Is a Non-European buyer required to pay the EU VAT when purchasing a yacht

7 October 2015

To put it simple, at the moment, a non-EU resident or entity can’t be legally forced to pay for the EU Value Added Tax. However, if the yacht is permanently moored in the EU, it will usually be necessary for VAT to be paid on the purchase of the yacht or its importation into the EU, to benefit from free circulation within the EU (roughly 20% /- of the purchase price).

A Commercially registered yacht (charter yacht), able to prove yearly rental activity to different clients, is not subject to the EU VAT nowadays.

Certain EU member states have favorable regimes. For example, Malta permits a Maltese company to recover the VAT paid and then to lease the yacht with VAT only being chargeable on a proportion of the lease rentals, this procedure generally lasts a year and the effective rate of VAT varies (depending on the size of the boat), from 5.4% (yachts over 24 meters) to 10.8% (boats up to 10 meters), of the value of the vessel. The applicable rate for boats from 20 to 24 metres is 7.2%.

Through our Yacht Management program, Allied Yachting is pleased to offer an all-inclusive fixed price Malta yacht leasing package of one year in duration priced at EUR 20,000.00 for an under 24 meter yacht and EUR 25,000.00 for an over 24 meter yacht.

The Malta company is created and administered on behalf of the client by our partner licensed corporate service provider in Malta, regulated by the Malta Financial Services Authority. Professional marine expertise is provided by Allied Yachting including the importation and registration of the yacht.

This yacht leasing system is one of the most popular corporate ownership structures available for European yachts operating within the European Union (EU), providing a reduced amount of VAT payable on the value of the yacht. However, our experience has shown that this structure mostly benefits larger yachts with sufficient range and value justifying its travel to Malta.

Alternatively, yachts can qualify for relief from VAT under a temporary importation regime (generally 18 months), after which the yacht needs to prove she’s left the EU and then returned.

There are 4 main conditions you must be aware of, for your yacht to qualify to unnecessary VAT payment in the EU:

  1. The Owner must be a non-EU resident
  2. The End-User must also be a non-EU resident
  3. The boat needs to be delivered outside of the EU Customs Territories
  4. In case of ownership through a corporation, the corporation must be established outside the EU

For more information, please refer to the article on our blog PRIVATE OWNERSHIP TAXATION ON YACHTS, or simply call our Yacht Management team.