When browsing listings for charter in the Med, clients can often overlook one additional consideration: Value Added Tax (VAT). VAT on superyacht charters in the European Union can represent a huge regulatory hurdle. Add Europe’s varying languages and local administrative rules and regulations to a busy charter season, and suddenly the directive can seem insurmountable. SOS Yachting is a leader in VAT representation, having served international clients for more than a decade. It works with more than 700 superyachts, processing nearly 2,000 charters in a given season. We asked SOS Yachting to share the most common questions and misunderstandings related to VAT on superyacht charters in the EU.
Q: How long has Europe used VAT, and why is it due on charters?
The concept of indirect tax dates back to 1918. France implemented the modern variation of VAT in 1954. Until 2010, however, EU member states and yachting professionals tended to widely interpret the VAT directive. Up to that point, they considered the supplies, fuel, charters, and even the hull of commercial yachts engaged in trade exempt from VAT. At the end of 2010, though, the European Court of Justice determined that a yacht chartered by a customer for leisure is no longer a VAT-exempt transaction. Consequently, VAT on superyacht charters of less than 90 days became payable at the applicable rate of the European country where the supply of services takes place, or where the charter starts.
Q: Is VAT identical across Europe?
Each country has its own VAT rate. Specifically, Croatia’s rate is 13 percent, while Greece’s rate varies from 5.2 to 13 percent. France’s rate is 20 percent, Italy’s rate is 22 percent, and Spain’s rate is 21 percent. Additionally, there are potentially two considerations. Firstly, VAT gets paid on the charter fee, and secondly, VAT gets paid on the APA (Advanced Provisioning Allowance) in some countries, not all.
Q: Does my itinerary impact the amount of VAT we need to pay?
No, VAT is due regardless of your itinerary and due to the country where your charter begins. So, for example, if your charter starts in Antibes, France and ends in Dubrovnik, Croatia, you owe VAT to the French authorities.
Q: For charters in U.S. dollars, can I pay VAT in dollars, too?
Unfortunately, no. Your VAT invoice will reflect a conversion from dollars to euros according to the conversion rate the date your charter ends. After you sign the charter contract, but before boarding, you’ll need to provide three payments. These are the charter fee, the APA, and the full VAT.
Q: Are any European countries not part of the European Union?
Although Europe consists of 27 countries, three along its charter coastline aren’t EU members. They are Montenegro, Albania, and Gibraltar. Sometimes, even if you leave from a non-EU country, you can still owe VAT if you cruise through EU member waters. For instance, if you leave Montenegro and cruise through Croatia, you’ll owe VAT on the number of days you spend in Croatian waters.
Q: Do I have to pay VAT on the APA in Italy and France?
Yes, it’s due on all your expenses that the APA covers. So, even when some goods or services are VAT-free, or purchased for you outside the EU (like fuel in Gibraltar), you still must pay VAT at the end of your charter.
Q: Is Croatia part of the EU?
Yes, it became a member state in 2013. As of January 1, 2023, Croatia is the 20th country to join the euro currency zone. So, VAT on superyacht charters there is in euros.
Q: Is it easy to charter in Greece?
Some people consider Greece the trickiest charter destination within Europe, although the government just established an easier format as of June 22. For many years, only Greek-flagged yachts could book charters. Now, EU- and non-EU-flagged yachts exceeding 35 meters (115 feet) will be able to obtain a special charter license. It comes with certain conditions, which we are familiar with and can explain to owners wishing to offer their yachts for charter there.
SOS Yachting sosyachting.com
Leave a Reply