For a few years, charter yachts built stateside had to pay a steep duty when operating in European waters. This regulation impacted tenders built stateside and in use aboard charter yachts there, too. However, the European Union (EU) has suspended the retaliatory tariffs against American-built charter yachts and tenders. It’s promising news for the upcoming Mediterranean season.
On June 22, 2018, the EU placed a 25-percent duty on U.S.-built yachts chartering in Europe. Specifically, the fee was on the value of the hull, versus the charter rate. It was part of a response to the United States taxing imported metals from all countries except Canada and Mexico. Imported steel, for instance, garnered a 25-percent duty. Similarly, the U.S. government taxed imported aluminum by 10 percent.
The European Committee for Professional Yachting (ECPY), a trade association, began negotiations with the French Customs Service about the tariff shortly after its enforcement. It did so because the majority of charter yachts use France as their summer base. While it successfully obtained clarifications, the duty remained. Some American yacht owners therefore kept their vessels in U.S. waters or in other regions of the world. American export boat and yacht sales suffered as well.
The United States and the EU agreed to drop the respective tariffs in early November 2021. They further agreed to an effective date of January 1 of this year. Additionally, they agreed to replace the duties with a tariff-rate quota (TRQ). This allows a quota of historically based volumes of metal products to enter each region duty free. Therefore, American-built charter yachts that didn’t previously formally import into the EU can enter without paying the extra duty.
Owners of yachts that did import into the EU prior to June 22, 2018 have a condition to digest, though. If the yacht is still theirs, she must have one completed charter, anywhere globally, prior to the end of 2021. Without this, no commercial exemption occurs this year if they return to EU waters to charter.
Another issue faces American-built charter yachts that imported into the EU after June 22, 2018 for bookings under a French commercial exemption. For a limited time, some of them weren’t liable for the duty. Those same yachts cannot benefit from the commercial exemption this year if they’re under the same ownership as they were in June 2018 and chartered in the EU that summer. But, if the yacht sells to a different owner prior to importation this year, the new owner won’t have to pay for the past omission.
To determine what impact the revocation of the tariff has on your yacht, consult your maritime attorney and tax advisors.
European Committee for Professional Yachting ecpy.org
Leave a Reply