VAT on sale of asset held overseas

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 I am possibly overthinking but am not sure as to whether Output VAT applies to the following senario.

A UK limited company (VAT registered) owns an asset which is located overseas (in the EU). If it sells the asset to a UK based person is there UK output VAT? The new owner will not bring the asset back to the UK.

What is the general principle? I am thinking if the asset was currently in the UK and then exported so it ends up where it is now then there would not be VAT as exports are zero rated, but it is already overseas. Proof of export is not possible but proof of overseas location is. The goods are not being "consumed" in the UK to use HMRC's terminology. 

Does it make a difference if the asset is a yacht (which it is) as I know there are special rules for yachts - I have researched this but can't find this senario. The yacht is not "VAT paid" as it was used for charter but I am thinking the VAT may just be the new owners problem and they will have to pay VAT in the country they keep the yacht in if it stays in the EU or else take it out of the EU. If they do bring it back to the UK they will have to pay VAT on import (it has been overseas for many years) so it wouldn't seem right that the Company should pay VAT now as that means HMRC would get 2 lots of VAT!

Any thoughts appreciated, thanks


Replies (3)

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By Jason Croke
25th Jul 2023 07:16

Place of supply of goods is where the goods are at time of sale, if the goods are in the EU, then it usually means the seller has to register for VAT in the Country where the goods are located....a warehouse with stored goods in a French warehouse will trigger a French VAT registration.

Not much different with regard yachts, it is goods, it is an an EU location, default position is VAT registration required in that location...but there are ways around the rules.

Not being VAT paid could be an issue in any EU port, not just the UK.

You need to understand the history of the yacht, why is it not VAT paid? It can't usually be sitting in an EU port unless it has been VAT paid at sometime in it's life, is it in the docks on a visiting license under a charter? Where was it purchased and what flag does it fly under?

Thanks (2)
Replying to Jason Croke:
By Hazel Accounts
25th Jul 2023 12:21

Thank-you for your reply Jason, my understanding (because this company wasn't my client then) is the yacht was purchased in UK and the UK VAT reclaimed (hence why not VAT paid). The yacht was sailed over to the EU (well before Brexit) and hired out on short term lets as a business which I believe went quite well until covid.
It flies under a UK flag.

I think you have answered my question - there is no UK VAT due. (Although there may be EU VAT due).

Thanks (1)
Replying to Hazel Accounts:
By Jason Croke
25th Jul 2023 13:25

Cool, another happy AWeb customer.

Thanks (1)