CUSTOMS INVESTIGATION REGARDING VAT PAYMENT ON THE VALUE OF A VESSEL
“YMCA has been involved in a difficult case with a vessel that had been controlled by the customs in France. The authorities were trying to readjust the VAT based on the value of the boat. As a matter of fact, the situation of the vessel was perfectly legal but this had to be made clear to the customs.
The vessel was an EU good, built in the European Union and sold by a dealer established in France to an economic operator who had a VAT registration in Italy. By this transaction, the VAT could be accounted for in Italy and no disbursement of VAT was necessary. Indeed, the main activity of the buyer, as an economic operator, was the long-term rental of boats to third parties.
The difficulty of the case was that the main place of establishment of the vessel’s buyer was in another EU country (“Country C”), different than Italy (the owning company of the vessel had, thus, a second VAT number in that country).
The authorities of Country C accepted, as a common rule, that the VAT was not due on the value of the boat when a pleasure vessel was acquired in a member state of the European Union and transported to Country C provided that the buyer was a taxable person and that the vessel was purchased to carry out economic activities.
The VAT was, according to country C, only due on the value of the rents when the vessel sailed in the European Union waters.
These explanations did not satisfy the French customs as they considered that, as the vessel had been delivered to Italy, and not to Country C, the VAT should have been paid on the value of the vessel.
Fortunately, in an official document specifically addressed to the buyer, Country C had considered that:
- The buyer of the vessel had to be considered established in Country C and not in Italy (despite the place of delivery of the vessel and the Italian VAT registration).
- In case of a long term hiring to a non-taxable person, the place of delivery is supposed to be the place of establishment of that latter person as long as they do not have a fixed-establishment in the country of delivery. In our case, the lessee was established in Country C and had no fixed-establishment in Italy.
This last piece of information has been crucial and customs have considered that there was finally nothing wrong with the customs and tax status of the vessel.
The intervention of YMCA has been conclusive as we have assisted our client liaising with the French customs and putting an end to the investigation”.
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