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
If you are building a superyacht in the EU, be aware of not becoming involved in a tax-avoidance artificial exporting structure.
Can I avoid VAT on buying my superyacht?
• 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 be able to participate in a legitimate leasing structure.
Cyprus and Malta run broadly similar leasing schemes which can dramatically reduce the effective rate of VAT on the assumption that superyachts do not spend all their time inside the EU. However, both the German and UK tax authorities have openly criticised these schemes and so they are a potential risk for owners living there.
Is the VAT status on my superyacht preserved for life?
• No. If at some point in the future it becomes clear that you are not pursuing legitimate commercial business or you are only chartering the superyacht infrequently, you may be asked to de-register as a commercial superyacht. At this point you would become liable for VAT on the hull unless you permanently export the superyacht or become eligible for VAT relief as a non-resident. Also, an EU tax paid superyacht sold outside the EU will lose its VAT paid status if brought back into the EU by a new owner. The only certainty in tax and superyachts is that there is no certainty.
Can I charter my superyacht if I am in the EU under the Temporary Importation Regime (TIR)?
• No. The TIR is a relief, that lasts for 18months and is renewable, from import VAT based only you neither chartering or offering to charter, selling or offering to sell your superyacht within the EU. TIR is only available to a non-EU flagged superyacht, owned by non-EU residents.
You should not allow EU residents to use the superyacht if you are not on board. If you breach any of these conditions, the relief is removed and VAT on the importation of the superyacht is immediately chargeable, together with possible penalties and interest calculated from the date of the original importation. TIR for helicopters on board a superyacht is only six months.
Can I charter the superyacht to myself?
• Occasionally this is possible, but only if you pay an arm’s length commercial charter rate. However, if you are the only or principal charterer, the superyacht is not commercial. As an aside, chartering through a series of dummy companies does not count as arm’s length chartering or pursuing commercial business. The tax authorities do not always respect the sanctity of the corporate veil. They look at who directly or indirectly owns the company and draw their own conclusions.
Does the flag have anything to do with tax?
• The flag only has an impact on tax if you are applying for TIR where you have to have a non-EU flag. Usually, tax is determined by how the superyacht is used as opposed to the superyacht’s flag. However, anecdotal evidence suggests that non-EU flags are having a tough time operating legally in some parts of Spain and Greece.