Clyde Co Guide to Superyacht Law - Sixth Edition

TAX

Q&AS

If you are building a superyacht in the EU, be cautious to avoid becoming involved in a tax-avoidant artificial exporting structure.

Do I have to pay VAT on the acquisition of my superyacht?

• More generally, the industry’s tax practices are under increasing scrutiny (from governments and journalists alike) worldwide, and we are aware of yachts caught up in tax cases in several countries. Owners would be advised to approach any tax minimization scheme with caution, and not to put short-term savings above long- term legal, financial, and reputational risks. By way of one example, the UK government has recently introduced ‘Unexplained Wealth Orders’ — a means of using civil powers (and their lower standard of proof) to investigate and confiscate the perceived proceeds of crime, including tax evasion.

• If you are an EU resident, you may be able to recover any VAT you are charged if you are legitimately operating the superyacht commercially in the EU, or you may consider participating in a leasing structure. • Cyprus and Malta ran broadly similar leasing schemes until their legality was questioned by the European Commission. The individual EU member states have laws on the VAT on charters that operate in part outside EU territorial waters. Provided you tick all the regulatory and commercial operation boxes (and your yacht has a length of more than 15m), generally if you operate 70% outside EU territorial waters you will qualify for charging 50% less charter VAT, with an evaluation of the time spent outside EU waters using AIS data. Generally, no AIS data no reduction in tax, but there are exceptions for superyachts without AIS who need to provide the navigational paper alternative to AIS using for example, logbooks.

IF YOU ARE AN EU RESIDENT OR YOU CHOOSE TO OPERATE YOUR SUPERYACHT COMMERCIALLY IN THE EU, OR ANY COMBINATION OF THE TWO, YOU HAVE TO ACCOUNT FOR VAT

Is the VAT status of a superyacht preserved for life?

All sorts of events can compromise the VAT status of a superyacht even if it is VAT paid. For example, if you own a superyacht which has been declared to be for commercial use and has been accounted for VAT, if at some point in the future it becomes clear that you are not pursuing legitimate commercial business or you are only chartering the

31

Made with FlippingBook - professional solution for displaying marketing and sales documents online