VAT and import taxes

Posted On:
Filed Under:
By:

VAT

VAT (Value Added Tax) is a sales tax. Though applied across the EEA it may be referred to by different names (TVA in France for instance).  In principle it is a tax applied to the added value only.  Thus if there is no 'added' value there is no VAT due.  This is normally the case with second hand goods sold within the EU but is of course based on the premise that (EEA) VAT was paid when the goods were first sold.  Clearly this does not hold for second hand imports from outside the EEA.

VAT rates vary across the EEA states as they are set nationally.  At present Madiera at 15% has the lowest rate.  The UK which was at 15% for much of 2010 has now jumped first back to 17.5% and now (from 1st January 2011) to 20%, as a consequence of the current financial crisis.  Most EEA countries hover in the 19-21% bracket whilst Norway (perhaps typically) currently charges 25%.

Most countries do not charge (or refund)  the 'difference' when VAT paid goods are moved across borders.  Thus a craft imported from the US to the UK where VAT at 15% was paid, could have been taken to Italy and registered there without paying the extra 6% notionally saved on Italian VAT at 21%.   This is not (again typically) the case for Norway where the paid VAT is effectively refunded and the Norwegian VAT (at 25%) charged (note however that imports to Norway via Sweden can do so without paying Swedish VAT as well as Norwegian import tax).

Where craft are landing in a different country to the final destination (eg arriving in the UK prior to onward shipment to Norway) it may be possible to arrange a VAT waiver so that VAT is only paid on arrival at the final destination.  Such waivers vary by country and should clearly be arranged in good time.

Whatever the rate it is CRUCIAL that care is taken with the receipt of payment as most VAT authorities WILL NOT replace these documents.  Instead they take a second bite of the cherry and charge VAT again.  Oh to be a taxman.

Taxable value

Though open to interpretation the taxable value is generally accepted to be the price paid for the craft (less any buyer commission), plus the sea shipping, plus the cost of insurances for the sea shipping.  In theory transport in the US and other services directly attributed to the import process could/should be included but in practice these are not.  Why pay more?

If the craft has not recently been purchased prior to import the authorities will apply a number of alternative ways to value the craft, most of which won't be favourable.  It may be possible to depreciate the value or find a friendly official (eg in Spain perhaps) who take a conservative view on value.  There are tax specialists who can help with this but it's seldom viable for anything other than high value craft.

In times of financial upheaval (as now) prices can vary considerably and it is often difficult to make a judgement on value....

Antiques

A number of Clients have asked about pre-war (pre-1942 for the US) craft and VAT.  Sadly, for the UK at least to qualify for the lower 5% Antique rate a craft would need to be over 100 years old or of historical significance or directly linked to someone of historical significance.  None of which normally apply to those lovely Chris-Craft runabouts.

Import Taxes

These will vary considerably by country but in principle in the EEA an import tax of 1.7% of the taxable value is charged for craft under 12m in length (Hull Length).

Some countries (guess what it's Norway again) apply additional taxes.  In Norway there is a BHP tax calculated on the engine power of the imported craft.  This is not insubstantial and for say a 5.7l Mercruiser MPI - 300hp could amount to EUR 6,000, almost the cost of the engine.  We have a Norwegian specialist if you want know more.

Written By: Rowland Smith

Rowland Smith is a Naval Architect and founder of Gablemarine.  His industry experience includes Lloyds Register, British Shipbuilders Hydrodynamics Ltd, Cammell Lairds, BP Shipping Ltd & Conoco.  He has a degree in Naval Architecture, a Diploma in Marketing (CIM) and an MBA (Cranfield School of Management).  He has also held Director level positions in a number of technology and engineering companies, including CEproof, which provides RCD compliance software to builders. 

American Boat and Yacht Council Logo

Search our website