VAT implications of Yacht acquisition / ownership (prepared by RKG Consulting – www.rkgconsulting.com, 020 7839 0389)
| Owner is | Yacht purchased / located in the EU | Yacht purchased / located outside the EU |
| Resident in the EU | Scenario: UK purchase: yacht purchased in the UK/ Isle of Man is subject to VAT at 20{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d} if it remains in the EU.Solution: Incorporate offshore company to acquire yacht for “commercial use” to obtain VAT registration & recovery in Isle of Man. Obtain “Zero-VAT paid” passport usable throughout the EU.Scenario: EU purchase: yacht purchased from EU supplier is subject to EU VAT at rates up to 25{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d}. Solution – “Acquisition VAT” Accounting: Incorporate offshore company & obtain IoM VAT registration to “acquire” the yacht VAT-free from EU supplier (yacht must be for “commercial use”). Obtain “Zero-VAT paid” passport usable throughout the EU. Not necessary to sail the yacht to IoM or UK. Scenario: EU resident (or emigrant) purchases a yacht and intends to sail it to outside the EU for a continuous period of 12 months. Solution: Sailaway boat scheme (see below) is available but VAT will normally be payable if the yacht is re-imported into the EU. The owner must sail it away under its own power to a non-EU destination with 2 months of date of delivery. | Scenario: EU resident sailing new yacht purchased outside the EU into the EU is liable to pay “import VAT” at first port of call in EU.Solution: Use code 42 00 import procedure: Import via an agent in another member state. Incorporate offshore company with IoM VAT registration to achieve VAT-free status on the transaction by then using “acquisition VAT” accounting. No need to sail to IoM.An agent in say Malta can be used to “import” the yacht. The yacht can dock into any EU port nearest to Malta to complete the customs entry. Then the IoM company can “acquire” the yacht for VAT purposes. |
| Resident outside the EU | Scenario: overseas visitor intends to purchase and export the yacht under its own power to destination outside the EU.Solution: “Sailaway boat scheme”: To achieve zero-rated VAT export status the yacht must leave the EU within 6 months of date of delivery (normally this is the date it leaves the supplier’s yard)If EU-registered yacht is bought or kept in EU it is liable to VAT even if its owner is non-EU resident. | Scenario: Non-EU resident wishes to purchase non-EU yacht but intends to use it in EU waters.Solution – Temporary Importation (TI) relief: Non-EU yacht owned by non-EU resident may be “temporarily imported” and used in the EU without incurring VAT for a limited period (currently 18 months in any 24 month period).Scenario: Owner of non-EU yacht intends to move his permanent home from a non-EU to a EU country. Solution: Transfer of Residence (TOR) relief: If non-EU owner wishes to move residence to EU then TOR relief is available subject to conditions. TOR relief will enable the yacht to be imported into the EU free of customs duty and VAT. |
Charters: The place of supply of yacht charter services is where the supplier belongs. Where the supplier is say an IoM company and the yacht is being used in IoM/UK/EU waters, the charter services will be deemed to be supplied in the IoM at the standard rate of 20{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d} , regardless of where the recipient of the supply belongs. Example: An IoM VAT-registered charter company should invoice an American client with 20{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d} VAT for charter services with or without (bareboat charter) crew, even where the yacht will sail in say French waters.
Passenger transport: The place of supply of passenger transport services is where the transport takes place, not where the supplier belongs. Example: A yacht is sailing in French waters and is owned by an IoM company providing passenger transport services. The supply takes place in France and will be subject to French VAT (after VAT registration in France). If the yacht sails on to the waters of other EU countries multiple VAT registrations may be required depending on the VAT registration thresholds in these countries.