After nearly two years of working alongside the Republic of the Marshall Islands (RMI) Registry, WES, the French Customs and the Port State Control Authorities, Rosemont Yacht Services has announced a new dual use solution, which will permit owners to use their yacht on a private basis, whilst offering the possibility to charter the yacht out to third parties a few days per year to minimise their annual running costs.
Designated as a Yacht Engaged in Trade (YET), this initiative combines private and commercial use without falling foul of existing flag, customs and port state regulations.
Rosemont Yacht Services obtained the official authorisation from the French Customs on 13th November 2014, and the new programme was officially launched by the RMI Registry during the Monaco Yacht Show this year.
Below, Rosemont International explained more about how the new solution works, including the eligibility of yachts and advantages to owners.
How it works
Currently, owners no longer willing to operate their yacht on a fully commercial basis are seeking a solution which will permit them to use the yacht on a private basis, whilst offering the possibility to charter the yacht out to third parties a few days per year to minimise their annual running costs.
As the rules are currently set, owners can either use their yacht on a purely private basis, without the possibility to charter; or they can charter their yacht to third parties without being able to use their yacht extensively themselves, and with the obligation to pay VAT even on their own charters.
The solution is to develop a dual-use operation programme approved by PSC for yachts commercially compliant on voluntary basis to avoid any detention that shall also take into account EU VAT regulations.
A YET is a private yacht permitted to engage in charter activities for up to 84 days per year; it’s an initiative based on EU customs regulations, approved by PSC authorities and so far by Monaco and French customs, but is reportedly going to be extended to the rest of Europe.
- Non-EU owned yachts (having non-EU resident Ultimate Beneficial Owners) under Temporary Admission (TA) or EU or non-EU owned yachts which are VAT paid
- Yachts in compliance on a voluntary basis with all relevant regulations and requirements that apply to commercial yachts
- Yachts that have undergone a Voluntary Compliance Verification to the standards of the RMI Maritime Regulations and Yacht Code by an Authorised Representative of the Marshall Islands
- Yachts built to class or classed if over 500GT
- The RMI is the only flag promoting dual use that has been validated by Port State Control Authorities (Paris MOU) for temporary commercial operation
- Flexibility of use: Private use without losing the option to charter the yacht on an occasional basis (up to 84 days/year) to offset annual running costs (no more dilemma: Purely private use without the possibility to charter or charter to third parties without being able to use the yacht extensively and with the obligation to pay VAT, even on their own charters)
- No risk of requalification in case of extensive private use
- No need to sign a charter agreement paid at commercial market rates each time owners want to charter their yacht
- No need to pay VAT on owners use
- No need to leave EU waters and touch a third country port to allow change of use of the yacht, and systems not plagued with Tax and VAT issues in comparison to the ‘switching regimes’
- Exemption of VAT available on works for non-VAT paid yachts as part of the inward processing relief regime
- No VAT exemptions on supplies and fuel: Exemptions on duties could be obtained on request
- No private use while the yacht is under the ‘commercial bubble’
- RMI YET programme only available in France and Monaco for the time being, but Rosemont is working to have it formally extended in Europe. The regime is based on EU regulations and EU customs documentation, which should be accepted in all EU countries.
How does it work when private yachts are to charter?
The yacht should be placed under Temporary Admission (TA) for 18 months, immediately upon its arrival in EU waters.
When the owner wants to charter his yacht out to third parties, the following must be undertaken:
- The yacht will need to be placed under TA guaranteed for commercial activity
- The RMI Registry will need to issue a Temporary YET certificate for the duration of the charter or commercial promotion period
- An Import Declaration should be filled with the customs
- No need to put in place any bank guarantee or guarantee deposit
- A charter broker and fiscal representative must be appointed
- VAT paid on charters
- The yacht will be placed into a ‘commercial bubble’ which will last until the owner wants to use the yacht again for purely private use. At that time the yacht will need to be removed from that regime
- The owner could decide to place the yacht under this ‘commercial bubble’ for a specific period, during which the yacht will be promoted for charter, or each time there is a charter. There will be a formality to enter and to exit from this specific regime
- No private use will be allowed while the yacht is placed under the ‘commercial bubble’
- The placement of the yacht under this specific regime will suspend the 18 months clock.
For any further information on YET, contact Rosemont Yacht Services.