VAT DO YOU MEAN? The Cruising Association summarises VAT and Visa implications as a result of Brexit.

Following Brexit, yacht cruisers in Europe will need to be much more aware of the VAT implications of their cruising activities. Once Brexit occurs – either on a ‘no-deal’ Brexit or at the end of a transition period - there will be separation of the UK and EU VAT regimes. Yacht cruisers sailing between the UK and the EU will then need to be aware of and take account of these new VAT issues.

In addition, cruising sailors will need to be aware that Visa-free stays in the Schengen Area will be limited to 90 days in ANY 180 day period and that if either a single trip or a combination of trips will be more than 90 days, then an extended visa may be required BEFORE leaving home. VAT ON VESSELS

The EU Approach The EU Commission has stated that customs status of a UK boat will depend on its location on the Brexit day. If on the Brexit day a boat is located in an EU port or sails in EU territorial waters, it will keep its Union status and continue to be regarded as having VAT-paid status. If the boat is located in the UK on the Brexit day, 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 nonUnion goods. Following Brexit, Customs controls for such UK boats will be the same as for boats coming from any other non-EU country.

Following Brexit, yachts without EU VATpaid status will be able to visit the EU under a ‘Temporary Importation’ scheme without paying VAT. In general, this allows non-EU yachts to sail in EU waters for up to 18 months (extendable up to 24 months if the yacht is laid up and not used), for private purposes, as long as the yacht is owned by a non-EU resident. The Temporary Importation scheme can be re-started by leaving EU waters (even for a few days).

The UK Approach HMRC has stated that “UK owned boats will retain their UK VAT paid status whatever their location on the day the UK exits the EU”.

HMRC has also said Returned Goods Relief (RGR) will be available to allow those resident in the UK to return with their belongings (including pleasure boats) to the UK without paying customs duty or VAT as long as the items have not been changed since their departure and the importer follows HMRC guidance. This requires that “the person responsible has evidence that the VAT was paid on the purchase of the boat in either the UK or the EU”. There does not appear to be any time limit on the availability of this relief as long as the yacht is used for private purposes.

For yachts that are purchased post-Brexit “VAT accounted for in the UK would need to be shown in respect of vessels purchased after the date of the EU exit”.

Extended visits to the Schengen area by Individuals - Visa implications As has been widely publicised, the EU has agreed in principle to grant UK citizens Visa free travel to the EU Schengen zone for trips which total no more than 90 days in any rolling 180 day period.

Those cruising in yachts need to look at their plans very carefully and recognise that trips for winter maintenance or skiing etc… may well have an impact on the time they can spend on their boats in the summer.

There are various online Schengen calculators available but the simplest approach is to consider the last day of any proposed trip, look back 180 days and check the number of days spent in the Schengen Zone. This must not exceed 90 days in total.

For cruisers wishing to stay more than 90 days in any 180 days who do not have either an EU passport or residency rights in an EU country, then an Extended visa must be applied for well before leaving the UK / entering the Schengen Zone. Two months is suggested.

Extended visas are only valid for a single country and hence multiple visas might be needed. However, time spent in a country covered by an Extended visa does not count as part of the 90-day Schengen allowance.

Applications for Extended visas must be made directly to the UK Embassy of the country(ies) to be visited and the application process may differ from country to country; however, in most cases the application requires a declaration and possibly proof of an accommodation address.

Marinas and harbour masters appear to be willing to support yacht cruisers by confirming that a yacht moored in their facility is a valid accommodation address for the purposes of visa applications.

Practicalities Yacht owners who cruise in the EU need to think carefully about the location of their yachts on Brexit day. If retaining EU VAT-paid status is important then they should consider locating their yacht in the EU on Brexit day. If they do this, it will be important to obtain evidence that the yacht is in the EU at that time. There are no official requirements for this. A variety of items of evidence have been discussed, such as mooring invoices and receipts, confirmatory letters from marinas and time stamped photos and AIS track records.

“Following Brexit, yachts without EU VATpaid status will be able to visit the EU under a ‘Temporary Importation’ scheme without paying VAT.”

In addition, they need to carefully consider the time they are going to spend in the Schengen zone after Brexit day and, if necessary, make applications for an extended visa in good time. Having confirmation of an accommodation address may well help this process go smoothly.

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