BREXIT & YOUR YACHT, THE RULES

Does it matter where my boat is lying at 11pm UTC on 31 December 2020?

Yes. The location of your boat at 11pm UTC on 31 December 2020 will determine its future VAT and customs status.

It is recommended that you obtain and retain documentation which can be used to demonstrates the vessel’s location at the time the transition period ends.

- Boat lying in Great Britain at 11pm UTC on 31 December 2020

From the end of the transition period Great Britain will no longer be part of the Customs Territory of the EU. 

Recreational boats lying in GB at the time the transition period ends will cease to be in free circulation in the Customs Territory of the EU. They will no longer have Union status and will be treated by the UK as ‘domestic goods’.  

In order to evidence this status of ‘domestic goods’ in the future the owner will need to continue to retain evidence of the boat’s VAT paid status and must also obtain and keep evidence to demonstrate the boat’s location at the end of the transition period. 

- Boat lying in the remaining 27 EU Member States (EU27) at 11pm UTC on 31 December 2020

A boat which is in free circulation (i.e. it has Union status and is lying in the EU27 at the time the transition period ends) will remain in free circulation for as long as it remains in the EU27, as long as it can be proven that the boat was lying in the EU27. 

It is essential that you obtain and retain documentation which demonstrates the vessel’s location at the time the transition period ends.

This is also applicable to boats lying in the Sovereign Base Areas of Akrotiri and Dhekelia (Cyprus) which will remain part of the customs territory of the EU after the end of the transition period. 

- Boat lying in a territory of an EU27 country which is part of the customs territory of the EU but excluded for VAT purposes at 11pm UTC on 31 December 2020

If, at the end of the transition period, a boat is lying in a territory of an EU country which is part of the Customs Territory of the EU but which is not part of the EU for VAT purposes (e.g. Canary Islands, Guadeloupe, Martinique, French Guiana, Réunion, Åland Islands, Mayotte, Saint-Martin – French part), its customs status of Union goods (Union status), if it was held in that territory, will be retained.

- Boat lying in a Crown Dependency at 11pm UTC on 31 December 2020

During the transition period the Crown Dependencies (Isle of Man and the Channel Islands, that is, the Bailiwick of Jersey and the Bailiwick of Guernsey (including Guernsey and its dependencies)) are part of the customs territory of the EU. When the transition period ends the Crown Dependencies will no longer be part of the customs territory of the EU. Therefore a boat which is lying in a Crown Dependency at the end of the transition period will no longer have Union status. 

The Crown Dependencies will not be part of the UK Customs Territory after the end of the transition period. A boat lying in a Crown Dependency at the end of the transition period will not be treated by the UK as ‘domestic goods’. 

- Boat lying outside the UK and the EU27 at 11pm UTC on 31 December 2020

In order to return to the UK or the EU27 without paying VAT and import duty, the owners of boats which have been exported from the EU before the transition period ends will need to meet the conditions for relief from VAT and import duty for the customs territory they are entering.

You will not resume Union status if you enter the UK. Similarly, you will not gain [UK] 'domestic goods’ status if you enter the EU27.

This includes boats which were lying in the British Overseas Territory (Anguilla; Bermuda; British Antarctic Territory; British Indian Ocean Territory; British Virgin Islands; Cayman Islands; Falkland Islands; Gibraltar; Montserrat; Pitcairn, Henderson, Ducie and Oeno Islands; St Helena and St Helena Dependencies (Ascension and Tristan da Cunha); South Georgia and South Sandwich Islands; and The Turks & Caicos Islands) which are not part of the EU customs territory. 

Arriving in the UK from abroad from 1 January 2021.

When you arrive in the UK from abroad with your boat, the default position will be that VAT and import duty are payable on the current value of the boat. This will be the case unless you are entitled to relief.

The Returned Goods Relief (RGR) concept has been replicated in UK law. 

HMRC has advised that the general conditions for RGR for relief from both import VAT and duty are that the goods - the boat:

• is imported into the UK within 3 years of its export; and
• is imported by the person who exported it; and
• has undergone no more than running repairs outside the UK that did not increase its value; and
• must be UK ‘domestic goods’ at the time of export.

