Any pleasure yacht owned by an individual or company, which is resident in the European Union (EU) Customs Union, will have paid VAT on the purchase of the yacht. It will have to account to the VAT authorities of the Member State for VAT on charters whether inside or outside EU waters. A VAT paid yacht will encounter no difficulties in EU waters, provided the vessel is not chartered.

NB. Pleasure yachts built prior to 1985 and in EU waters on 31 December 1992 are treated as having paid VAT.

Gibraltar is an EU territory but is outside of the Customs Union and therefore does not levy VAT.

Pleasure Yachts Entering EU Waters

Pleasure yachts in EU waters are subject to VAT on the cost of the vessel and any charters commencing and finishing in EU waters.

However those pleasure yachts whose owner is non-EU resident or whose charter company is non-EU resident will be free from VAT on entering EU waters in the following cases:

  • As long as the yacht is not in EU waters for more than six months in total in any twelve month period, it can apply for a Temporary Importation Certificate which gives it relief from VAT
  • Any charter commences and finishes outside of EU waters.

Advantages Of Owning And Chartering A Pleasure Yacht In Gibraltar

  • Gibraltar is outside the EU Customs Union, but at the mouth of the Mediterranean and is close to Spain, France, Portugal and Italy
  • Gibraltar is a British port of registry.
  • Gibraltar allows companies who trade outside Gibraltar (e.g. Charter companies) to be Tax Exempt
  • Gibraltar is a tax efficient and cost effective.

NB. The above applies to Spain and France, however in Italy the authorities may seek to charge VAT for the time that the vessel is in Italian waters.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.