Where a yacht is imported into EU waters with the intention of re-exporting, it may be temporarily brought into the EU and used for private purposes without customs duties or VAT being paid on the value of that yacht. This option is available by persons who are not EU residents, that is by persons established outside the EU.
Temporary Importation Procedure Available to Non-EU Yacht Owners
Temporary importation may be affected in any member state of the EU, including Malta. Should you opt to avail of this solution, the Customs Authority in Malta will require the provision of a security or guarantee to cover the payment of the customs duties and VAT which would become due if the yacht does not leave EU territory.
The temporary importation procedure enables the yacht to stay within EU waters for 18 months and can move freely with no further customs formalities during this period. If the boat is laid up for any period of time it is also possible to disregard such laid up period for the purpose of reckoning the 18 month period.
Onward Supply Relief (OSR) - An Attractive Solution
Goods imported or dispatched from a third territory are subject to VAT on the taxable value of the goods in the first State of destination within the EU.
The OSR is particularly an attractive solution when yachts are being imported into the EU for a commercial use (not in Malta), due to the fact that the consignee, being identified for VAT purposes in the member state of final destination, would only be required to account for the transaction as an intra-community acquisition of goods, effectively resulting in the cash outflow of VAT not being required.
As part of the processing of OSR documentation, the person making an importation of the yacht into Malta must provide the Director General of the Customs Department, a bank guarantee for 10% of the value of the VAT which would be due in Malta, capped to a maximum of ?23,500.
OSR provisions allow the exemption from the payment of VAT due on importation of the goods from a third territory when the place of first destination is Malta, insofar as the goods
are intended for the subsequent dispatch to another EU member state as an intra-community supply following their release into free circulation authorised by the Maltese customs.
These provisions also find application on the importation of yachts into the European territory, and are an effective tool to relief the immediate payment of VAT on import, whilst achieving the objective of having the yacht released into free circulation within the EU borders. Whereas any applicable customs duties are to be paid in Malta on the importation, VAT would be paid or accounted for in the member state of final destination.
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.
