Customs control regarding temporary admission and European residence

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We have had a case regarding the temporary admission scheme. As you may know non-EU flagged yachts, owned by a non-EU company and which Ultimate beneicial owner (UBO) is not a resident of the European Union, have the right to remain in the EU 18 months in a row without being subject to tax or duty.

In our case, the customs thought that the UBO was a resident of the European Union merely because he held a French resident permit. As a consequence, they were willing to reassess the VAT on the value of the yacht and consider the UBO, not only as an EU resident, but also as a French resident (which would have made him liable for the payment of an annual tax applicable to French residents private yacht owners).

Little they knew that this specific resident permit bore the mention “temporary visitor” meaning that the holder of such permit was not allowed to work in the EU and had to rely on his own resources.

We reminded the authorities that, notwithstanding any resident title, the notion of residence is subject to a factual check. To establish the residence of a person you need:

  1. to establish that such person has spent 6 months or more in the EU during any given calendar year.
  2. and/or establish financial ties between such person and the EU.
  3. and/or establish family ties between such person and the EU.

It was clear, in our case, that the UBO did not have any family or financial ties in the European Union. The last point to debate was the day count.

Thanks to some clear evidence (flight tickets, passport stamps among others), the customs acknowledged the fact that the UBO was indeed not a resident of the European Union.



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