British Marine – EU Collaboration on VAT post Brexit position

Collaboration between leading leisure marine representative bodies yields positive confirmation on post-Brexit VAT interpretation

Published on: 08 April 2021

Collaboration between leading leisure marine representative bodies yields positive confirmation on post-Brexit VAT interpretation

Following the UK’s withdrawal from the EU, there have been many questions which have caused confusion and uncertainty for the leisure marine sector both in the UK and in the EU. Arguably, the biggest has been around the VAT status of recreational craft at the end of the transition period.

 

In an unprecedented declaration of unity, the International Council of Marine Industry Associations (ICOMIA), European Boating Industry (EBI), European Boating Association (EBA), British Marine (BM) and the Royal Yachting Association (RYA) joined forces to provide clarification on VAT and customs for recreational boating companies and users. Showing the value of cooperation and membership organisations, the five organisations have taken the exceptional decision to release this guidance to members and non-members.

 

The group put forward the key scenarios affecting boaters and are pleased to confirm that the Commission has now responded, validating the interpretation of the guidance and how VAT should be applied under the various examples. This follows a push led by the EBI with the European Commission to provide this important clarification. For the original document, please contact the participating organisations.

 

The positive confirmation of the scenarios should now also be recognised by each EU country in their dealings under this matter. Failure to do so could result in formal complaints being made to the Commission. Further clarification will be sought from the European Commission on the documentation required and interpretation of establishment of “person established in the customs territory of the Union”.

VAT issues post-Brexit: FAQS

The following acronyms are used:

TPE = The time at which the transition period ended – 31 December 2020, 23:00 UTC

VPS = VAT Paid Status: i.e. in free circulation

EU28 = EU before TPE, i.e. including UK

EU27 = EU after TPE, i.e. excluding UK

GB = England / Scotland / Wales excluding Northern Ireland

TA = Temporary Admission

RGR = Returned Goods Relief

UCC = Union Customs Code

 

The Union Customs Code referred to within this document can be found here.

 

SCENARIO           IMPACT ON VAT PAID STATUS (VPS)

Scenario 1

GB owned/registered pleasure craft

In free circulation (VPS) within EU28 pre-TPE and has supporting documentary evidence

Within EU27 as at TPE

✓ EU VAT Paid Status

The boat retained EU VPS status.

 

Scenario 2

GB owned/registered pleasure craft

In free circulation (VPS) in EU28 pre-TPE (and has documentary evidence)

Within EU27 as at TPE

Boat leaves EU27 (for GB or elsewhere) and then returns to the EU27

✓ RGR & EU VAT Paid Status

Boat is eligible to RGR on return to the EU27 and will have EU VPS, provided that all the conditions established in Article 203 UCC are fulfilled and, for VAT, that the boat is imported by the same person who exported it.

 

Scenario 3

GB owned/registered pleasure craft

EU28 VPS pre-TPE (and has documentary evidence)

In EU27 as at TPE

VAT paid on original new purchase in GB a number of years ago

Subsequent ownership and location within the EU27

✓ EU VAT Paid Status

The boat keeps its Union status and it is therefore in free circulation with EU VPS.

 

 

Scenario 4

GB owned/registered pleasure craft

Business owned EU

EU VPS before TPE

In EU27 as at TPE

Kept and used within the EU27

Long-term lease to individual for private use

GB VAT accounted for on annual lease charge

✓ EU VAT Paid Status

According to the information provided, the boat has Union status and keeps it unless the boat is taken outside the customs territory of the Union.

 

Scenario 5

GB owned/registered pleasure craft

Owner is ordinarily resident in GB

Using boat within EU27 on TA

Owner has an EU27 holiday property where they keep the boat moored (in their name)

✓ Temporary admission

A person is established in the customs territory of the Union if he/she fulfils the conditions established in Article 5(31) UCC. If the person is not established in the customs territory of the Union, then he/she can declare the boat for temporary admission if it has non-Union customs status.

 

Scenario 6

GB owned/registered pleasure craft

In free circulation within EU28 pre-TPE (and has documentary evidence)

No evidence of having been in the EU27 previously; or

Long-term lease to individual for private use

In GB as at TPE

EU VAT Paid Status Lost

 

Article 203 UCC requires evidence of a previous export to the UK. The Commission guidance indicates that, in the absence of an export declaration, evidence of the previous movement of the boat to the UK is required. If the boat has never been in EU27 it is impossible to provide evidence of movement to the UK.

 

Scenario 7

GB owned/registered pleasure craft

In free circulation within EU28 pre-TPE (and has documentary evidence)

Had previously been evidenced as being within the EU27 within the last three years

In GB as at TPE

Same owner who brought it out of EU27, returned to the EU27 within three years of departure

Documentation required

It is for the Member State to decide whether the conditions for RGR is possible (Article 203 UCC) are met. Article 203 UCC requires evidence of a previous export to the UK. The Commission guidance indicates that, in the absence of an export declaration, evidence of the previous movement of the boat to the UK is required. Member State authorities must therefore assess whether that satisfactory evidence can be provided in this scenario.

 

Scenario 8

GB owned/registered pleasure craft

In free circulation within EU28 pre-TPE (and has documentary evidence)

Had previously been evidenced as being within the EU27 within the last three years In GB as at TPE

Same owner who brought it out of EU27, returned to the EU27 within three years of departure

Documentation required

It is for the Member State to decide whether the conditions for RGR (Article 203 UCC) are met. Article 203 UCC requires evidence of a previous export to the UK. The Commission guidance indicates that, in the absence of an export declaration, evidence of the previous movement of the boat to the UK is required. Member State authorities must therefore assess whether that satisfactory evidence can be provided in this scenario.

 

 

Commenting on the collaboration, Philip Easthill, Secretary General of the EBI, says; “We are delighted to have received the responses from the Commission that companies and boaters urgently need. Given the impact of Brexit on businesses and supply chains, clarity on VAT for second-hand boats is highly important. The cooperation of EBI with our partners has been key and we will continue to advocate for clarity on VAT issues through our channels at EU level.”

Lesley Robinson, CEO of British Marine, said; “Collaboratively working together with other leisure marine industry bodies is a highly successful way of collectively garnering results, and this recent clarity received on VAT issues post-Brexit will greatly benefit British Marine members and the UK leisure marine industry. The answers to these scenarios will be welcomed in particular by UK boat retailers and brokers to assist in maintaining a healthy trade of second-hand boats across the UK and EU.”

Udo Kleinitz, Secretary General of ICOMIA, added; “The industry is affected by the changes in VAT regime through loss of boaters expenditure in marinas and tourism. Our members have asked us for support on this matter which is why the collaboration with EBI, BM and the user organisations helps in raising the profile and relevance of the topic with the applicable agencies.”