Luxury yacht VAT overview from Moore Stephens Isle of Man

When the seasonal migration begins this year, the yachts will funnel through the narrow Straits of Gibraltar to access the picnic grounds of the European coast as usual.  Spain’s matriculation tax will still be in place. Yachts will still need to register for VAT and obtain a charter permit in order to start charters there according to Moore Stephens Isle of Man. Otherwise, as welcome visitors or tourists sailing through, they will still need to exercise the usual amount of caution in order not to trigger a VAT liability there.

Directly across in the north central Ligurian and Tyrrhenian parts, nothing too will have materially changed in Italy. The yacht ownership tax regime introduced there last year will still be bedding in, with no apparent logical or conclusive outcomes, as will the experiments with reduced rate charging of VAT on yacht charter.  Fear-induced sparseness will probably continue in the harbours.

On either side of Italy there will be quite a lot stirring this year. France to the west has experienced problems with the European Commission (“EC”) over its tax exemption for commercial yachts. Far from relenting, and having already referred France to the European Court of Justice over VAT on ships generally, the EC has now homed in on yachts.

The Commission asked France on 21st November 2012 to start taxing “luxury yacht hire”. “In the absence of a satisfactory response from France within two months,” it warned, “the Commission may refer the case to the European Court of Justice.”  Therefore, more than ever before, all eyes will again be on France to see how it gets itself out of its current state of quandary over yachting VAT.  The stakes are especially high because whilst the neighbouring countries have been moving to impose VAT on yachting activity, France has to date offered a degree of shelter and succour that has encouraged many yachts to start charters there.

To the east of Italy on the Adriatic coast, is Croatia, which joins the EU, and therefore the VAT system, on 1st July 2013. So far Croatia’s Dalmatian coast, with its high water quality, immense number of coves, islands and channels, has been a magnet for yachting activity in the periphery of the EU.  

Despite the similarity of its national charter licensing regime to Spain’s, the fact of Croatia being outside the EU removed the overhang of EU VAT from any sailing calculations there.  That is set to change bang in the middle of the 2013 yachting season as the EU’s fiscal territory extends solidly to the eastern coast of the Adriatic, bringing along a yachting VAT regime that is more closely aligned to the conservative camp of the EU, with a standard VAT rate of 25%, a nip-claw tax system for boats and the Porezna Uprava, its spirited tax administration, Croatia will be the keen player in the yachting VAT scene to watch.

Remarkably, a welcome pre-accession window has opened there for yacht owners to import their yachts before 31st May 2013 at a super reduced VAT rate of 5%.  So it is that with the very real possibility that both France and Croatia would be pushed to charge VAT on yacht charter, 2013 could provide the simultaneous pinching motion and fiscal ‘double envelopment’ that the yachting industry has been dreading.  To complete the ambush is Greece’s own yacht taxation regime from the middle-eastern rear of the Mediterranean Sea. By all accounts this is being reinforced to give it more bite, despite brave reform in recent months designed to attract ‘yacht tourism’.

There may soon be nowhere left in the Mediterranean to start charters without some degree of exposure to VAT charging.

For further information about tax, yacht structuring and registration and crew benefits from Moore Stephens Isle of Man, visit

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