A rough transcript of a Berthon podcast, which we hope you will enjoy.
With our impending exit from the EU now looming at the end of 2020, the yachting community find themselves faced with a lack of clarity on VAT status with regards to their yachts. Will yachts retain their VAT paid status and if so, will they still be considered VAT paid in Europe? Are yachts in danger of losing their UK VAT paid status if not in the UK? This situation is in flux and both British Marine and the RYA are lobbying hard to obtain clarity on the subject.
Now that there is a practical possibility to choose between the EU VAT paid status and UK VAT paid status, people are beginning to ask which is better, particularly financially – particularly when they come to sell their yachts. As yacht brokers we spend our lives working in the international market place and residual value is a key factor that we have in the back of our minds always.
FPB 97 (ICEBERG) – Yacht for Sale – https://www.berthoninternational.com/yacht-sales-brokerage/yachts-for-sale/fpb-97-iceberg/
Yachting is all about fun with family and friends, unique experiences and making life long, happy memories. You pay for these in the real world, and you pay when you yacht in the same way. Here are the facts currently:
So what is best VAT paid in UK?
Because of our waters, the size band is likely to range from dinghy to probably 40 or 50 feet. We have amazing waters at home and it is a shame not to use them. Please do not avoid our waters as you had originally intended just because you own, for example, a Princess V60 or a Southerly 570 and you are worried about the double VAT problem should you possibly sell to a European in the future.
The fact is that a market for VAT paid yachts will develop in the UK. There will be less UK VAT Paid yachts in the future, as many will migrate to Europe (particularly with new yachts where there is nothing not to like about azure seas, sunshine and a 20% cost saving). As a result, your yacht may well be more in demand over time, particularly if she is quite new.
Dale Classic 45 (VITA) – Yacht for Sale – [OFF MARKET]
For everything else – European VAT paid is the best.
Do not think that a British manufactured yacht is best UK VATed. We sell Rustlers in the USA as new, Oysters throughout all five of our offices and also Princess, Fairline, Sunseeker, Spirit, Gunfleet (RIP), Discovery, Southerly and all the rest. British yacht manufacturers have always exported massively to Europe and beyond to the rest of the world.
Do not rush to pay European VAT on what you own. Hold tight and have a day of reckoning when you sell the yacht. Sadly she is a depreciating asset and her new European owner will pay less and you will do better.
So we find ourselves with 3 options on the table:
We like the third best. It has so many wonderful possibilities and allows you to sell not just in Europe but to the rest of the world. The EU is a big market but looking forward we are seeing other nationalities embrace motor yachting, bluewater sailing and the rest. We are not economists but we see that new growing markets will become more significant and who knows the landscape when you give your yacht her marching orders?
Other important things to take into consideration are:
In the UK we are a little island. Europe is a bigger market but it is somewhat smaller than the planet so in owning and selling a yacht consider all the aspects that will make her attractive going forward in the world market…
Above all, remember that a yacht is a joy so the message is pay the VAT where you will use the yacht, follow all the rules and if it means paying no VAT at all, then this is the very best of all worlds.