- Not resident in the UK 

If you are not resident in the UK and your boat is registered outside the UK it is likely that you will be eligible to visit the UK, for recreation and pleasure purposes under temporary admission. Information on UK Temporary Admission..

- UK resident with a boat which has never been in the UK 

To enter the UK without paying VAT and import duty you will need to be eligible for relief. For most people this will be as returned goods, known as returned goods relief (RGR).

However, irrespective of the boat’s location at 23:00 UTC on 31 December 2020, if a UK resident brings a boat to the UK which has never been in the UK it will not be eligible for RGR. VAT and import duty will be payable on arrival in the UK (unless the owner is eligible for another relief, which is unlikely). The boat must be declared on arrival.

- UK resident with boat which was lying in the EU27 at 11pm UTC on 31 December 2020

To enter the UK without paying VAT and import duty you will need to be eligible for relief. For most people this will be as returned goods.

Conditions for returned goods relief (RGR) until the end of 2021

If the boat has been in the UK in the past, then until 1 January 2022, it does not matter how long ago, as long as it can be proven that the boat has previously been in the UK and the other conditions to be eligible for RGR can be met. This is because there is an automatic waiver of the three-year rule for goods which were in the EU at the end of the transition period (after 31 December 2020) that are returned to the UK within one year of that date. 

The boat must also:

• be imported by the person who exported it^; and
• have undergone no more than running repairs outside the UK that did not increase its value; and 
• must have been UK ‘domestic goods’* at the time of export.

^ HMRC previously advised that it would be sufficient to show that any sale or transfer or ownership was made in compliance with VAT legislation, however it has withdrawn that advice as the legislation does not support an easement against the condition that importer and exporter must be the same person.

* VAT doesn’t have to have been paid in the UK providing the boat has been in the UK in its current ownership. 

Conditions for returned goods relief (RGR) from 1 January 2022

From 1 January 2022 the standard conditions for relief from both import VAT and duty as returned goods will apply. The boat must: 

• be imported into the UK within 3 years of its export; and
• be imported by the person who exported it; and
• have undergone no more than running repairs outside the UK that did not increase its value; and 
• have been UK ‘domestic goods’ at the time of export.

The requirement that the goods must be returned to the UK no more than 3 years after the date of export may be waived to account for exceptional circumstances where HMRC considers it would be reasonable to do so. 

In particular, this includes:

• specialised goods returning to the UK from long-term hire or loan agreements outside the UK
• building equipment or machinery returning to the UK after use in capital projects outside the UK
• exhibition goods returning after long-term display or storage outside the UK;
• collectors’ or heritage items originally manufactured in the UK and returning from overseas after re-acquisition by a UK dealer or investor, e.g. collectable items of furniture or ceramics
• professional and personal effects returning with returning UK expatriates

If you consider that exceptional circumstances apply and the three-year rule should be waived, then you can make an application for approval (supporting evidence may be required). 

There is an automatic waiver of the three-year rule for goods owned by Crown Servants returning to the UK after their postings overseas (the time limit for Crown Servants is currently 6 years) – Crown Servants include diplomatic staff, armed forces, embassy and consular personnel. 

HMRC stated, that the return within three-years condition will be strictly enforced. You may therefore wish to seek guidance from HMRC, on whether your circumstances would be considered to be exceptional, if you intend to remain outside the UK for longer than 3 years. 

- UK resident with boat which was lying in one of the Crown Dependencies at 11pm UTC on 31 December 2020

The Crown Dependencies are not part of the UK Customs Territory, however the UK has signed customs arrangements with the Channel Islands and the Isle of Man which ensure that customs duty will not be liable on trade between the Crown Dependencies and the UK after EU treaties cease to apply.   

Import VAT will not be payable on boats imported into the UK from the Isle of Man as the Isle of Man is part of the UK’s VAT territory.

The Channel Islands do not align with the UK on VAT and therefore import VAT is due on imports from the Channel Islands, unless the owner is eligible for relief.

- UK resident with boat which was lying in Gibraltar or the British Overseas Territories at 11pm UTC on 31 December 2020

Both customs duty and import VAT will liable on imports into the UK from Gibraltar and the Overseas Territories, unless the owner is eligible for relief.

