When the United Kingdom (UK) left the European Union (EU) on December 31st of 2020, owners of yachts registered in the UK faced a great deal of uncertainty on their Value Added Tax (VAT) liabilities. To clarify the complexity of post-Brexit VAT status, a consortium of British and European Marine Organizations set eight different scenarios to help yacht owners know whether they must pay additional taxes.
Any UK registered boat can keep their EU VPS (VAT Paid Status) if they were in the European Union during or before Brexit day and if the owner —the one who removed the vessel from the UK— has not changed.
These same crafts can return to the UK without paying a UK VAT by claiming Return Goods Relief (RGR) only if:
- The yacht had UK VPS at the time of departure
- Return is within three years of departure
- There has been no material change to the yacht
- The person who exported the craft is the same as the one who is re-importing it.
The UK-registered boats that have been out of the UK for more than three years may not pay UK VAT if they return to their country of origin before June 30, 2022.
If a yacht or boat owner is from the UK and resides in the UK but has a business or property in the EU, they may keep their EU VAT status. The boat, however, must have been in EU territory at the time of the transition.
Scenario 6, 7 and 8
UK or EU-registered boats outside the EU at the time of Brexit will lose its EU VPS status without proof that it was in EU territory within the last 3 years. The boat will not be relieved of additional VAT if it belonged to another when it was in the EU. People who have EU-registered boats that were in the UK during Brexit will need to pay VAT status when returning to the EU.
Some boat owners may benefit from RGR to avoid paying additional VAT if they return the boat to its place of origin in the UK or UE.
Tax liability comes down to good record keeping
Documentation is crucial. If the boat or yacht owner lacks proof of its travels or of where it was during Brexit, they will need to pay the respective VAT each time they enter either of these territories.