Despite the weak economic climate, demand from wealthy individuals and company executives for superyachts is showing signs of strong growth, according to Jersey-based trust and fiduciary provider, Vistra.
Offshore marine yacht registrations are rising along with sales of superyachts to wealthy individuals in the emerging economies of Brazil and China, which recorded a 29% rise in 2011 compared with 2010. In Malta, some 300 super yachts were registered in 2011, representing an increase of 19% on 2010 figures, according to Maltese transport minister, Austin Gatt.
However, Marina Gall, Director of Marine and Aviation at Jersey-based Vistra says getting the structuring right at the outset is vital, if complex tax and customs issues are to be avoided later on during ownership.
"We always tell clients to take advice as early as possible and to have clear understanding how they might operate their vessel, both in terms of geography and whether commercially it will be chartered, for example, as all of this can impact upon the best way of structuring ownership.”
Your resident status also has an impact. Under EU VAT law, all yachts owned or used by EU residents are liable to VAT and owners must be able to show that VAT has been paid before they may enter EU waters explains Gall.
Gall says there is, however, a concession open to non-EU persons, under which vessels purchased outside of the EU may be temporarily ‘imported’ into the Union - or more strictly in the 'customs territory of the Community', which includes the EU’s territorial waters)- and used for private purposes, without customs duties or VAT needing to be paid.
And although VAT laws are to some extent harmonized across the EU, the rules and rates vary considerably from country to country. It may therefore be advantageous to consider paying VAT in a country which has relatively low rates of VAT, such as Cyprus (17%) or Malta (18%) or importing a vessel to certain territories which are outside the EU for VAT purposes, such as Gibraltar or the Channel Islands.
Gall adds, however, a note of caution: "With EU member states increasingly cracking down on all forms of tax avoidance, especially by high-net-worth individuals, the penalties for breaking VAT rules, whether by accident or design, can be severe."
She stresses that seeking expert advice is crucial, particularly if a vessel is to be used within EU waters, for example in the Mediterranean or the English Channel.
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