- UK resident with boat which was lying in UK at 11pm UTC on 31 December 2020

The owner of a boat, which was lying in the UK at 11pm UTC on 31 December 2020, which is taken out of the UK (exported) will need to be able to demonstrate eligibility for relief on return if the boat is to re-enter the UK without the owner incurring VAT and import duty. 

HMRC has confirmed that where VAT was paid in the EU 27 rather than the UK, if a boat which has domestic [UK] status as a result of being in free circulation in the UK at the end of the transition period, leaves the UK (i.e. is exported from the UK) on its return the owner will be eligible for RGR on the basis that EU VAT had been paid.

- UK resident with boat which was outside the UK and the EU27 at 11pm UTC on 31 December 2020

If you arrive in the UK within 3 years of the boat having left the EU (i.e. within 3 years of the boat being exported from the EU), RGR can apply providing that EU VAT has been paid.

Assuming you meet the conditions for UK RGR (see above) your boat will be treated as ‘domestic goods’ by the UK. You will not resume Union status if you enter the UK.

Taking your boat to the EU27 from 1 January 2021

- National interpretation and implementation

The European Commission has provided guidance on the legislation. The practical interpretation and implementation of that legislation is the responsibility of the authorities of the country in which you are entering the EU27 and member states have a certain level of discretion in this regard. The resulting local variations can cause confusion. 

National Tax Websites - https://ec.europa.eu/taxation_customs/national-tax-websites_en

National Customs Websites - https://ec.europa.eu/taxation_customs/national-customs-websites_en 

- Boat lying in UK at 11pm UTC on 31 December 2020

According to information received from the European Commission on 30 October 2020, and contrary to previous advice, the flag state of a boat which was lying in the UK may have some bearing on its eligibility to re-enter the EU27 as returned goods. 

The European Commission has confirmed that, although a boat which was lying in the UK at the end of the transition period will lose its Union status as soon as the transition period ends, if the previous Union status can be proven upon arrival in the Union, the Union status can be regained. How this is achieved is different for EU registered boats and non-EU registered boats. 

• Non-EU registered (flagged) boats

If the boat is not registered in the EU, upon re-entering the EU customs territory it will be treated as any other third-country goods and to acquire Union status it will need to be placed under release for free circulation in the EU. 

If you are established (habitually resident) in the UK you will become eligible to take your boat, which must be registered outside the EU27, to the EU27 for up to 18 months under temporary admission (conditions apply). For further information see EU returned goods relief and temporary admission.

• EU registered boats

If the yacht is registered in the EU and on the condition that the requirements of Article 203 of the Union Customs Code (UCC) are met, the boat may be released for free circulation as returned goods according to Article 203 UCC on the condition that the declarant is established in the customs territory of the Union. The customs declaration may be lodged orally.

Where the declarant is not established in the EU, the possibility of an exception will need to be checked with customs. 

Caution: 

Please think carefully before changing the registration of your boat to an EU member state: 

• If customs turn down the possibility of an exception to the declarant being established in the EU, a boat which is registered in the EU will still not be eligible for Temporary Admission. You may therefore end up in a worse position than if your boat remains UK flagged.
• If you register your boat in another country you then have to comply with that country’s legislation. That could entail having that country’s evidence of competence (which might involve a test in the country’s language), compulsory carriage of equipment, etc. 

- Boat lying in the EU27 at 11pm UTC on 31 December 2020

A boat which is in free circulation (i.e. it has Union status and is lying in the EU27 at the time the transition period ends) will remain in free circulation for as long as it remains in the EU27, as long as it can be proven that the boat was lying in EU.

If the boat later leaves the EU27, as long as it had Union status when it left the EU it is our understanding that provided you can evidence that you meet the conditions for returned goods relief (RGR) you should be able to re-enter the customs territory of the EU without VAT and import duty becoming payable. 

When the boat leaves the EU, the sole act of crossing the frontier of the customs territory of the Union is deemed to be a customs declaration for export.

The boat should regain Union status if it is later re-imported into the EU and qualifies as returned goods. It must be declared to customs, however for returned goods, this can be done by the sole act of the boat crossing the border. To qualify as returned goods and avoid paying customs duties, the boat must fulfil the conditions established in Article 203 of the Union Customs Code (UCC). For the VAT exemption to apply the boat must be exempt from customs duties in accordance with Article 203 UCC and it must be re-imported by the same person who exported it (Article 143(1)(e) VAT Directive).

