Keeping a boat in Europe has offered easy adventure and warmer climates, but as regulations after Brexit begin to take shape, this could all change. Lu and Rod Heikell look at what this means for cruising sailors
If you keep your boat in Europe, you may well have a lot of questions about what Brexit will mean for you.
As the end of the Brexit transition period looms into view and our time as EU citizens expires, there is an increased focus, and some panic, among cruisers whose yachts are based in EU countries.
Here we will try to sort fact from myth and provide some guidance on what you need to do to stay within the rules.
The act of leaving the EU means that UK citizens lose the automatic right to free movement, to live and work wherever we choose in the EU, that we have enjoyed for many years.
It also has tax implications for our boats; as part of the EU we enjoyed the customs union where no tax barriers existed.
For most UK tourists the new limits do not affect their ability to take regular EU holidays.
But for those who are accustomed to spending several months out on their boats in the Med, or those who have cast off for a longer term cruise, it needs careful consideration.
The first thing to realise is that the boat and the person are regarded entirely separately. People are covered by immigration rules. The boat is governed by customs rules.
EU countries are both individually and collectively responsible for the immigration status of all non-EU citizens.
EU-wide travel is governed by the Schengen Agreement, which allows 90 days of travel in every 180-day period.
UK visitors do not require a visa, but must still comply with this rule, which runs on a rolling basis, so for each day you spend in the Schengen area you must count back 180 days and ensure that you have not been there longer than 90 days.
Over-staying is a serious matter and is likely to incur severe fines.
You can use a ‘Schengen calculator’ to help keep track if need be.
Individual countries also have their own jurisdiction regarding immigration, such that they are free to grant their own long stay visas, or to issue residency cards, which operate beyond the Schengen rules.
In this way visitors can spend longer in any particular country if they have the correct paperwork.
Thus, time spent in that country may not count against the 90-day Schengen rule.
The harsh fact is, as ‘third country’ citizens, it is much harder to obtain residency in an EU country than it is as an EU citizen.
The main rules for boats are limited to the ‘tax status’ of the vessel.
Any non-EU vessel may be temporarily imported (TI) by a non-EU national for a period of up to 18 months before becoming liable to pay VAT.
Most countries will issue a ‘transit log’ to be kept with the vessel while it is in that country.
It must be stamped on leaving the country, and a new one obtained at the new country’s port of entry.
At the end of the period the vessel must leave the EU or pay VAT.
The valuation and tax rate for VAT varies by country.
Leaving the EU will automatically restart your VAT clock. The period which you must leave for can be as short as one night.
Most states accept a marina receipt in a non-EU country as proof of leaving.
On re-entry to the EU a new 18-month period of temporary importation starts on a new transit log.
The 18-month ‘clock’
The 18-month ‘clock’ can be stopped by putting your boat out of commission and lodging your papers with the customs office.
The complicating factor on leaving the EU is that many UK-flagged boats are deemed to be VAT paid, where VAT has been paid anywhere in the EU whilst the UK was a member.
It mattered not where in the EU the vessel was purchased or where tax was paid.
The latest from UK HMRC suggests that a UK-flagged boat which left the UK must return before 31 December 2021 if they wish to claim Returned Goods Relief (RGR) such that the UK VAT paid status of the boat is retained.
Unfortunately, it also appears that any UK- flagged boat which was not ‘exported’ from the UK may not be able to claim RGR if they return to the UK.
Further clarification is being requested by the RYA and the CA, as it means that any UK boat owners who wish to bring their tax-paid and EU-purchased boats back to the UK will be subject to a second VAT payment, even if it has remained in the EU, and even if it returns before the cut-off.
On the EU side, it appears that any UK- flagged, tax-paid boat which will be in EU waters through 31 December 2020, will be deemed to be EU VAT paid.
This means these boats will not have the 18-month TI period enforced, although a transit log may be required.
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What does this mean for me?
Q. I bought my boat in the UK and have a VAT receipt. My boat is currently in Greece, where it has been for 10 years. I had planned to bring the boat back to the UK to keep or sell in the next few years. What should I do?
A. You have until 31 December 2021 to get your boat back to the UK.
If you return after this date, you will be liable to pay VAT again, based on a new valuation of your boat.
However, if your boat remains in Greece through 31 December 2020, it will be deemed to be EU VAT paid.
If you then return the boat to the UK before 31 December 2021 you can claim RGR and retain your UK VAT paid status.
It would seem in this scenario that you retain both EU and UK tax paid status.
If you then decide to move your boat back to EU waters, you must return it to the UK within three years to claim RGR again.
Likewise, you cannot stay outside the EU for more than three years without losing the EU VAT paid status.
