Published 18/05/2020 | last updated 05/02/2021
Returned Goods Relief
This information should be read in conjunction with Brexit - what happens next? where more detailed guidance on which boats may or may not be eligible for returned goods relief is provided.
The payment of VAT
on a boat is not necessarily a one off event. When a boat leaves the customs territory of the EU, in accordance with Article 154 of the Union Customs Code, it becomes non-Union goods (i.e. the customs status of Union goods is lost) unless the rules on internal transit apply. As a result, 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
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.
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.
Some EU Member States may
require that the boat is placed under customs supervision if the owner leaves
it in the EU unattended.
Since the end of the Brexit transition period, people resident in GB with boats registered (flagged) in the UK may, within the conditions of Temporary Admission, use a boat in the EU which is not in free circulation (i.e. it is not VAT paid). Owners of UK flagged boats may find that the ensign lead to increase interest in the customs status of the boat. It is therefore important to have the relevant documentary evidence to demonstrate the boat’s status, if requested.
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
met. It is recommended that this includes evidence of
the location of the boat at the end of the transition period.
Further information can be found under Brexit - what happens next?
information about the RYA’s Brexit work, visit www.rya.org.uk/go/brexit.
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