The European Union's VAT tax and yachts: The EU's Value Added Tax (VAT) is a consumption tax collected by each member state's government. VAT is required on yachts imported into the EU and yachts purchased by EU owners who use their yachts in the EU.

Any boat regardless of country that spends more than 6 months in EU waters in any calendar year, is liable to VAT. A boat can only be used in the EU if it has paid VAT.

Each member state applies its own interpretation, implementation, administration, and enforcement of EU VAT rules. Individual member state regulations govern VAT rates. The appropriate VAT requirements are usually enforced by the local customs office. A yacht registered in the EU has the ability to travel freely throughout the EU if VAT has been paid in any EU country.

If the yacht stays in some EU nations for more than six months, it may be subject to local rules.

What documentation is necessary for VAT?

When travelling in EU seas, each yacht must have proof of VAT payment onboard, such as a paid invoice or VAT certificate. If the yacht is exempt from paying VAT, customs or another appropriate entity must submit paperwork stating the cause for the exemption.

Yachts constructed or imported into the EU after January 1, 1985 must be able to demonstrate their VAT status. If privately owned and operated in EU territorial waters until December 31, 1992, yachts built or imported into the EU before January 1, 1985 are regarded to have paid VAT status. Local customs authorities could ask for proof of your legal status. Logbooks, receipts, and invoices from European marinas are examples of acceptable documentation. If records establishing the yacht's whereabouts on December 31, 1992 are not available, all essential paperwork should be produced, and local customs authorities will make a decision.

When a European buyer buys a boat, he or she should request a VAT certificate from the seller or broker. VAT must be paid by the original buyer or importer on yachts manufactured after January 1, 1985. An original invoice or a VAT certificate can be used as proof. Originals can be replaced with certified copies.

If a firm sells a yacht and recovers the VAT, the new buyer will be charged VAT on the yacht. A sales contract will exist to prove that VAT was paid.

If the previous buyer was an individual (rather than a firm) who paid VAT, they should pass this VAT-paid status on to the new buyer and will not be able to collect any VAT. After changing owners, the yacht will retain its VAT-paid status.

Is it possible for the yacht to lose its VAT-paid status? 

If a boat with VAT paid status is exported from (or sails outside of) the EU, it will typically be eligible for a VAT exemption if it is brought back into the EU within three years of exportation. This only applies if the item is returned by the same person who took it. This means that no transfer of ownership can take place outside of the EU. 

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