VAT on Superyacht Charters: Everything you need to know
When browsing the world’s finest yachts and destinations for your next luxury vacation, an often-overlooked consideration is charter taxes, namely Value Added Tax (VAT).
Last updated: 28th July 2023
A complex and ever-changing discipline, VAT on superyacht charters around the world can represent quite the regulatory hurdle.
With decades of experience and a solid understanding of the intricacies involved in yacht charter taxes, the Ocean Independence Team continues to take extensive professional advice from Fiscal Representatives. Regularly attending meetings regarding the most up to date VAT laws, we ensure charterers are well informed regarding the latest regulations.
To clarify this subject for those considering a luxury yacht charter, below we present a round-up of the latest protocols regarding VAT on superyacht charters and its application across the EU and beyond.
We have made every effort to ensure the information provided is accurate as of the publication date (July 2023). However, since new regulations can go into effect at short notice, should you have any questions regarding specific itineraries, please contact your Ocean Independence Charter Consultant.
YACHT CHARTER TAX FAQs
HOW IS VAT APPLIED TO A SUPERYACHT CHARTER?
In general, VAT is applied to the full charter fee and then determined by the VAT rate of country in which the charter begins. For example, if your charter starts in France and ends in Italy, you will pay VAT to the French authorities. VAT is also, subject to location, applied to delivery and/or redelivery fees.
Although this may sound like a somewhat confusing and lengthy process, your Ocean Independence Charter Consultant will guide you through every step of the booking process. VAT amounts due will be clearly presented on page one of your MYBA Charter Agreement with further explanation of the VAT applied to your charter in the ‘Special Conditions’ or a VAT Addendum attached to the agreement.
WHEN DO I PAY THE VAT?
VAT is paid in your final instalment of charter fees due, usually one month prior to the start of the charter and held in the stakeholder's client account before being dispersed to the Fiscal Agent.
Put simply, after you have signed the charter contract, but prior to boarding, you will be required to make a number of payments which include the charter fee, the Advanced Provisioning Allowance (APA), VAT, and sometimes also (re)delivery fees or security deposits.
But rest assured, there are no last-minute surprises. All payments are pre-empted and specified in your charter agreement. We strive to make the process of securing your superyacht charter a seamless, stress-free experience. Your only task is to look forward to an unforgettable journey, knowing all financial aspects are securely managed and arranged in advance.
CAN I QUALIFY FOR REDUCED VAT?
In some cases, time spent cruising outside of EU waters during your charter can be proportionately reduced with any excess VAT reimbursed at the end of the charter. However, for small amounts of time spent outside EU waters, any VAT advantage may be negligible once fuel costs are taken into account.
VAT RATES FOR CHARTERS IN EUROPE
FRANCE (INCLUDING MONACO) AND ITALY
January 2020 signalled significant changes in the ways that VAT was applied to superyacht charters (although there were some delays in putting these into effect due to the Covid-19 pandemic). The current situation for charters starting in Italy, France and Monaco is that VAT is now applied at the country's full VAT rate at the origin of the charter, i.e. the port of embarkation.
This VAT rate is applicable regardless of which country your port of disembarkation falls in. VAT is also applied to any delivery or redelivery fees.
For itineraries including both France and Italy, VAT will always be applied at the rate of the country of origin, i.e. if starting in France or Monaco – 20%, if starting in Italy - 22%.
FRANCE AND MONACO
In France and Monaco, the standard rate of 20% French VAT is due on charters, and (re)delivery fees originating in France and in Monaco, regardless of the port of disembarkation.
For itineraries including significant time spent cruising outside EU waters, your Captain will calculate the actual hours in international waters and the tax is proportionately reduced. At the end of the charter, you will be reimbursed via your Charter Consultant.
As of June 2020, modifications to Italy's Value Added Tax (VAT) regulation were implemented, enforcing a standard rate of 22%. VAT in Italy is required to be paid on the charter fee along with any fees for delivery/redelivery that originate in Italy, irrespective of the port of departure.
The previously available lower VAT rate of 6.6% for itineraries entering international waters is no longer applicable. However, as with France, for any itineraries including significant time outside EU waters, the taxable base is reduced, and a reimbursement of VAT paid may apply following the conclusion of the charter.
For all charters starting in Spain, VAT is set at a standard rate of 21% of the charter fee. There is no reduction of VAT if cruising outside EU territorial waters (i.e. more than 12 nautical miles offshore) during the charter period. However, if starting outside the EU and cruising into Spain, VAT is only due on the number of days spent in Spanish waters.
Charters beginning in Croatia incur a VAT rate of 13% on the charter fee. However, VAT is not due on delivery and redelivery fees. If your charter begins outside of EU waters, Croatian VAT is due on a pro-rata basis, considering the number of days spent in Croatian waters.
Every yacht cruising in Greece is required to possess a Greek charter licence. And while the base rate of VAT is 24%, in most cases this is reduced by 50-60% depending on your itinerary.
If you are planning to book a yacht charter in Greece or have already signed the charter contract and want to know how your itinerary will affect the amount of VAT you will have to pay, please don’t hesitate to get in touch with your Ocean Independence Charter Consultant.
One of the most recent changes to VAT in Europe, as of summer 2023, Turkey has increased its VAT rate from 18% to 20%. For charters in Turkey, on Turkish-flagged commercial vessels, 20% VAT is applied to the charter fee.
For foreign flagged commercial vessels chartering in Turkey VAT is 0%. But it's essential to note that while vessels under 39 metres are required to purchase a cruising permit, it is mandatory for yachts over 39 metres to obtain a Turkish Charter Licence.
As costs may vary depending on the size of your charter yacht and the length of your stay, should you require clarification or detailed information on the cost of a cruising permit for your chosen yacht and itinerary, your Ocean Independence Charter Consultant is readily available to assist.
In Montenegro VAT is 0% so you will not incur any VAT charges while chartering a superyacht here. However, if your itinerary extends into Croatia, you will be required to pay Croatia's VAT rate of 13%, levied pro rata for every day you stay in Croatian waters.
VAT ON YACHT CHARTERS IN THE BAHAMAS
While the VAT rate for superyacht charters in most of the Caribbean is currently 0%, the Bahamas introduced a 10% VAT from the 1st of July 2022. As a result, foreign-flagged yachts chartering in Bahamian waters are now required to pay this rate on the charter fee. Additionally, July 2023 saw another significant increase in the cost of charter licensing (paid by yacht owners annually).
Prior to the recent introduction of this VAT rate, Bahamas yacht charters had a mandatory 4% port tax. This tax remains in place, resulting in a total tax rate of 14% of the charter fee.
Navigating VAT regulations for your luxury superyacht charter can seem complex, but at Ocean Independence, we simplify this process, ensuring a smooth and enjoyable experience from booking to boarding, and beyond.
For any queries, or more information regarding VAT regulations and yacht charter taxes, please don’t hesitate to contact us using the enquiry form below. Or, to explore our entire list of luxury yachts for charter around the globe, click here.