VAT for Yachts

VAT presents particular problems for yacht owners. Yachts often move around the EU and thereby encounter the VAT regimes of the various Member States. The Single Market introduced in 1993 was supposed to create a level playing field with all Member States applying the same rules. It did not.

What is acceptable in one Member State is not acceptable in another. Whilst some EU territories adopt a benign approach to VAT, some authorities have a particularly harsh attitude to the application of VAT on the yachting sector and will apply arguments that they would not consider appropriate in any other sector to collect VAT or prevent VAT refund claims by businesses.

The confusion has increased in 2010 as a result of action by the European Commission to challenge the rules in France (which it considers too generous) and a referral from the Court of Luxembourg to the European Court of Justice of a question concerning the scope of exemptions. Adding to this are new “place of supply” rules from 1 January 2010 and further changes, due in 2013.

CVC’s leading role in this sector means that we act for large firms with maritime interests as well as brokers, charters, manufacturers and owners. We have been obliged to lodge a number of UK VAT Tribunal appeals. To date these have all been settled in our clients’ favour prior to a formal hearing.

Reluctantly, we have been forced to take a robust and uncompromising line with HMRC in this sector. However, a specialist HMRC tax collection team on a mission to collect VAT, whatever the facts, does not present room for compromise.

UK taxpayers operating in the sector must demonstrate similar resolve in seeking fair VAT outcomes.

When dealing with yachts based overseas we have extensive contacts with other specialist firms which allow us to give advice on VAT and Spanish Matriculation Tax issues.