As we prepare for the upcoming summer Mediterranean season, we would like to keep you advised of the latest news and updates regarding the VAT on charter contracts. While most of the VAT procedures are unchanged, there have been some new updates regarding reduced VAT in France and Italy. IYC works closely with the Fiscal Representatives in Europe to ensure that we are communicating the correct information and advising our clients expeditiously.
In most countries, a VAT rate will be added on top of the charter fee. An overview of VAT rates and taxes is provided below, however please make sure to discuss with your Charter Consultant as exceptions may apply and rates are subject to change.
For EU member states, the VAT is due in the country where the charter begins, although there are exceptions to the rule. For charters commencing in a non-EU country, but passing-by or ending in an EU country, VAT will be applicable for the number of days spent in the EU country’s territorial waters. Please keep in mind that the owning company must be VAT registered in each EU country where the yacht intends to start chartering. In most cases, the yacht must be imported under commercial registration into the EU.
The VAT rate is 20%. A reduced rate of 10% is applicable for itineraries including navigation in international waters. VAT is also applicable for delivery and redelivery fees. As of March 30, 2020, the 50% VAT reduction will no longer apply for yachts cruising into international waters. Any reduction in VAT will be applied for actual time spent in EU waters. Charter contracts signed and paid prior to March 30, 2020, will not be affected by the new law.
As of January 2020, the VAT rate is 22%. The reduced VAT rate of 6.6% is no longer applicable to itineraries including navigation in international waters. VAT is also applicable for delivery and redelivery fees. The Italian Inland Revenue is expected to meet on February 29th, 2020 to issue a new method for the calculation of the effective use of the yacht outside the EU territory that will allow the Owning Company not to charge Italian VAT on such portion of use.
The VAT rate is 21% for yachts with a Spanish charter license starting charters in Spain. VAT is charged on delivery/redelivery fees. EU flagged yachts can charter anywhere in Spain. Non-EU flagged yachts can only charter in the Balearic Islands and Barcelona. If the owning company has fiscal residency in a country that has no dual taxation treaty signed with Spain then it is subject to a 24% Non- Resident Income Tax.
All yachts starting or end- ing charters in Greece, must have a Greek charter license. The VAT for yachts with a Greek charter license is 24%, however there is a 50% to 60% discount (depending on cruising permits) for charters that last more than 48 hours bringing the VAT down to 12% and 9.6% respectively. There is no VAT for yachts cruising in Greece that do not have a Greek charter license; however, in this case the charter must begin and finish in a port outside of Greece and must not include any change of guests while in Greek waters.
The VAT rate is 13%. All non-EU yachts must obtain a Croatian charter license prior to the start of the charter season.
The VAT rate is 0% while cruising in Montenegro. If the itinerary includes cruising in Croatia, then Croatia’s VAT (13%) is due for each day that the yacht spends in Croatia.
The VAT rate is 0% while cruising in Turkey, however local cruising taxes apply. Yachts with a Turkish flag are taxed at 18%. Non-EU flagged yachts may start and end charters in Turkey as long as they cruise outside of Turkish waters throughout the itinerary.