To help Owners, Captains and their advisors to be well informed and prepared we look briefly below at the latest yachting fiscal news in France, Italy, Greece and Croatia. We will not speculate on the potential implications of Brexit at this stage as we consider it to be premature.
What is new for Yachts in France?
Clarification on Import / Export formalities
The following question is often raised by Captains and Brokers: when do yachts need to be exported and re-imported?
In order not to lose the benefit of the importation made under the French Commercial Exemption Regime, non-EU commercially registered yachts would need to be temporary exported if they leave EU waters for a season (ie: leaving the EU to spend the winter season in the Caribbean) and for a maximum duration of three years and be always used under commercial registration while in France.
No export / re-import formalities will be required by French Customs for non-EU commercially registered yachts starting their charters in the French Riviera, sailing through Mediterranean waters and extending the cruise to Montenegro or Gibraltar for instance, as long as the same yachts will come back in EU waters during the course of the charter season.
Pay attention though as Customs from other countries and mainly from Spain might not have such a relaxed view.
No specific export / re-import formalities will be required for EU commercially registered yachts.
Make sure you seek proper advice before leaving EU waters even temporarily as rules change very rapidly and as all countries do not share the same position.
No more Cabotage Declaration for commercial yachts validly operating under the French Commercial Exemption
After pressure from several associations led by ECPY and MYBA and common actions taken following the publication and enactment by the French Government of the “Décret d’ Etat d’Accueil”, commercial vessels below 650 GT that operate between French ports will not need to complete anymore a ‘Declaration of Activity’ 72 hours prior to a charter; provide evidence of affiliation with national social security institutions; provide seafarers with contact details of the French Labour inspection office and translate documents into French and amend Seafarers Employment Agreements accordingly.
These requirements will be waived as long as the relevant yachts can demonstrate that they comply with the new 70% criteria required to benefit from the French Commercial Exemption. So no changes for commercial yachts imported and / or operating under the French Commercial Exemption regime, as long as they can prove that they do more than 70% of their trips outside of French territorial waters.
This is without any doubt an important relief for the yachting industry as with over 4500+ yachts operating in the Mediterranean this Season, the implementation of the “Decret d’Etatd’Accueil” would have had important cost implications amongst others.
French or national social security compulsory in the future?
There has been a lot of fuzz these last months about French Ministry of Labour & Employment wanting to render compulsory the affiliation of crew members navigating in French waters towards a national social security regime in line with the provisions of the MLC 2006 Convention.
French resident crew members would have to subscribe to the French Social Security regime, while the non-French resident crew members working on board foreign yachts chartering in France, would have to prove that they are registered with another national social security regime.
Owners will need to be mindful of the potential ramifications of the revised Labour Directives and associated cost implications.
This is to be closely monitored as it will have a major impact on the yachting industry, and might lead to yachts avoiding France, especially as so far, all other countries accept for crew members to be covered by proper private accident and medical covers.
What is new for Yachts in Italy?
Simplification of export formalities for yachts sold to non-EU Owners (individuals or owning companies)
Until May 2016, in order to be able to benefit from the VAT exemption on the hull in Italy, new builds or second hand yachts sold to non-EU owners had to be formally exported with proof remitted to the Builder / Seller that the yacht touched a third country port within three months from delivery.
Since 12 May 2016, it is not necessary to touch a third country port anymore as per Italian Customs Authorities Circular published on the same date.
Now non-EU Owners could also opt for their yachts to be delivered in International waters before being able to enter again EU waters and operate either under Temporary Admission or being formally imported.
Specific formalities would need to be gone through with the Harbour Master and an Owner’s Declaration stating that the vessel was delivered in International waters (beyond the 12 miles limit) supported by an AIS screen shot provided.
These new measures will certainly ease the sale process of such kind of yachts as Tunisia and Turkey are not safe places to sail in anymore and quite far for doing just a “touch and go”.
First yachts imported in Italy in exemption of VAT
Savona Customs recently proceeded to the first importations of commercial yachts in exemption of VAT.
Will Italy steal the spotlight to France for importing commercial yachts in exemption of VAT?
