• Dora Shimansky

To pay or not to pay? VAT for boat owners.

There are stories about boats being confiscated because of VAT not been paid. There are another long stories about ways of "escaping" from VAT. But what exactly is VAT? Why is it charged on yachts and boats? Who should be concerned or not?

We will attempt to answer at least some of your questions, so you can sleep well.

The tax on goods and services (VAT) is widely know tax invention. It is imposed on consumption and applied in practically every country. On goods, on services. It is general rule in European Union to use VAT - although the tax rates for the same products or services may vary.

As a consequence, VAT is also levied on yachts imported into the EU, produced in EU and on yachts purchased and owned by EU residents who use their yachts inside EU.

What is quite important, VAT applies regardless of jurisdiction of the ultimate beneficial owner and the yacht's flag. It is bound and dependent on the final destination of yacht - in other words where the yacht will be physically located and, in the case of a "commercial" yacht, where it will be chartered.

VAT settlement. Who should discharge, when and at which rate - sellers or buyers?

The general concept is quite. For example, Polish party imports goods from another EU country, i.e. imports them to Poland, then Polish company is obliged to pay VAT at the rate applicable in Poland. In simple words - VAT goes with goods/services. The importing party settles accounts in his country in accordance with the applicable rate for these specific goods.

Transactions between parties in European Union member states are called Intra-Community Acquisition of Goods/Services and they should be identified as such.

VAT regulations on yachts - new vehicles of transport

Following the legal texts, pursuant to art. 2 clause 1 lit. b) point (ii) of Directive 2006/112 / EC OF THE COUNCIL of 28 November 2006 on the common system of value added tax (hereinafter referred to as the "Directive"), VAT applies to transactions for pecuniary interest in the intra-Community acquisition of goods within the territory of a Member State in the case of new vehicles of transport, by a taxable person or a non-taxable legal person, where other acquisitions are not subject to VAT in accordance with art. 3 sec. 1, or by any other non-taxable person.

For the purposes of art. 2 clause 1 lit. b) (ii) of the Directive "vehicle of transport" means of the transport of persons or goods, including vessels with a length of more than 7.