It should be said though, that in recent years most EU countries (including the UK) showed little interest in re-taxing vessels which have been away for more than three years under the same ownership.
This may change.
If you sell the boat in the UK, it will lose the EU VAT paid status, but will retain UK VAT paid status.
Q. I am looking to buy a yacht in France and flag it under British registry. What is the VAT status of the boat?
A. Assuming the seller can show prove that VAT has already been paid in the EU, then the vessel will retain that status on transfer, even if it is re-flagged to the UK registry.
As a non-EU resident you may purchase a boat free of VAT, but you must remove the vessel from EU waters within a strict period of time (usually 30 days) before it becomes liable for VAT.
If you wish to import the boat into the UK you will be liable to pay UK VAT based on a customs valuation.
There is much talk on various platforms regarding re-flagging your UK boat to an EU country in order to circumvent some perceived problem in keeping it in the EU.
In short, I would say that there are numerous pitfalls to this plan, for very little gain.
Having to make an occasional trip out of the EU to reset your TI clock does not strike me as being too much of a problem.
Q. I bought my boat in France in 2010 and have a French VAT receipt. It is currently in Spain. I want to bring it back to the UK. Will I have to pay VAT on entry, even if I return before 31 Dec 2021?
A. As things stand, yes.
HMRC has said that RGR may only be obtained if the vessel was exported from the UK, even during the period when the UK was an EU member.
Q. I plan to head to the Med from the UK next year. What rules do I have to follow?
A. In the above scenarios we only considered the vessel. So, in this case, we will also show what rules the person must follow.
The vessel’s status is clear – it has 18 months in the EU before it must leave for a minimum of one night.
The clock will start from when you first enter the EU, so logically that would be in northern France, where you will get a transit log for the boat.
Morocco, Tunisia, Gibraltar, Montenegro, Albania and Turkey are all good options to ‘re-start’ the importation period.
The person, though, may only spend 90 days in any 180-day period in the EU.
So say you make a leisurely cruise down the Atlantic coast of Europe, and your personal ‘Schengen clock’ started in northern France, after 90 days you must either leave the boat somewhere and return to the UK for the next 90 days, or you could plan to spend that time on the boat in a non-Schengen country.
In addition to the countries listed above, you could also consider Croatia as even though it is part of the EU, it is not yet part of the Schengen area.
The same goes for the Spanish enclaves of Ceuta and Melilla, and Cyprus.
This ‘Schengen dance’ must be followed the whole time you are on the boat.
Q. My boat is in Greece and I plan to cross the Atlantic in 2021/2022. I worry about the 90-day limit to sail from Greece to leaving the Canary Islands. What can I do?
A. It is tricky. The last thing any sailor needs is external time pressure to interfere in your cruising decisions but it is what other non-EU sailors have had to manage for many years.
Some UK cruisers who have based their boats in the Med for a number of years have successfully applied for some form of residency or long-term visa.
This effectively discounts the time you spend in that particular country from your 90-day limit.
It is possible that individual countries will continue to look favourably on UK travellers and offer some form of long-stay visa, but this is by no means a given.
It is also possible that the EU will provide an extended ‘touring visa’, but this is unlikely to be available in the near future.
That means that you have two main options:
1. Start early in the season from Greece and head west, and then park your boat, maybe in Spain, and return to the UK.
You will need to calculate the date that you want to leave the Canary Islands, and count back to work out the earliest time you can return to Spain, such that in the 180-day period before leaving the Canary Islands, you have not spent more than 90 days in the Schengen area.
On the plus side, the French and Dutch islands in the Caribbean are not in the Schengen area.
2. Along your route out of the Med consider making up some of your westward miles in Tunisia, Gibraltar and Morocco, which will give you more time to be in the Canary Islands.
You need to keep a ‘countback’ of the last 180 days to ensure you do not overstay in the Schengen area.
Remember that you may want to allow for some flexibility in your departure date so that you are not under too much pressure to embark on your transatlantic voyage.
Q. I couldn’t get out to my boat in southern Italy this year, but I would like to bring it back to the UK next year.
What is the best way to do this?
A. Basically, the main constraint is the 90-day limit, not on the boat, but on you and any other UK crew you have.
There are two main options to consider, but with the new time constraints you will need to plan carefully.
When you have made your decision on which route you will take, it would make sense to move your boat from southern Italy close to the ‘start point’ for your route home before taking a ‘Schengen break’.
This will maximise your 90-day window to move up through EU countries back to the UK.
ABOUT THE AUTHORS
Lu and Rod Heikell are the leading pilot book authors for the Mediterranean and have cruised between the Med and the UK via both offshore and inland routes.