2021 VAT Advice for Yacht Charterers
09 Mar 2021
The VAT applied on superyacht charters in EU waters has changed dramatically over the last few decades and even more so in the last few years. The team at Ocean Independence continue to take extensive advice and regularly attend meetings regarding the most up to date VAT news to ensure that charterers are well informed regarding the latest regulations.
Here we present a round-up of the latest protocols regarding VAT in relation to your charter and its application across the EU and beyond. However, should you have any questions regarding specific itineraries, please check with your Ocean Independence charter broker.
How is VAT applied to my charter?
In general, VAT is applied to the full charter fee and then determined by the country in which you commence your charter, i.e. the port of embarkation. VAT is also applied to any delivery and/or redelivery fees. VAT amounts will be shown clearly on page one of your MYBA Charter Agreement and there may also be a 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 by you 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.
Can I qualify for reduced VAT?
In some cases, time spent cruising outside of EU waters during your charter can be proportionately offset against the full VAT payment you make prior to the charter and any excess VAT will be reimbursed. However, be aware that for small amounts of time spent outside EU waters any VAT advantage may be negligible, when fuel costs are taken into account.
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 countries, VAT will always be applied at the rate of the country of origin, ie if starting in France or Monaco – 20%, if starting in Italy - 22%.
1. France and Monaco
In France and Monaco the standard rate of 20% French VAT is due on charters (and delivery/redelivery fees) originating in France and in Monaco, regardless of the port of disembarkation.
In Italy, the updated new Italian VAT law came into effect in June 2020, therefore the standard rate of 22% Italian VAT is due on the charter fee and any delivery/redelivery fees originating in Italy, regardless of the port of disembarkation.
For all charters starting in Spain, VAT is set at a standard rate of 21% of the charter fee and possibly on delivery and redelivery fees (please check with your Ocean Independence broker). 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.
For any charter commencing in Croatia, VAT on the charter fee is applied at 13%, although a day charter in local waters will be charged at the rate of 25%. The 13% is a reduction on the country’s standard rate of 25%, so no further reductions can be applied. However, VAT is not due on delivery and redelivery fees. For charters starting outside of EU waters, Croatian VAT is due on a pro-rata basis based on the number of days spent in Croatian waters.
VAT on charter has historically been charged but currently no formal guidelines have been finalised for 2021. We will update upon confirmation of these.
For charters in Turkey on Turkish-flagged commercial vessels, 18% VAT is applied to the charter rate. Foreign flagged commercial vessels need not pay VAT but must pay a cruising permit fee, which is based on the length of the vessel. A foreign flagged vessel must also then clear out of Turkish waters after the guests have embarked and cruise into international waters, before clearing back in and continuing the charter in Turkey.
For any charters of less than 90 days starting in Malta, VAT is applied at the standard Maltese VAT rate of 18%. This is regardless of the port of disembarkation.
For more information on VAT regulations relating to your yacht charter, please contact us or speak to your Ocean Independence broker.