This guest article from Isle of Man Maritime member, Sentient International, looks at how a yacht’s location at 11pm UTC on 31st December 2020, will have implications on its future VAT and customs status.
“Does it matter where my yacht is on 31 December 2020?” Simply put – YES!
At 11pm UTC on 31st December 2020, the location of your yacht will determine its future VAT and customs status.
Since the original Brexit announcement, the Royal Yachting Association (‘RYA’) has been petitioning to the European Commission for clarity on VAT and Customs matters post Brexit, for the yachting industry.
Yet, just days away from the end of the transition period, there is still no clear, published guidance. That said, the European Commission has communicated some specific information in response to RYA’s questions. We have set these out below in an FAQ format:
My yacht will be in a Crown Dependency at 11pm UTC on 31st December 2020. Will my yacht be in free circulation within the EU?
The Crown Dependencies, i.e. the Isle of Man and the Channel Islands, are currently considered part of the EU customs territory. However, when the transition period ends, this will cease to be the case. Instead, any yacht that previously had Union status but that is in Crown Dependency waters at the end of the transition period, will lose its Union status and will no longer be treated by the UK as ‘domestic goods’.
My yacht will be located in one of the remaining 27 EU Member States (‘EU27’) at 11pm UTC on 31 December 2020. What will be the status of my yacht?
A yacht that is considered to be in free circulation; i.e. has Union status and is in the EU27 at the end of the transition period; will remain in free circulation for as long as it remains within the EU27 if it can prove that it was in the EU27 at that time.
At 11pm UTC on 31st December 2020, my yacht will be in a territory of a EU27 country that is part of the customs territory of the EU but excluded for VAT purposes. What is the status of my yacht?
A yacht that is in the territory of an EU country, which is part of the Customs Territory of the EU but not part of the EU for VAT purposes (e.g. the Canary Islands, Guadeloupe, Martinique, French Guiana, Åland Islands, Mayotte etc.), will retain its Union status (if it was held in that territory).
What will happen if my yacht is outside of the UK and the EU27 at 11pm UTC on 31st December 2020?
In order to return to the UK or the EU27 without paying VAT and import duty, the owner of a yacht that had been exported or had left the EU before the end of the transition period, will need to meet the conditions of the customs territory they are entering back into, for relief from VAT and import duty.
You will not resume Union status if you enter the UK. Likewise, you will not gain UK ‘domestic goods’ status if you enter the EU27. This will include vessels that are located in the British Overseas Territories, which are not part of the EU customs territory. These include:
• British Antarctic Territory;
• British Indian Ocean Territory;
• British Virgin Islands;
• Cayman Islands;
• Falkland Islands;
• Pitcairn, Henderson, Ducie and Oeno Islands;
• St Helena and St Helena Dependencies (Ascension and Tristan da Cunha);
• South Georgia and South Sandwich Islands; and
• Turks & Caicos Islands.
It is important for yacht owners to ensure any relevant documentation that can be used to demonstrate their yacht’s location at 11pm UTC on the 31st December 2020, is retained in order that the status and movement of the yacht post-Brexit can be determined accordingly.
Unhelpfully, the European Commission has not been forthcoming in clarifying what documentation Customs Authorities will accept to support proof of location come Brexit.
We would recommend adopting a sensible approach such as taking date stamped photographic evidence of GPS coordinates, retaining invoices for berthing which include dates, as well as any other logs and records that may evidence the yacht’s location on 31st December 2020.
If you are worried that the location of your yacht on 31st December 2020 might create a VAT or Customs issue for you, or you have specific questions left unanswered, please get some professional advice and guidance.