The European Commission has provided guidance on the legislation. The practical interpretation and implementation of that legislation is the responsibility of the authorities of the country in which you are entering the EU27. You must therefore be prepared to evidence the status of your boat if asked. You may be considered to have made a false customs declaration if you cross the frontier of the customs territory of the Union and cannot provide the necessary evidence, if asked.

Please see the section on the future validity in the EU27 of documents issued by HMRC for further information.

- Boat lying in a territory of an EU27 country which is part of the customs territory of the EU but excluded for VAT purposes at 11pm UTC on 31 December 2020

If, at the end of the transition period, a boat is lying in a territory of an EU country which is part of the Customs Territory of the EU but excluded for VAT purposes (e.g. Canary Islands, Guadeloupe, Martinique, French Guiana, Réunion, Åland Islands, Mayotte, Saint-Martin – French part), its Union status (if it was held in those territories) will be kept.

When the boat returns to the EU27 from such territories it is considered to be an import. VAT and other taxes must be paid, and the customs status of Union goods of those boats needs to be proven. However, if the boat is exempted from import duty (e.g as returned goods), then the conditions of Article 143(e) of the VAT Directive are fulfilled and VAT will not become payable. 

- Boat lying in a Crown Dependency at 11pm UTC on 31 December 2020

The Crown Dependencies (Isle of Man and the Channel Islands, that is, the Bailiwick of Jersey and the Bailiwick of Guernsey (including Guernsey and its dependencies)) are currently considered part of the customs territory of the EU. When the transition period ends that will cease to be the case and a boat which is lying in a Crown Dependency which had Union status will no longer have Union status.  

Upon re-entering the customs territory of the EU the boat will be treated as any other third-country goods and to acquire Union status it will need to be placed under release for free circulation in the EU. 

If you are established (habitually resident) outside the EU27 and the boat is registered outside the EU27, you should be able to take the boat to the EU27 for up to 18 months under temporary admission (conditions apply). For further information see EU returned goods relief and temporary admission.

- Boat lying outside the UK and the EU27 at 11pm UTC on 31 December 2020

This includes boats which were lying in the British Overseas Territory (Anguilla; Bermuda; British Antarctic Territory; British Indian Ocean Territory; British Virgin Islands; Cayman Islands; Falkland Islands; Gibraltar; Montserrat; Pitcairn, Henderson, Ducie and Oeno Islands; St Helena and St Helena Dependencies (Ascension and Tristan da Cunha); South Georgia and South Sandwich Islands; and The Turks & Caicos Islands) which are not part of the customs territory of the EU. 

If your boat had Union status when it left the EU it is our understanding that as long as your boat is not in the UK at the end of the transition period and you can evidence that you meet the conditions for returned goods relief (RGR) you should be able to re-enter the customs territory of the EU without VAT and import duty becoming payable. 

When the boat leaves the EU, the sole act of crossing the frontier of the customs territory of the Union is deemed to be a customs declaration for export. 

The boat should regain Union status if it is released for free circulation in the EU. It must be declared to customs, however for returned goods, this can be done by the sole act of the boat crossing the border. To qualify as returned goods and avoid paying customs duties, the boat must fulfil the conditions established in Article 203 of the Union Customs Code (UCC). For the VAT exemption to apply the boat must be exempt from customs duties in accordance with Article 203 UCC and it must be re-imported by the same person who exported it (Article 143(1)(e) VAT Directive).

The European Commission has provided guidance on the legislation. The practical interpretation and implementation of that legislation is the responsibility of the authorities of the country in which you are entering the EU27. You must therefore be prepared to evidence the status of your boat if asked. You may be considered to have made a false customs declaration if you cross the frontier of the customs territory of the Union and cannot provide the necessary evidence, if asked. 

Please see the section on the future validity in the EU27 of documents issued by HMRC for further information. 

Future validity in the EU27 of documents issued by HMRC 

- After the end of the transition period, can paperwork (such as a VAT invoice, T2L, customs opinion letter or other supporting documentation) issued in or by the UK be used to demonstrate the Union status of pleasure craft? 

