|General Information > Yacht, Charter and VAT|
Chartering of a yacht in EU waters is treated as suppliers services and is therefore a taxable supply for VAT purposes.
If the owner is established in an EU member state the owner will be liable to account to the VAT authorities of the member state in which he is providing such services in respect of any charter hire made within or outside EU waters.
If the owner is not established or domiciled in an EU member state no VAT will be payable on any charter hire.
A non EU flagged yacht brought into the EU by its non EU resident owner or such an owner's charterer who is also not established in the EU (EU resident or EU company) will be entitled to a temporary importation certificate and no VAT will be payable on the capital value of the yacht nor on the charter provided no chartering commences within an EU country.
If the yacht is chartered to a non EU resident by a non EU resident owner, then provided the charter commences and ends outside the EU the charterer can bring the yacht into EU waters and obtain a temporary importation certificate for it. The yacht must not commence or end a charter whilst in EU waters under a temporary importation certificate unless it is taken out of EU waters immediately.
It would therefore seem prudent for a non EU owner to register and own the vessel outside the EU, for example in Gibraltar, and provide such charter services from Gibraltar. The entire service would therefore escape VAT.
The above applies to Spain and France however the situation in Italy would seem to be different in that the authority may wish to charge VAT for the time the vessel is chartered within Italian waters even though the charter has commenced and will end outside the EU.
Yacht Registration & Ownership of Pleasure Yachts and VAT within the European Union
A VAT paid yacht will encounter no difficulties in EU waters provided the vessel is not chartered.
Pleasure yachts built pre-1985 and in EU waters on 31st December 1992 are treated as VAT paid. Evidence that the yacht was in EU waters on this date may be required.
Temporary importation relief from VAT is available to yachts beneficially owned and used by non EU residents provided such non EU resident does not become ordinarily resident in the EU.
An EU national may establish residence outside the EU VAT zone, for example Gibraltar, and thereby avail himself of the temporary importation relief from VAT.
Temporary importation relief enables a yacht to be used within EU waters for up to six months in total in any twelve month period.
Pleasure yachts should therefore be owned and registered outside the EU customs area.
Gibraltar is a territory outside the EU customs union, yet in close proximity to Spain, France and Portugal. It is a British port of registry and therefore combines the advantages of British yacht registry with non EU ownership and registration.
Supply of Services Generally
Gibraltar is well located to supply services to the EU generally. It is situated at the entrance to the Mediterranean and within easy striking distance of Portugal, Spain, France and Italy. It is possible to establish a services company in Gibraltar which has tax advantages well beyond the non payment of VAT. In particular a Gibraltar tax exempt company could be established to provide charter services paying ?225 a year or alternatively a Gibraltar qualifying company paying between 0% and 35% per annum depending on the status agreed with the Government of Gibraltar. Gibraltar could therefore prove to be a very tax efficient and cost effective centre from which to operate for all your ownership, registration, chartering and supplying of services generally.