This publication refers to the sailing of yachts in EU waters, the Malta yacht VAT leasing set-up and the possibility of mitigation on the VAT payable on yachts sailed in EU waters.
EU VAT, which applies throughout all the member states of the EU, is a form of consumption tax system. In accordance with such rules, VAT must be paid on yachts sailed in EU waters. The moment of payment of yacht VAT depends mostly on the ownership of the yacht.
A yacht owned by an EU individual or body corporate, will be able to sail freely in EU waters once yacht VAT is paid in one of the EU countries on the particular yacht .
On the other hand, a temporary relief is available for the sailing of yachts in EU waters principally in those cases where the yacht is owned and used by non-EU persons. Should the non–EU person wish to sail the yacht indefinitely in EU waters, yacht VAT must be paid for the purposes of importing the yacht in the EU.
Malta provides for a system which facilitates the payment of yacht VAT with the possibility of reducing the yacht VAT payable to a rate of 5.4%, through the setting up of a Maltese company which firstly must acquire the yacht, proceed with its lease to a third party and finally ensue with the sale of the yacht. The rate of VAT payable is dependent on the length and propulsion of the yacht.
Such treatment allows yacht owners to sail freely within the EU waters while at the same time benefit from savings on yacht VAT payable on the value of their yacht.
The effective rates applicable are as follows:
- Sailing boats or motor boats over 24 metres in length - 5.4%
- Sailing boats between 20.01 to 24 metres in length - 7.2%
- Motor boats between 16.01 to 24 metres in length - 7.2%
- Sailing boats between 10.01 to 20 metres in length - 9%
- Motor boats between 12.01 to 16 metres in length - 9%
- Sailing boats up to 10 metres in length - 10.8%
- Motor boats between 7.51 to 12 metres in length (if registered in the commercial register) - 10.8%
- Motor yachts up to 7.51 metres in length (if registered in the commercial register) – 16.2%
