Industry collaboration yields confirmation on post-Brexit VAT

Following the UK’s withdrawal from the EU, there have been many questions which have caused confusion and uncertainty for the leisure marine sector both in the UK and in the EU27. Arguably, the biggest has been around the VAT status of recreational craft at the end of the transition period. 

In a show of unity, the International Council of Marine Industry Associations (ICOMIA), European Boating Industry (EBI), European Boating Association (EBA), British Marine (BM) and the Royal Yachting Association (RYA) joined forces to provide clarification on VAT and customs for recreational boating companies and users. The five organisations have released this guidance to their members and non-members.

The group has put forward key scenarios affecting boaters (detailed below) and confirms that the European Commission has now responded, validating the interpretation of the guidance and how VAT should be applied under the various examples. This follows a push led by the EBI with the European Commission to provide this important clarification.

Positive confirmation of the scenarios should now also be recognised by each EU country in their dealings with this matter. Failure to do so could result in formal complaints being made to the European Commission. Further clarification will be sought on the documentation required and interpretation of establishment of “person established in the customs territory of the Union”.

Commenting on the collaboration, Philip Easthill, secretary general of the EBI, says: “We are delighted to have received the responses from the commission that companies and boaters urgently need. Given the impact of Brexit on businesses and supply chains, clarity on VAT for second-hand boats is highly important. The cooperation of EBI with our partners has been key and we will continue to advocate for clarity on VAT issues through our channels at EU level.”

Lesley Robinson, CEO of British Marine, adds: “Collaboratively working together with other leisure marine industry bodies is a highly successful way of collectively garnering results, and this recent clarity received on VAT issues post-Brexit will greatly benefit British Marine members and the UK leisure marine industry. The answers to these scenarios will be welcomed in particular by UK boat retailers and brokers to assist in maintaining a healthy trade of second-hand boats across the UK and EU.”

VAT issues scenario post-Brexit

The following acronyms are used:

TPE = The time at which the transition period ended – 31 December 2020, 23:00 UTC 

VPS = VAT Paid Status: i.e. in free circulation

EU28 = EU before TPE, i.e. including UK

EU27 = EU after TPE, i.e. excluding UK

GB = England / Scotland / Wales excluding Northern Ireland

TA = Temporary Admission

RGR = Returned Goods Relief

UCC = Union Customs Code 

The Union Customs Code referred to within this document can be found here.