U.S.-built yachts planning to charter in the Med this summer will be hit with a steep retaliatory tariff. While the tax decision dates back nearly a year, captains, yacht managers, shipyards, and more report its enforcement going into effect now. As much as some details seem clear, however, others are not. Therefore, the European Commission for Professional Yachting (ECPY), a trade association focused on the economic growth of the yachting industry, is clarifying the confusion.
First, some background. In June 2018, the European Union (EU) decided to impose a 25-percent extra tax on all U.S.-built yachts engaged in commercial operation (a.k.a. charter). Specifically, the tax is on the value of the hull. The tax came in response to the United States placing tariffs on imported steel and aluminum. Since that time, ECPY says, it has been negotiating with the French Customs Service, since most charter yachts use French ports as their summer base.
Here are four facts that ECPY has confirmed, in writing. Note that they apply to U.S.-built yachts entering French waters. Despite the 25-percent tariff being EU-wide, thus far other countries have not gone on record as to whether they will enforce it. France has.
1. The tariff excludes private yachts. Privately registered, U.S.-built yachts strictly used for private cruises are exempt. Therefore, this is the same situation as before the EU ruling in June 2018.
2. U.S.-built yachts operating under the Yachts Engaged in Trade (YET) program may—or may not—have to pay the tariff. YET permits privately registered yachts to switch temporarily to commercial (charter) operations. “The Customs’ requirements for this status are still not clear,” ECPY reports.
3. Temporary Admission status provides limited protection. If you place your charter yacht under this status, usually you can import your yacht without additional customs tax. However, French authorities tell ECPY that to avoid the retaliatory tariff, your yacht will need to depart EU waters at the charter’s conclusion, and before the next charter begins. So, you’ll need to head to Gibraltar, for instance, or Montenegro.
4. U.S.-built tenders might not be exempt. Just like with U.S.-built yachts operating under the YET program, your toys could possibly be subject to the tariff. “For tenders that have their own registrations and are built in the U.S., we have requested clarifications to know under which formalities these tenders will be imported, and if they will be eligible to benefit from the “Temporary Admission” status,” ECPY states.
The ECPY remains in negotiations with government authorities to further clarify the tax implications. The U.S. Superyacht Association is also monitoring the situation and attempting to obtain clarification. In the meantime, for your own benefit, consult your yacht manager and/or legal advisor.
European Commission for Professional Yachting ecpy.org