According to the European Commission: 

• Whilst in the EU27

The documentation (such as a T2L, customs opinion letter or other supporting documentation) issued by the UK before the end of the transition period shall not be valid in the EU as of the end of the transition period. Therefore, for a boat lying in the EU at the end of the transition period, the person concerned will need to submit a new request to obtain a proof of Union status to one of the Customs authorities in the EU. Regarding the VAT invoice, if there is a proof that the VAT has been paid in the EU before the end of the transition period, then this proof may be used in order to demonstrate the Union status of the craft. In case this payment can be verified on the invoice, then the invoice itself may be used in order to demonstrate the Union status of the craft. 

• When crossing the frontier of the customs territory of the Union (the EU27) as returned goods 

For a craft crossing the frontier of the EU customs territory, a T2L, a customs opinion letter or other supporting documentation issued by the UK before the end of the transition period shall not be valid in the EU as of the end of that period and will not be able to be used in order to demonstrate that the craft had the Union status before it was taken out of the EU. Regarding the VAT invoice, if there is a proof that the VAT has been paid in the EU before the end of the transition period, then this proof may be used in order to demonstrate the Union status of the craft. In case this payment can be verified on the invoice, then the invoice itself may be used in order to demonstrate the Union status of the craft. In case the VAT payment in the EU is verified, the craft can be dealt with as a returned good upon its re-entering into the EU. Customs formalities for re-importation shall be carried out.

- Can somebody who is not established in the EU27 own a vessel with Union status and keep it in the EU27?

According to the European Commission somebody who is not established in the EU27 can own a vessel with Union status and keep it in the EU27. As long as the vessel remains in the customs territory of the Union, the presumption of Union status applies. For customs purposes, the ownership of a vessel is not relevant.

- Can I pay VAT and import duty on arrival in the EU27 to import my boat and have it released for free circulation? 

The European Commission has advised that any person wishing to place goods under a given customs procedure, e.g. release for free circulation, shall indicate it in the prescribed form and manner by lodging a customs declaration. As a general rule, when it comes to declaring goods for release for free circulation, the declarant has to be established in the customs territory of the Union. Therefore, in case a person established outside the EU wishes to lodge a customs declaration in order to release a recreational craft for free circulation into the EU, then this person shall use an indirect representative established in the EU, who will play the role of the declarant. However, Article 170(3)(b) UCC provides for a derogation from this general rule provided that the customs authorises consider this to be justified.

- Do I need to change my country of registration in order to keep my boat in an EU 27 country after the end of the transition period?

Registration of a privately owned recreational boat is generally a matter for domestic/national legislation. Free movement for the vessel is linked to the vessel having Union status (i.e. it has been released for free circulation). As long as it is lying in the EU27 on the day that the UK leaves the EU, based on the Union Customs Code its status should not change just because UK’s relationship with the EU has changed. For that reason, if an EU member state is happy that you keep your UK registered vessel on its territorial or internal waters now there is no reason that we can see why that should not be the case after the end of the transition period.

If you are resident in the UK, at the moment, the RYA does not believe there will be any advantage to registering your boat in another EU country. If you decide to register your boat in another country you will then have to comply with that country’s legislation. That could entail having that country’s evidence of competence (which might involve a test in the country’s language), compulsory carriage of equipment, etc.

Immigration and visas for travel to the EU27 after the end of the transition period.

- I’m a UK Citizen and am not resident in an EU27 country, after the end of the transition period will I still be able to spend the whole summer on my boat in the EU27?

The UK Government has published information regarding travelling to the EU from 1 January 2021 at https://www.gov.uk/visit-europe-1-january-2021. Additionally, country by country information is available at https://www.gov.uk/foreign-travel-advice.

You will be able to travel to countries in the Schengen area for up to 90 days in any 180 day period without a visa for purposes such as tourism. This is a rolling 180 day period.  

If you enter the dates you are thinking about being in the Schengen Area in the calculator of travel days remaining provided by the European Commission, you will be able to see whether your plans are possible within the 90 days in any 180 day period restriction.  

Different rules will apply to Bulgaria, Croatia, Cyprus and Romania.