The future will tell us, especially as yachts imported in Italy do not have to comply with the 70% criteria to maintain their VAT exempted status and import benefit.
The future will also tell us how the rest of the EU countries will welcome the yachts which have been imported in Italy.
This is to be followed as Italy could become the new major player as far as importations are concerned in the future.
Clarification of the VAT applicable on the APA in Italy
There has been a lot of confusion these last years with regards to the APA on charters.
Things have now been clarified; there is no VAT to add on the APA stated in the charter agreements.
However, any provision and fuel acquired by the yacht in exemption of VAT for and on behalf of the charterer shall be recharged to the charterer at cost with VAT. All provisions acquired directly by the charterer shall be VAT inclusive.
Make sure you review carefully the APA statements and that the correct information is remitted to your local fiscal agent at the end of each charter.
What is new for Yachts in Greece?
Another VAT increase for Greece.
Since 1 June 2016, Greek VAT increased from 23% to 24%. This is the sixth VAT increase in six years. Without any doubt this will have some negative repercussions within Greece’s superyacht charter market and on tourism.
Vessels chartering for a period of 48 hours or less are not entitled to any VAT rebate anymore and are therefore subject to the full 24% VAT rate.
For vessels chartering for a period exceeding 48 hours we have to distinguish between:
Category I vessels;
which are vessels that have been granted permission to perform international cruises, which are entitled to a 60% VAT rebate. Therefore, the VAT rate applicable to these vessels is now 9.6% instead of 9.2%; and
Category II vessels;
which are vessels permitted to perform long range cruises within Greek waters, which benefit from a 50% VAT rebate. Therefore the VAT rate applicable to these vessels is now 12% instead of 11.5%.
We need to stress though that the above rates apply to Greek yachts or foreign EU registered yachts operating under a Greek charter licence. No proper and perfectly legal solution exists yet for foreign companies starting a charter in Greek waters, to pay VAT in Greece by appointing a Greek fiscal representative like in other EU countries (ie: France, Italy, Spain, Croatia).
For these yachts it is still advised only to terminate charters in Greece, not to start them in Greece and especially for yachts cruising in Italy during the course of the same charter.
What is new for Yachts in Croatia?
Appointment of a Croatian agent mandatory for vessels over 45m
The Croatian government has implemented a new regulation that requires all superyachts over 45m to appoint a local agent, should they wish to cruise in Croatian territorial waters. This new regulation is an extension of the European Union’s Directive 2002/59/EC, a directive that previously only applied to commercial vessels in Croatia.
Directive 2002/59/EC aims to improve maritime safety, port and maritime security, environmental protection and pollution preparedness by efficiently monitoring maritime traffic and transport. The implementation of Directive 2002/59/EC in Croatia requires vessels, now including yachts over 45m, to be monitored by the Croatian Maritime Information System (CIMIS), which can only be used by registered Croatian marine agents.
Superyachts over 45m arriving in Croatia without having previously appointed a Croatian agent will not be granted clearance documentation.
This small, and otherwise benign, change of regulation should, in theory, cause very little disruption to the Croatian superyacht market. However, this is dependent on charter brokers, yacht management teams and captains being informed in a timely and concise manner to ensure errors are avoided in Croatian waters and the necessary agencies are contacted in advance.
Intensification of random inspections on board commercial yachts in Croation waters
We have been made aware that Croatian Authorities have increased the random inspections on board yachts with the aim to detect mainly:
- Yachts which operate fraudulently under Temporary Admission having EU Ultimate Beneficial Owners;
- Yachts which operate legally under Temporary Admission but which have stayed in EU waters in excess of 18 months;
- Yachts operating commercially but mainly used by their owner.
More than ever the choice of operation of the yacht (private versus commercial) is of paramount importance.
Owners and Captains need to be well informed and prepared.
For more information or advice on the above legal and fiscal matters please contact:
Yacht Ownership & Administration Department Manager
Rosemont Yacht Services
Les Villas del Sole
47-49, boulevard d’Italie
Tel. +377 97 97 21 41
Fax. +377 97 97 21 51
Web : www.rosemont-yacht.com