With the 2014 yachting season fast approaching it is important for yacht owners planning to use their yachts in the EU to ensure that they have considered the VAT implications. Chris Borg provides a summary of the EU VAT Treatment of Superyachts.

Private pleasure yachts

Private pleasure yachts used in EU waters must be VAT paid (unless deemed VAT paid or temporary importation applies). VAT is payable upon the supply, intra-EU acquisition or importation of a yacht into the EU. The standard VAT rate of the relevant EU Member State applies. Standard VAT rates of the EU Member States range between 15% and 27%.

Temporary importation

Temporary importation enables the private use of a yacht within EU waters subject to certain conditions, including:
– Owner and user(s) of the yacht must not be EU resident
– Vessel must be flagged outside the EU
– Commercial use is strictly prohibited

It is valid for up to 18 months (generally renewable, although some EU Member States adopt different interpretations).

Deemed VAT paid status

Certain vessels that were in use as private pleasure yachts prior to 1 January 1985 and were in the EU on 31 December 1992 may be deemed VAT paid under the Single Market transitional arrangements. For Austria, Finland and Sweden, which joined the EU subsequently, the relevant dates for vessels in these countries are ‘in use’ before 1 January 1987 and moored in EU on 31 December 1994.

Commercial charter yachts

A commercial structure generally enables full VAT recovery on the yacht itself and on operational expenditure. Importation of commercial yachts with full VAT deferral is available in Malta and in the Isle of Man.

VAT on charters

For yacht charters, VAT is due as follows:

type of charter VAT place of supply
B2B short term Where the yacht is put at the disposal of the customer
B2C short term Where the yacht is put at the disposal of the customer
B2B long term Where the customer is established
B2C long term Where the customer is established (BUT: where the supplier is established if
the yacht is made available to the customer in the same country)

Yacht leasing arrangements

Where available, these enable mitigation of VAT cost based on EU effective use and enjoyment provisions. For yachts greater than 24m, the currently applicable effective rates are:
– France and Monaco: 10%
– Italy: 6.6%
– Malta: 5.4%

These reduced effective rates also apply to short-term charters commencing in those jurisdictions. Full standard VAT rates would be due in other EU Member States where these arrangements are not available. Domestic VAT registration is required.

Matriculation tax

This is levied at 12% in Spain when registering under the Spanish flag or when used in territorial waters by Spanish residents. The Spanish Government announced the extension of the exemption from matriculation tax to commercial vessels which are greater than 15m.

If you’d like to download this information then please click here for a PDF file.

For further information please contact Rachael Kelly, email: rkelly@boston.co.im or phone 01624 692769.

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