Getting yacht importation right is worth the effort
During the recent MYBA yacht show in Genova, Italy, a non EU yacht was boarded by Italian Customs, suspecting it to be there under temporary admission. After three days of scrutinising documents and asking questions, the customs authorities were happy that it had been formally imported and was free to circulate in EU waters.
According to Chris Allix of Dominion Marine Corporate Services, this was because it had been imported through France correctly, zero rated as a commercial vessel, under Article 262 of the French Tax Code.
Chris Allix explained the current situation:
“Over the past few years, the EU Commissioners have expressed concerns over the French adoption of the EU Directive on VAT exemption on commercial vessels. In their original tax code they did not include the words, ‘for use on the High Seas’. Following discussions with the EU Commissioners, the French Tax Authorities included these words in Article 262 of their Tax Code, but with no clear definition. However, it was crystal clear that they had no intention to change their stance on commercially registered yachts engaged in third party charter.This has resulted in further arguments with Brussels and as a result the Commissioners have referred France to the European Court to consider infraction proceedings.”
To date the European Court has not ruled whether the French Authorities are in breach of the rules. It appears the Commissioners are not completely against the exemption but dislike the fact there is no definition of ‘High Seas’.
In the meantime, the French Tax Authorities continue to apply this exemption to all commercially registered yachts with permanent crew, chartering on the high seas to third parties. Under EU Directives, all EU Member States must accept the French Rules, which gives the yachts free circulation. This was the case for the yacht boarded recently by Italian Customs during the show. The Italian authorities accepted that the yacht was eligible for free circulation throughout the EU.
Chris Allix told us that yacht and super yacht captains and owners need to understand the rules:
“The view that yachts imported through the French commercial exemption rules are only suitable for use in France is incorrect. I hope this helps yacht owners and their advisers understand that until the French change their rules on VAT exemption for charter yachts, any yacht imported through France will (under EU rules) enjoy free circulation. It is the same for any yacht imported prior to any changes, as it was imported in accordance with the rules in force at the time. Any action must be taken against the member state, rather than the yacht owner. A similar situation is occurring in Malta with the Maltese Leasing structures. These are in breach of many other EU Members’ VAT rules, but no one is claiming that a yacht acquired through this structure does not enjoy VAT paid status after the lease purchase finishes, because the acquisition is in accordance with the Maltese Government’s adoption of the EU Directives on VAT.”
Dominion Marine was founded in the Isle of Man in 1984 and is one of the most experienced providers of specialist services to yacht and superyacht owners. The Dominion team has built up extensive knowledge of the different options open to yachts coming in to the EU. According to Chris Allix, ‘The current economic climate means that yacht owners and captains need to be particularly careful that the advice they are getting is the right one. It is not advisable to be complacent.’