Croatia and VAT
I received this mail recently from a friend and thought it may clear up some issues over Croatia joining the EU and the VAT issue for foreign flagged boats. The mail was sent by Marina Frapa
Our last notification about the measures that Croatia is preparing to give everyone who wants
the opportunity to register their boat under the Croatian flag before the entry of Croatia into
the European Union at July 1st 2013 has caused a lot of reactions. Since some of you have
received that letter and some did not, we briefly repeat:
"The Republic of Croatia is preparing a series of measures to stimulate the owners of boats
located in Croatia to perform the import declare for their pleasure boats and obtain the
This measure is mainly implied to those owners who have not paid the tax at acquisition of
the boat in their countries, since the boats were immediately exported into „third countries“
and especially those whose domicile countries have no knowledge that they possess a boat
(registered for example in Delaware, on the Cayman Islands etc.)
Even if you do not belong to this catagories that have to regulate their status and pay tax, it
may be possible that you want to register your boat under the Croatian flag because on this
way it is simpler and cheaper.
The Law on the VAT lowering for sport and leisure boats in the period of January 1st 2013
till May 31st 2013 from 25% to 5% has just passed. In the meantime there is a legislation
already stating that the special tax on boats (toll) has been reduced to 0% for all boats. Also
the rate of duty will be reduced from 8% to 1,7% for boats up to 12 m lenght and to 0% for
boats for sea sailing with a hull longer than 12 meters.
boats up to 12 m length
boats longer than 12m
All these favorable measures will be valid for a very short period of time – up to May, 31st
2013, that is one month before Croatia becomes a full member of the EU. After that date all
the measures will be annulled autumatically.
So, we use this opportunity to inform you in order to have enough time to bring up te decision
whether you are willing to change your flag with the flag of the Republic of Croatia or not.“
Our idea was to present you the advantages and disadvantages of the transition from your
current flag to the Croatian flag by listing all possible costs that you can expect with the
transition. However, not all information are still available to us. The information we have are
current and we reserve the right to make changes caused by changes in the desicion making of
the Croatian Government.
We would like to mention right away that we will not leave you alone with the paperwork and
obligations that are waiting for you with the transition to the Croatian flag. If you want you
can let me take care of this. Although this is not a classic Marina activity, you as our client
deserve the best and fastest service and help at all points. That is why we have formed a
team of outside experts (our forwarding agency from Šibenik), in order to provide you with
everything you need to get at one place. Please contact us with confidence! All we need
from you is an authorization to obtain for you at certain institutions all necessary documents,
We have some of the documents already at the reception.
We have prepared together with our forwarding agent frequently asked questions and on this
way we are trying to give you all necessary information. Please note that it is not about
official interpretations, but unoffical, given in good faith, so that you can on time make a
1.Why to register a boat under the Croatian flag?
-regulation of your tax status
-cheapest rates of taxes and duties
-no more vignettes and limits of the number of passangers on the crew list
-you can place the boat in all marinas, harbors, moorings
2. What if I do not want to register my boat under the Croatian flag?
If you do not want to register your boat under the Croatian flag and change your flag, it is your
free choice. It is your choice where you want to pay VAT within the EU.
If you have paid VAT within the EU – you are not obliged to pay anything else.
If you have not paid VAT within the EU – you will have to decide where to pay VAT (Croatia
is currently offering the most favorable conditions).
3.Who controls whether VAT has been paid or not?
As soon as Croatia joins the EU the checking of the status of all boats in marinas has already
been announced, to capture those who have not paid taxes.
Your home country will control whether you have paid VAT in a country that is member of
the EU – based on the data provided by Croatia that you are the owner of the boat (or the
person authorized to use the boat if the owner of the boat is listed as a legal entity).
4.What if I have not paid the tax and I do not want to pay it in the future?
If you are avoiding paying taxes you will have to place your boat in another country that is not
an EU member (before 01.07.2013).
5. I am not a citizen of the EU, but I have a boat under a flag of the EU, do I have to pay
The criteria is the flag. If the tax is not paid, you will have to do this (and Croatia is currently
offering the most favorable conditions).
However, as you are not a citizen of the EU you can select a flag of an offshore oasis and
keep (without paying taxes) your boat placed in Croatia.
6. I am a citizen of the EU and have a boat under the flag of Delaware, Serbia, the
Cayman Islands and I want to stay in Croatia?
Urgently change the flag!
7. What happens if I sell my boat in a few years? Is it enough that the Croatian VAT is
paid, even if the boat sold to a German or Dutchman?
The same rules apply to you as well as for Croats, it is irrelevant whether the flag is Croatian
or for example Belgian. It will be sufficient to pay the Croatian VAT because it will be paid
legally with all fees of the EU.
8.Will I have to pay in the future some kind of extra tax in Croatia for a boat under the
Tax (and duties) are paid only once, during the import customs clearance.
