Value Added Tax

Value Added Tax (VAT) is chargeable on boats purchased and owned by residents of the EU VAT Zone. VAT is also chargeable on vessels, irrespective of ownership, that spend more than six months in any calendar year cruising in EU VAT Zone waters.

Legitimate mitigation of potential VAT liabilities is generally available for both pleasure and commercial yachts, particularly if the yacht is purchased through a corporate structure. The options will depend on a comprehensive assessment of a yacht’s ownership, operational requirements and the personal financial circumstances of the owner.

Further points to consider:

  • A VAT-paid yacht will have no issues in EU waters, unless the vessel is chartered
  • Pleasure yachts that are built pre-1985 and were in EU waters as of 31 December 1992 are treated as VAT-paid. Evidence that the yacht was in EU waters on this date may be required.
  • EU nationals can establish residence outside the EU VAT Zone (e.g. Gibraltar) and use the Temporary Importation regime.

VAT is administered and enforced by customs officials via the clearance procedures when cruising boats enter a EU member state or via routine inspections of cruising boats within a member state’s borders. Yachts should carry a registration document, insurance policy and radio licence. One crewmember is required to hold a radio operator’s certificate of competence. For EU boats, proof of VAT status is also required.

SMS is able to assist and guide owners as to the best options and, if required, will obtain VAT advice from independent and reputable advisors.

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