cautions, “These 3 points are particularly relevant form a VAT perspective.”


He continues, “The manner in which the crew shall be employed (whether directly by the owning company or via a crewing agency, is important too. In the case of the latter case the specifics of the arrangement need to be well established because they could have an impact on social security issues. Finally, he adds, “You must look into what form the ownership structure is envisaged. Will it be through a company or owned outright by an individual?”


COMMERCIAL YACHT If the yacht is intended for commercial use, VAT will not be payable on the acquisition of the yacht if she is transported from one Member State (Netherlands where she is under construction) to another Member State in which the owning company will have a VAT number.


This will constitute and Intra-Community Acquisition (ICA) with the place of supply being the country to which the yacht is delivered, where input VAT is claimed in the same VAT declaration recording the acquisition, resulting in a VAT neutral transaction. Under this scenario, VAT on the consequent use of the yacht would


be payable, whether the yacht is used by a third party charterer or the owner, in which case VAT on arm’s length charter prices is payable.


For a yacht to be registered as a commercial yacht under the Malta flag, she needs to be compliant with the Maltese Commercial Yacht Code. Being built to LY3 specifications, there is no doubt that she will be compliant.


PRIVATE YACHT Here there are three options. The first is where the client’s EU connections (or lack thereof) become relevant. A yacht which is registered in the name of a non-EU owner, owned and used by a non-EU UBO and flying a non-EU flag may enter EU waters without triggering payment of VAT, for periods of up to 18 months each. Since the yacht is being built in the EU, to avail of this Temporary Importation (TI) regime, the yacht would need to be formally exported upon delivery by the builder, and re-imported by the new owner, satisfying the aforementioned conditions. No commercial activity is permitted whilst the yacht maintains TI status.


The second option, from a VAT perspective, for private ownership is the outright payment of VAT applying the Dutch rate (as the place where the supplier is established), unless


JERSEY SHIPS’ REGISTRY Jersey has had an active ships registry since 1803, and now has over 2000 vessels based all over the world. With a well-regulated offshore finance centre, Jersey also has the associated maritime legal, company formation, and banking expertise to assist potential owners to register at the Island Port. The Island has been white-listed as a transparent and well-regulated offshore finance centre by the OECD. Applications are welcomed from British, Commonwealth, and European Union citizens, regardless of residency, as well as from Bodies Corporate incorporated in one of those areas. Pleasure and commercial vessels up to 400 gross tons may be registered. For more details Tel: + 44 (0)1534 447728 or visit www.ports.je/Shipsregistry


the yacht is formally exported and imported in another country, in which case VAT would be payable in the country of import, applying that country’s VAT rate (18% in Malta).


Finally, the third option in Malta for private operation is leasing, whereby the yacht is delivered in Malta to a Maltese VAT-registered owning company, who will then lease the yacht to a ‘third party’ be that the owner himself or a second company. The lease will be for, say, a period of 15-20 years, with VAT (at 18% since the lease will commence in Malta) being payable on instalments amounting to roughly the value of the yacht, spread over the lease term.


This option presents significant advantages of a cashflow nature for larger, more expensive


ONBOARD | AUTUMN 2020 | 59


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