SEA N SEA
30m | Ocean Alexander | 2016
When it comes to organising a yacht charter in the Mediterranean or elsewhere, one important consideration which can easily be overlooked is that of Value Added Tax (VAT).
As a complicated, ever-changing discipline, understanding VAT on superyacht charters can feel like a major hurdle, especially when Europe’s many different languages and local administrative rules are taken into account. Here, we tackle some of the most common questions around superyacht charter VAT, to help you have one less thing to think about this season.
As a general rule, VAT is applied to the full charter fee and determined by the VAT rate of the country where your charter begins, meaning that the amount paid is not affected by your itinerary. For example, if a charter started in France, and ended in Croatia, VAT would need to be paid to the French authorities. In addition, VAT is also applied to delivery and/or redelivery fees, which again, are subject to location.
Each country has its own VAT rate and this can vary quite significantly between countries. At the time of writing, Croatia’s rate is 13%, Greece’s rate varies from 5.2-13%, France’s rate is 20%, Spain’s rate is 21% and Italy’s rate is 22%. Notably too, in some (but not all) countries, VAT gets paid on both the charter fee, and the APA (Advanced Provisionining Allowance), so this is another factor to take into account.
The VAT is paid in the final instalment of charter fees which are typically due one month before the beginning of the charter. These are held in the stakeholder’s client account before being dispersed to the Fiscal Agent.
Once you have signed your charter contract and before you board the vessel, a number of payments will be due, which could include the charter fee, the Advanced Provisioning Allowance (APA), VAT, as well as security deposits and delivery/redelivery fees. All of the above payments will be specified in your charter agreement, so there should be no unpleasant surprises.
Three countries along the European charter coastline are not members of the EU, namely Albania, Montenegro and Gibraltar. However, in some instances, you can still owe VAT from the time spent cruising through the EU member country’s waters, even if you begin your charter in a non-EU country, such as when you begin a charter in Montenegro (VAT rate 0%) and then cruise through Croatia (VAT rate 13%). In this case, you would need to pay VAT for all of the days you spent in Croatian waters.
Although the VAT rate for superyachts in the majority of the Caribbean is currently 0%, The Bahamas introduced 10% VAT rate on the charter fee from July 2022 for foreign-flagged yachts chartering in Bahamian waters, so this is well worth factoring into your planning.
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