Found your dream yacht in Europe? Don’t forget about the value-added tax (VAT)!
There’s no denying it: European boats have a style all their own. And today’s global search makes it easy to find what you’re looking for, even if it’s on another continent. But if you’ve got your eye on a boat to buy in Europe, make sure you understand the tax implications and the paper trail—especially if you plan to cruise in Europe for any length of time.
According to Bloomberg Tax, all privately owned vessels used by European Union (EU) residents are required to pay a VAT, which can add a hefty 20% to your sales price. Unfortunately, that’s just the beginning of all the details you’ll need to consider. Tax is rarely straightforward and VAT in relation to yachts is no different. Yacht owners should be aware that each member state has a certain level of discretion regarding the interpretation, implementation, administration, and enforcement of the EU legislation regarding VAT.
This can cause difficulties in interpretation and of course, different members may charge VAT differently on various types of yacht services. For example, yacht owners may qualify for commercial exemption rules in France or Italy and claim VAT-free supplies such as fuel. Charterers may also be able to claim reduced VAT on charter hire for international voyages as well as transport contracts.
So, before you decide to purchase that luxury sloop overseas, read up on the European tax implications or you may find more of your money sailing away!