VAT declaration point of attention when buying a used pleasure craft

Published on 4 years ago

We regularly receive requests for advice or reports of disputes regarding the absence of a VAT declaration after the purchase and/or sale of pleasure boats. Many contracts state that a boat is delivered VAT-free. However, it is often not specified what kind of evidence is necessary top roof the boat is indeed VAT-free. A VAT declaration can prove that in the past -often at first purchase- a sales tax (VAT) was paid to the Dutch Tax Authorities on the vessel and that this VAT was not refunded by the Tax Authorities.

In a recently reported dispute, a potential buyer of a pleasure boat wanted proof that the boat could indeed be transferred VAT-free. The boat had been purchased VAT-free ten years earlier but no declaration had been handed over at the time of purchase. The policyholder still wanted to obtain the statement but was told by the then seller that he did not have a statement either. This ment that the policyholder needed to obtain a new declaration. This can easily cost 1,000 euros if it is requested from customs. On behalf of the policyholder, we then wrote to the original seller requesting that our policyholder shoold be compensated for requesting such a declaration.

To avoid this kind of situation we advise to explicitly state in a purchase contract that the vessel is free of any VAT charges and that the seller provides the buyer with a VAT statement. The declaration will have to be made available at the time of transfer as sole written evidence, like, for example, the original purchase invoice. This will prevent you from having to request a new declaration years later in the event of a sale, with the risk of having to bear the costs yourself.

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