When planning your dream yacht charter, it’s important to understand the taxes, especially VAT (Value Added Tax), that may apply to your booking. VAT is a consumption tax that is added to the charter fee and varies by country. This guide will explain how VAT works, what you need to know for a smooth experience, and the VAT rates in different countries.
VAT, or Value Added Tax, is a tax applied to the price of goods or services in many countries. When it comes to yacht charters, VAT is usually added on top of the charter rate. It’s important to know that VAT is calculated based on the charter fee, excluding the Advance Provisioning Allowance (APA) or any extra costs, like fuel or port fees.
Here are a few things you should know about how VAT works for yacht charters:
Added to the Charter Rate: VAT is calculated on the charter rate and added to the total cost.
When Is VAT Due?: According to contracts like MYBA and CYBA, VAT is typically due 30 days before your departure date, along with the balance of the charter fee and any APA.
Jurisdiction-Specific: The VAT rate depends on where the yacht is operating. Even if the yacht is in international waters, the VAT rate of the country where the charter begins or ends will apply.
Here are the VAT rates for yacht charters in several popular European destinations:
| Country | VAT Rate | Details |
|---|---|---|
| France | 20% | Full VAT applies for charters starting in French waters. |
| Italy | 22% | Full VAT applies for charters starting in Italian waters. |
| Greece | 13% | VAT varies, with reductions for longer charters and certain yachts. |
| Spain | 21% | Full VAT applies for charters starting in Spanish waters. |
| Croatia | 13% | VAT is mandatory for charters starting in Croatian waters. |
| Turkey | 20% | Full VAT applies for charters starting in Turkish waters. |
| Slovenia | 22% | VAT applies to the full charter fee for yachts in Slovenian waters. |
| Cyprus | 19% | Reduced rates may apply for charters, including non-EU waters. |
| Malta | 18% | Rates can be reduced for charters in international waters. |
| Sweden (Stockholm Archipelago) | 6% | VAT applies for charters starting in the Stockholm Archipelago. |
Some non-EU countries also charge taxes on yacht charters. Here’s a quick look at the VAT rates in popular destinations:
| Country | Tax Rate | Details |
|---|---|---|
| Bahamas | 4% Sales Tax + 10% VAT | Both taxes apply to the entire charter fee. |
| Maldives | 12% GST | Applies to charters within Maldivian waters. |
| New Zealand | 15% VAT | Applies to charters within New Zealand’s territorial waters. |
| French Polynesia | 5% VAT | Applies to charters starting in French Polynesian waters. |
Charters Starting in VAT Countries: If your yacht charter begins in a country that applies VAT, you will pay VAT based on that country’s rate.
International Waters: Some countries have rules that allow for a reduced VAT rate if the yacht spends time in international waters. For example, in France and Italy, if your yacht travels outside of the EU, you might be eligible for a partial VAT refund.
Split Itineraries: If your charter crosses multiple countries, VAT may be applied based on the time spent in each country's waters. The tax will be prorated according to how long the yacht stays in each jurisdiction.
Understanding VAT and taxes on yacht charters can be complex, but with the right guidance, you can navigate these waters without any issues. If you’re looking for expert advice on managing VAT and other taxes for your yacht charter, Breaking the Mould Accounting Limited is here to help. Our team of professionals specializes in ensuring your charter experience is smooth and tax-compliant, allowing you to focus on enjoying your time on the water.
Contact Breaking the Mould Accounting Limited today for personalized support and expert advice tailored to your specific needs. Let us help you break the mould and get the most out of your yacht charter hassle-free!