DUTY CALLS

Since the 22nd of June 2018 Europe imposes a 25% import duty on American built yachts as a direct response to the US enforced tariffs on steel and aluminium. Note, this is not about American owned yachts or American flagged yachts but yachts which are built at an American shipyard.

It has taken some time to obtain clarity as to what this actually means for yacht owners but we finally have some clear answers although sadly, you might not like them.

For example, when an American built yacht enters the European Union for the summer charter season, do they need to pay 25% duty on the value of the yacht? Unfortunately, the answer is yes. However, there are some exemptions. If an American built yacht has cleared into European waters in a commercial capacity in the last 3 years, it can return to Europe without paying the duty as long as it has remained in the same ownership and can demonstrate that it has remained commercially registered in the intervening period. This can be a solution for some owners. But many American owners don’t keep their yacht commercially registered all year around and will therefore lose the possibility to come back to Europe without paying the duty.

How about using the American built yacht privately for the summer season in Europe and operate under the Temporary Admission regime? This is also still possible but only if all guests are not European tax residents. And this is of course creates a huge limitation of the use of a yacht.

What does it mean for an owner who wants to buy a yacht? We can only advise clients not to buy an American built yacht until such time as this duty is repealed, should you ever want to use the yacht in Europe in the future. The exception being that you are happy to pay the 25% duty on the yacht of course.

And last but not least, what if only the tenders are American built? This is very important because brands like Novurania have a large market share. As long as the tenders do not have their own registration, they will be seen as part of the equipment of the mothership and no import duty has to be paid if the mothership is not American built. Chase boats, which are towed by the mothership, will be treated like a separate yacht and if they are American built, follow the rules as mentioned above.

As you can see, the regulations are never simple and the risks are quite high if you have it wrong. Please contact us at TWW Yachts if you have a question what these import duties will mean for your specific situation.