Minimising the risk of VAT and import
duty becoming payable on your boat when arriving in the EU27 after the end of
the transition period
Returned Goods Relief
The payment of VAT
on a boat is not necessarily a one off event. In fact every time your boat
leaves the Customs Territory of the EU, technically speaking, you risk having
to pay VAT on its return.
This is because, the EU VAT
Directive states that a chargeable
event for VAT occurs when goods (in our case a boat) are imported.
However, triggering a
chargeable event for VAT doesn’t always lead to a VAT payment. If goods (the
boat) are being re-imported in the same state [condition] as they were exported
by the same person who exported them, and provided the goods are exempt from customs
duties then the VAT Directive
provides for an exemption from VAT.
Whether or not the
goods are exempt from customs duties is determined by the Union Customs Code (UCC),
which permits goods that have Union
status when they are exported from the customs territory of the European Union
to be granted relief from import duty provided they return to that territory
within three years.
In summary, in
order to be entitled to relief from VAT and, if applicable, import duty on
arrival in the customs territory of the European Union (commonly called
returned goods relief – or RGR) a recreational craft must:
- have had Union
status when it was taken out of the EU; and
- have been exported
from the EU by the same person as is importing it; and
- be in the same
condition as when it was exported; and
- return within 3
years of export.
The result is that
boat owners usually move seemingly seamlessly in and out of the EU,
irrespective of the boat’s flag state, the nationality of the owner, or the EU Member
State in which the VAT (and, if applicable, import duty) were accounted for.
EU Temporary Admission
The boat’s flag
state (country of registration) is however a factor which determines whether a
boat is eligible to enter the customs territory of the EU under a temporary
allows non-Union goods (which includes non-EU boats which are brought into and
used for private purposes in the 'customs territory of the Union’) to enter the
customs territory of the EU (which includes territorial waters) for a limited
period of time without payment of VAT and, if applicable, import duty as long
- are intended for re-export; and
are not intended to undergo any
change, except normal depreciation.
Although the EU VAT
Directive states that a chargeable event for VAT occurs when goods (in our case
a boat) are imported, if the boat is placed under temporary admission with
total relief from import duty, VAT only becomes chargeable when the boat ceases
to be covered by those arrangements.
must be met if total relief from import duty is to be granted for a means of
road, rail, air, sea or inland waterways transport (in our case a boat) require
that the boat:
- is registered outside the customs
territory of the Union; and
is registered in the name of a person
established outside customs territory of the Union or if the boat is not
registered it must be owned by a person established outside the customs
territory of the Union; and
must be used by a person established
outside the customs territory of the Union (although there are a few
exceptional situations in which this requirement does not apply).
established in the customs territory of the Union is someone who has his or her
habitual residence in the customs territory of the Union or in the case of a
legal person or an association of persons, having its registered office,
central headquarters or a permanent business establishment in the customs
territory of the Union.
Although the UK has
left the EU, until the end of the transition period, the UK is still treated as
part of the customs territory of the Union. This means that a UK registered
boat or a boat owned by a person who is established in the EU is currently not
eligible for temporary admission. Thereafter, unless the future relationship
between the UK and the EU determines otherwise, a UK registered boat owned by somebody
who is established outside the customs territory of the Union will be eligible
for temporary admission.
The time limit for
the discharge of the temporary admission procedure in the case of a privately
used means of sea and inland waterway transport is 18 months. There is scope
within the UCC for the period of temporary admission to be extended, but only
in exceptional circumstances.
Until the future UK
– EU relationship has been finalised, we cannot be certain that UK boats will
be eligible for temporary admission. Assuming they are, after the end of the
transition period some UK flagged boats within the customs territory of the
Union will have Union status and some will have been allowed to enter the EU under temporary
admission, for a limited period with total relief from VAT and import duty. The
boat’s flag state and the nationality of the owner might then become triggers
which lead to increase interest in the customs status of UK flagged and / or UK
If this is the
case, it will be important to have the relevant documentary evidence to
demonstrate the boat’s status, if requested.
the European Commission has advised that, the Union Customs Code states “The
relief from import duty shall be supported by information establishing that the
conditions for the relief are fulfilled”.
Whether your boat
will be in the EU27 for an unlimited duration of stay on the basis of it having
Union status or you intend to rely on a temporary admission arrangement to go
boating in the EU27, we encourage all members to retain evidence to ensure that
it can be demonstrated that all of the applicable criteria, detailed above, are
Additionally it is
recommended that evidence of the location of the boat at the end of the
transition period, is obtained and retained, to evidence eligibility for RGR in
the future as the European Commission has previously indicated that a boat
which is lying in the UK when the UK’s current relationship with the EU ends,
may not meet the criteria for RGR as the boat, technically speaking, won’t have
been exported from the EU.
Therefore, if Union
status is important to your future plans, you may wish to locate your boat
outside the UK at the point in time when the transition period ends and obtain
documentary evidence of its location, as a boat which is lying in the EU27 will
retain Union status and a boat which is elsewhere in the world, other than in the
UK or UK territorial waters, should be eligible to re-enter the EU and claim
relief from VAT and import duty as returned goods.
information about the RYA’s Brexit work, visit www.rya.org.uk/go/brexit.
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