Public service announcement

2022/12/17

PORTUGUESE VAT

Sailors should be very wary about bringing their boats to Portugal if they come from a country outside the EU.

A Portuguese residents part owner of a non EU registered boat, which has spent the last two winters moored in Vilamoura, recently received a letter from Portuguese customs asking for all the boat's paperwork. This was supplied, including the valid European VAT certificate. He then received a report saying that because he had allegedly been to Gibraltar twice, he were due to pay Portuguese IVA at 23% based on an arbitrary valuation, plus a fine of some €10k totalling over €165,000. It seems they have issued similar notices to owners of other boats in Portuguese marinas, relying on the skipper's information on where they have come from, backed up by AIS data supplied by a Portuguese company. If the boat has come via Gibraltar, the UK or Morocco, all of which are outside the EU, it risks falling into the same trap.

Specialist consulted answered this:
"It is a commonly held misconception that once VAT has been paid then that is enduring. This is not always the case. When VAT and duty (if applicable) are paid in the EU, a boat becomes 'Union Goods'. If a boat leaves the EU then, technically, it loses its status as Union Goods and you risk having to pay VAT on its return. However, a boat that has Union Goods status when it is exported from the EU may be granted relief on its return (Returned Goods Relief (RGR)) provided these conditions are met:
  1. It had Union status when it was taken out of the EU
  2. It was exported from the EU by the same person who imports it
  3. It is in the same condition as when it was exported (less running repairs)
  4. That it returns within three years of export.
The result is that boat owners usually move seamlessly in and out of the EU, irrespective of the boat's flag state, the nationality of the owner, or the EU Member State in which the VAT was accounted for. However, this is where problems can arise even if the customs status of Union Goods is not linked to the nationality of the owner or the flag of the boat.

If a boat does not have the status of Union Goods or has lost it, then it might still benefit from Temporary Admission (TA). TA allows non-Union goods to enter the EU for a limited period without payment of VAT/import duty, provided the following conditions are met:
  1. It is registered outside the EU
  2. It is registered in the name of a person established outside the EU, or if the boat is not registered it must be owned by a person established outside the EU
  3. It must be used by a person established outside the EU.

See also Boating in Schengen area
This was published in "Motorboat and yachting" magazine of Jan 2023.