Buying a non-VAT Boat

Lifes Challenges

COVID lockdown had my boat languishing in France forcing me to do a deep dive into the EU custom rules to make sure I would not be hit by a massive 20% + VAT bill once we got back to Les Sables D’Olonne.  Here are the results of my research.

Sailboats, cars, motor-homes, superyachts and Lear jets etc are called ‘Means of Transport’ by the EU Customs rules.  They can be temporarily imported into the EU Customs area without being hit up for import duty and Value Added Tax (VAT) under rules called the Temporary Admissions procedure (sometimes referred to as Temporary Importation). Read More

Tax Residency

Scared of tax?  I am.  And each country makes it scarier because the rules are not uniform.   This online resource courtesy of international accounting advisory consultants Price Waterhouse Coopers gives a great summary of Tax Residency rules for your home country and everywhere in Europe.  As does this OECD resource.  183 days is common but by no means uniform.  Compare say Italy (183 days in a calendar year) with Croatia (183 days in any one year period) with France (no mention of 183 days) as examples.

It is also worth remembering that bilateral Tax Treaties between countries can alter the definition of tax residency.  Though this is often just for the purposes of Income Tax and specifically not for every other kind of tax you are held hostage to.  I wonder if that includes VAT?   And I wonder how much money Tax Lawyers make?

 Q and A from Readers

Q:  We are on the process of buying a non-vat paid yacht in Croatia. Our understanding is we have 18 months before we need to pay any VAT. Can anyone confirm please? We are both NZ citizens and residents and the boat will be NZ registered

A:  I can’t find a definitive answer to this.  A boat in the EU under Temporary Admission will be, and remain, VAT-exempt for 18 months from the time it entered the EU (not the time you bought it) as long as all the conditions for Temporary Admission are met. According to Article 218 of the Uniform Customs Code you can be authorized for TORO (Transfer of Rights and Obligations) for goods under special procedures which includes boats under Temporary Admission.  Ask a tax lawyer.  If the boat was a Charter Boat then the boat is not currently under the Temporary Admission procedure.  The safest approach would be to take the boat out of the EU Customs territory to Montenegro (for example) and restart the Temporary Admissions clock when you sail back.


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