The Republic of Croatia has to harmonise its tax policies with the EU legislation, so it is hard
to expect a subsequent implementaion of any tax. (In this case you would not leave your boat
under the Croatian flag and we do not believe that anybody else is thinking about this.)
9. What will be after May, 31st 2013?
The deadline till May, 31st 2013 is intentionally a month shorter than the date of Croatia´s
accession to the EU, to manage it to re-register the boats after the customs clearance. Those
who have avoided the paying of the tax will be forceed to do so and additionally fined.
After May, 31st 2013 it will be still possible to register the boat under the Croatian flag, but
this will not be so attractive, because the tax will automatically move to the regular rate of
10. Does Croatia automatically get the Schengen border?
It is intended that the Republic of Croatia enters the Schengen in the year 2015.
11. Do I pay charges on the purchase or present value of the boat? Who calculates the
value of the boat?
The duty basis is the present value of the boat (without taxes).
The value of the boat is calculated by the customs catalog, this is a catalog published by
SCHWACKE, a member of the Eurotaxglass Group.
Our forwarding agent will determine the value and calculate the final price which is to be paid.
(In case of self-contruction or if the boat is not listed in the catalog it can come to
discrepancies between the declared price and the price that is accepted by the customs duty).
12. Do I have to be personally present and in what phase?
You do not have to be personally present either at the obtaining of the personal identification
number (PIN), the customs clearance or the registration of the boat, but the person or persons
who represent you must have proper authorization (it would be best if it is the same entity).
13. Does the boat need to get to the border crossing?
If the boat is duly (and it is) declared by the marina it is already under customs supervision
and it is not necessary to come to the border (the customs duty will do the inspection in the
14. What is subject to registration?
Subject to registration are all boats longer than 2,50 meters or boats with a motor power over 5
15. How and where to register boats to the Croatian flag?
If you decide to register your boat to the Croatian flag the first step is to contact us.
The boat registration procedure is the following:
-obtaining the Croatian personal identification number (PIN) from the tax administration – it
is granted once and you can also use it for other activities in Croatia (for expamle when
buying a property, establishing a company). There is no cost for the entity that is requesting
the number, but a verification of the signature is need if you are not personally present.
-original ownership documents or a original extract from the boat registry are needed before
the registration of the boat and the customs clearance can be done whether with the original
registration document or with an original extract.
After that submit a copy of the Decleration of conformity of the boat (Declaration of
Conformity to 94/25/EC Directive), a copy of the certificate about the type examination of the
boat (EC Type Examination to 94/25/EC Directive) as well as a copy of the insurance policy
We will prepare all other required documents (copy of the passport, accounting extract of the
marina, original inventory list).
-After the customs clearance a Croatian sailing permit from the Port Authority (for boats up to
12 m) or for boats longer than 12 m from the Croatian registry of boats is obtained.
16. How much does the fee for the registration of a boat in the Croatian registry cost? 1
In the overall list of costs the fee for the registration of the boat will be surely quoted, but this
fee is not yet defined. The costs of the registration depend on the lenghts of the boat. There are big differences between boats which have been produced in the EU and boats with a non-EU-origin. For example, the registration of boats from Asia or the USA are quite more expensive than the registration of boats with an EU origin. According to the latest information there will be a significant price reduction and we will inform you on time about this.
17. What are the other costs (except the costs of the forwarding agent)?
The highest expense are certainly the VAT, customs duties and the fee for the registration.
There are still some minor expenses and the fee for the boat inspection, which depends on the
lenght, but also on the equipment of the boat and the place where the inspection is done.
18. After how much time do I have to extend the registration document?
Pleasure boats up to 12 m get a permanent licence, while those over 12 m prove the ability for
sailing with the possession of the Certificate about the ability of the yacht for sailing, which is
issued by the Croatian Register of boats and which is renewed every 5 years (when the boat is
19. What about the (old) insurance policy that I paid for?
According the the available information, the insurance policy is valid if the previous owner
(and that is you) agrees with this.
20. Do I keep upon the registration the name of my boat?
Boats with a lenght up to 12 meters must have a mark (combination of numbers and letters
from the port of registry) and can also have a name (which is set by the owner).
However, yachts (longer than 12 m) must have a name – and it has to unique in whole Croatia.
21. The owner of the boat is not a natural person, but a legal person. In which way the
boat can be used in personal (recreational) purposes?
It is fact that the reduction of the tax rate to 5% applies to recreational boats (for boats of
economic activity this is not so important, because the VAT is used as tax prepayment).
It is, however, currently not clarified whether and how legal persons will be able to register a
boat for personal use. (Most probably it will be necessary to make a ownership change i.e.
the legal person will make out an invoice to the natural person and based on this the boat
will be registered in Croatia on that natural person).
22. How long does the whole procedure take?
It is necessary to do a lot of things: to obtain the PIN,to preliminary inspect the boat to check
the serial numbers of the hull and engine, to obtain the “certificate of technical
acceptability”, to perform the import declare and pay all fees, to delete the boat in the
mother registry, to translate all documents into Croatian by a certified translator, to submit
the request for the registration of the boat...
