VAT is, as ever, still a bone of contention, and the indications that individual EU member states are now likely to require charter yacht owners to charge ,and account to them for VAT on charter fees earned whilst operating in their territorial waters, may well prove to be the kiss of death to longstanding cosy arrangements whereby certain member states have essentially made money and built up thriving national industries constructing and supporting fleets of super or mega yachts ,through offering their owners generous and tax advantageous operating/acquisition arrangements.
It is particularly interesting the France and Italy now appear to be leading this charge, having so successfully attracted such large yachts and owners, to the point where more modest craft, or owners with limited means, long ago departed, having found it impossible to find, let alone even temporary moorings in the more popular marinas.
There is inevitably much concern at the manner and the pace with which these changes of policy are being implemented, some commentators suggesting that the French and Italians are introducing changes by stealth, intending to “catch” and shake down unwary owners.
Whatever the truth, the reality is that given the present economic climate, the provision of such tax breaks and incentives to conspicuously wealthy owners is a political hot potato, and indeed various struggling euro zone economies, prevented from exercising independent measures to balance the books, will find the concept of raising additional taxes through targeting such wealthy(largely foreign owned) yachts too popular to resist, even if, as in the case of Spain ,this causes their wholesale exodus to France .
With a series of high profile arrests and detentions throughout Mediterranean EU countries last year, such owners will be rightly anxious about operating their craft in, or out of, those jurisdictions. These “Golden Geese”, operated and owned by astute individuals, are accordingly seeing the way of the world, and taking flight to more sympathetic climes.
It is accordingly unsurprising that non-EU countries ,ranging from old favourites such as the Caribbean and Turkey ,to new “Boutique locations “such as Montenegro, are seeing dramatic increases in the numbers of large vessels now based there, fuelling local demand for moorings, accommodation and services ,and adding greatly to the local economy.
All good so far, but many predict that the unrestricted construction of the marinas, and the other grand shore side developments which inevitably ensue, will destroy the comparatively cheap and relaxed charm of these locations, the very features that initially attracted the smaller yachts and their owners, fleeing from, or displaced by these Superyachts .
The Med is a big place, and there are many places where a well found yacht and capable independent crew can still get away from it all .If the recent unrest in countries bordering the Eastern and Southern Mediterranean can be resolved, and these struggling democracies thrive, then they too will undoubtedly also benefit from owners looking for new and more interesting bases from which to operate their craft. In that event, “ordinary” yachts may be able to afford to return to the Riviera.
There is however a sting in the tail as far as positioning vessels outside the EU is concerned. Even proper” VAT paid “vessels will lose that status if they are kept outside the EU for a period in excess of three years, or if such a vessel is sold whilst outside the EU. It is also not widely recognised that, for these purposes, the Channel Islands fall outside the EU.
We were recently instructed to act on behalf of a Purchaser who had already contracted to buy a vessel, VAT paid, where she lay in the Channel Islands. Had the transaction proceeded as originally agreed between the parties, then a significant VAT liability would have been incurred once the vessel was brought back to the UK as our client intended. Fortunately, we were able to renegotiate the agreement and hold the purchase money to order pending the completion of the sale occurring once the vessel had been cleared back into the UK.
With the clear resolve by many national authorities to collect as much Tax as possible, it pays to get clear and expert advice before undertaking any dealings with vessels which may have uncertain VAT provenance. Craft that has been subject to a lease arrangement, or has been owned or operated by commercial organisations, or outside of the EU can all provide significant traps for the unwary prospective purchaser, and even for unwitting Vendors and their Broker Agents.

If you have any experience of these matters then we would like to hear from you.