Important Brexit news , regarding VAT status and locations of yachts at the time of Brexit
Pelagos Yachts has received confirmation that when the UK leaves the EU, the EU Commission will regard all yachts based in UK-waters as losing their EU VAT-paid status.
The EU Commission has confirmed that “after the UK’s withdrawal from the EU or the end of the transition period in case a Withdrawal Agreement with a transition period is concluded, in general, any goods in the customs territory of the UK will lose their Union status and will become UK goods,” and that “The customs status of a UK vat paid boat will depend on its location at the point in time of Brexit : if the boat is located in an EU port or sails in EU territorial waters, it will keep its Union status; if the boat is located in the UK, its status will be that of a third-country boat when arriving in the territorial waters of the Union, i.e. it will be treated as non-Union goods. Customs controls for such UK boats will be the same as for boats coming from a third country”.
The implications for owners of UK-based yachts are considerable: Once UK-based yachts lose EU VAT paid status, VAT will be payable to the country of entry into the EU if a yacht does not have the benefit of the EU Temporary Importation rules. (In general, these allow a non-EU based yacht to spend up to 18 months in the EU before VAT becomes payable.)
If owners of UK-based yachts are likely to want to locate the yachts in the EU 27 in the longer term, they may wish to locate their yachts in an EU-27 port on Brexit day in order to retain EU VAT paid status.
To confirm the yachts location at time of Brexit, marina receipts and other evidence of the yacht’s location (for example, dated photographs and insurance certificates stating the yacht’s home location) could potentially be helpful.
We still do not know how HMRC will treat VAT issues on yachts being imported into the UK post-Brexit. If yacht owners locate their yachts in an EU-27 port on Brexit day it may result in UK-VAT becoming payable if the yacht is subsequently imported into the UK.
The EU Commission guidance indicates that if there is a Withdrawal Agreement with a transition period, the loss of EU-VAT paid status will occur at the end of the transition period. If there is a no-deal Brexit the loss of EU VAT-paid status will occur on the Brexit Day on 29th March 2019.
The EU Commission guidance does not distinguish between the nationality or original country of payment of the VAT. At first glance, it therefore seems possible that, under a no-deal Brexit, all yachts in UK waters will lose VAT-paid status irrespective of the nationality of ownership or where the VAT was originally paid. Pelagos are attempting to clarify whether this is the case.”
For assistance and advice in relation to this contact Pelagos Yachts