For yachts (longer than 12 m) the clearance procedure is roughly the same as for boats
up to 12 m, but the registration is more complex and time-consuming.
23. What is the difference in the registration of boats up to 12 m and those over 12
The registration of boats up to 12 m carries out the port authority and for boats over 12 m the
Croatian Registry of boats.
In both cases the customs declaration, the listing from the registry (deletion), the certificate of
technical acceptability, the authorization and the request for the first registration need to be
enclosed and the boat has to be inspected.
For yachts longer than 12 m the application for the naming of the boat has to be
submit, the licence for the radio station on the boat (Ship`s Radio Licence) and the
certificate about the yacht calibration had to be obtained.
24. How much time do I have to make a decision?
Theoretically you still have six months, but it should be started as soon as possible because it
is a long-term procedure. Also, there will be a lot of requests and the Croatian beureaucracy is
known for its slowness even when there is not much to do.
It would be desirable to announce the readiness to perform the import declare for the boat
already in December.
If you are NOT interested in this topic, please send us a brief notice so we will not
needlessly incommode you in the future with information and clarifications.
At the end of this letter we would like to mention that we will certainly charge you also the
costs of our service which will include our engagement and the engagement of the forwarding
agent with the added taxes which may need to be paid. I repeat, once it is clear what the
legislator has passed, we will make a calculation and inform our interested clients.
Re: Croatia and VAT
That is a long post. I knew already about that and it seems a good way to buy in EC a boat paying 8% tax instead of 20 or 23% and in the end have the boat fully legal with the VAT paid in the EC....if everything goes as previewed ;)
Re: Croatia and VAT
I was thinking along the same lines - I am sure that this is EC-legal, but am also wary of future changes in Croatia that might make flagging boats there more expensive than originally presented. I'm in a perfect situation for this - an EU passport, residency outside of the EU, a UK flagged boat with no VAT paid. The difference between VAT this way and if I were to return to the UK on my current boat value is almost $100K!
Re: Croatia and VAT
Here you have more information:
Kroatien: Nachversteuerung zu 5 Prozent kommt! - Reise*|*YACHT.DE
I don't think the problem would be with Croatia. Regarding Croatia if they say you have the VAT paid, you have the VAT paid and that's finish.
The problems is how the other EC countries are going to look at this maneuver that is clearly a way of evading tax in their countries and what they are going to do about it?
Maybe nothing because this is just a transitory 3 months measure. I guess it will depend on the number of sailors that will try to take advantage of this.
Re: Croatia and VAT
PCP - that article in YACHT.DE just re-states, in lay terms, what the original post said. They did mention a luxury tax in Croatia which I would be afraid might be levied in the future.
Many of the boats in Croatia belong to EU residents/citizens and are not VAT paid, so this measure was taken to ensure that these boats don't emigrate, along with their cash, to countries such as neighbouring Turkey. It does look like a very good deal and I intended on returning to the EU within the next 5 years then I'd certainly look further into a Croatian flag.
Re: Croatia and VAT
Does it mean that you have to buy the boat in Croatia? What if you buy it elsewhere in the EU?
This is maybe a nice move from them, but everything else may be more expensive so I think it is not straightforward decision. The whole EU will further suffocate its citizens with more and more taxes so I don't see any end in sight. It is a matter of time when EU asks Croatia to hand them the names of all those Italians and others who moved their boats to Croatia to avoid tax increases.
Re: Croatia and VAT
Invictus - you don't need to buy the boat there, but you need to register the boat there. If the previous flag was outside of the Eurozone or the boat was registered in the Eurozone but not VAT paid then re-registering and paying the reduced VAT is a great money saver (and source of income for Croatia).
Re: Croatia and VAT
I am not a tax expert but I am wondering what are the advantages of that vs having your boat registered in the Caymans, BVI or similar jurisdiction. I agree on the initial cost advantages but I am concerned that at some point, financially desperate governments will come after you anyway (like the encouraging 75% tax for the 'rich' in France), or introduce additional but differently phrased costs.
Re: Croatia and VAT
If you have a boat registered in the Caymans or the BVI and you travel to the EU with the boat then you don't immediately have to pay VAT upon entry into the Union - a great cash savings but the boat now needs to leave the EU in order to keep that tax-exempt status. I believe it is every 18 months but haven't looked into the details. I gather that if I own the boat in my name and cannot prove residency outside of the EU they will collect VAT as well - I've heard anecdotal stories about the Germans doing so but no first-hand experience; this means that to be 100% effective one would need to create an IBC and have the ownership in the company name plus a contract between yourself and the company allowing use. All rather complex but for a big yacht that work can be worth it.
In my case I won't be returning to the EU with the boat for a while, and when I do it will be part of my belongings as a returning expat and will be VAT exempt (with a couple of conditions, such as not selling the boat within x-months of returning). By that time depreciation will have also reduced the tax value of the boat.
Re: Croatia and VAT
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