtain the relevant paperwork from the vendor before listing a yacht as being VAT paid. However, sadly, not all are so diligent, which can lead to delays in a transaction at a later date. On the other hand there are also brokers who are adept at tracing a long-forgotten trail of paperwork, even where companies are no longer in business. here
Should you expect the price of a second-hand boat to be reduced if it doesn’t have the appropriate paperwork? There’s no clear-cut answer to this. For many smaller lower value craft the vessel’s condition and level of equipment has a much greater bearing on its value than the 20 per cent VAT. On the other hand, it’s clear that a one-owner boat that’s only a few years old will be reduced in value by the entire value of the VAT if the paperwork is not available. Unfortunately, there are also many cases in which the legal situation is not clear cut, especially as VAT on boats is a tax on a transaction – the sale or importation of goods or services – not on the vessel itself. It’s in these cases that an expert broker or solicitor can help out significantly, especially for high-value yachts.
The trader is responsible for paying the excise duty due in the EU country of destination. here
When you buy services online from a trader established in the EU, you pay the VAT rate of the country where the trader is established. This rule also applies if you live in a different EU country from the trader. [links]
If you buy goods online from outside the EU, VAT, customs and excise duty is always due. here
Senta, lives in Sweden and often purchases eBooks from a Finnish online book seller. The Finnish supplier must charge her Swedish and not Finnish VAT. [links]
You should therefore expect the price for these types of goods to reflect the cost of excise duty. If the price is very low, make sure you check with the seller if the duty has been paid before you make your purchase. If the seller hasn't paid the excise duty, your goods can be seized by customs on arrival or you may be required to pay the excise duty yourself. You should always make sure that the seller will pay the necessary excise duty in the EU country of destination. here
Use tax is usually imposed at the same rate as sales tax and is imposed when you bring the boat back into a state. Use tax must be of primary concern to anyone that has not paid sales tax. (If you have paid sales tax to a state however, you can rest easy, as sales tax is an offset to use tax). For Marylanders, use tax is the tax that a buyer will face on the boat purchased in Delaware and brought home on a trailer.
It is hard to keep track of all of the state taxes, and nearly impossible to keep track of all of the county and municipal taxes. Not only are they all different, but they also all subject to change. BOAT/US provides a good general comparison of state taxes on its website www.boatus.com/gov/state_boat.asp but I understand that it is being updated now after several years without revision. more
Another very good option to avoid initial sales tax is to identify an escape clause in your local tax jurisdiction. In Maryland, for example, one need not pay sales tax on a boat that files a certification stating that it is going to leave the state within 30 days of purchase. Similarly, in Florida, a non-resident need not pay tax if the boat is taken to a different state shortly after purchase. If you anticipate taking your boat out of the country, using it in a state that does not have a sales tax, or actively cruising between lots of jurisdictions, avoidance of paying the initial sales tax can be a big cost savings. If nothing else, a boat can depreciate a good deal over the course of a few years. [links]
How can I legally avoid paying taxes on my boat?
I stated above that this article would address the first step in legally avoiding tax on a boat. Well, that was it. The first step is to legally avoid sales tax. Anyone that has been around boats, however, will recognize that this is just the beginning. Most sales tax states have two other closely related taxes, title tax and use tax. Use taxes were devised to take the profit out of going across state lines to purchase products, which is exactly the conduct we’re talking about here.
Before we get into specifics, however, let’s go back to the beginning. What kind of tax are we talking about and who collects it? There is no federal vessel tax (and may the federal luxury tax stay good and dead!), so taxes are imposed at the state and local levels. Generally, there are three taxes of concern to boat owners: sales tax, use or registration tax, and personal property tax. Sales tax is imposed, if at all, at the time of purchase. Use tax is imposed by sales tax states on goods that were not taxed at the time of purchase. Personal property tax is an annual tax, payable every year, on property that is kept within a jurisdiction. This article will focus on sales tax. more
Within the contract it’s important for the person selling the boat to state that they are the legal owner and they have the right to sell it. You’ll also want to see title documentation and evidence that the person selling the boat, does in fact own it. [links]
Hannah Cash says: “Ultimately buying a boat should be a pleasurable, experience and you should be excited about your intended purchase. The moment it becomes stressful and you feel unsure about the purchase, that is the time to proceed with caution and seek legal advice.“
Going private
Sales contract more
The majority of brokers should be able to provide this service for you but, if not, make sure you get your contract translated before you sign anything. here