Superyacht chartering in the United Kingdom (UK): A VAT efficient approach to commercial chartering

By Rachel Purnell, Senior Manager – VAT, Equiom Tax Services 

Introduction 

The superyacht industry continues to evolve, with owners, charter operators, and intermediaries seeking smarter solutions for tax efficiency and compliance. In this landscape, the UK has emerged as an attractive jurisdiction for commercial yacht chartering, offering compelling VAT advantages that warrant careful consideration.  

Successfully navigating VAT complexities requires technical expertise, proactive planning, and a well-structured approach. At Equiom Tax Services Limited (ETSL), we work closely with clients to optimise their VAT position and ensure chartering operations remain efficient and compliant for superyachts in the UK and European Union (EU). 

Why charter in the UK? Key benefits and VAT advantages  

Following Brexit on 31 December 2020, the UK became a separate jurisdiction from the EU, with an independent VAT and Customs  status.

The UK has become a favourable destination for commercial yacht chartering from a VAT perspective. The postponement of import VAT and the application of zero-rated chartering activities (subject to meeting the relevant criteria) provides substantial financial savings  for yacht owners, when compared to the EU. 

Commercial chartering in the UK is VAT neutral in respect of: 

• Importing the yacht into the UK 

• Commercial chartering of the yacht in the UK 

Overhead costs incurred during commercial chartering in UK waters, where subject to UK VAT, should be fully recoverable, ensuring operators can maximise efficiency while benefiting from the UK’s VAT neutral framework.   

How does UK chartering differ from EU charters?

In the UK, commercial yacht chartering is classified as a supply of passenger transport service, provided the operation meets the necessary criteria.  This classification allows qualifying charters to benefit from the 0% VAT rate, offering a significant tax savings  for operators structuring their activities correctly.  

To qualify, passengers must be actively transported, with voyages conducted in UK territorial waters. These charters may operate between UK ports or as round-trip journeys, beginning and ending at the same UK port. This contrasts with EU chartering, where VAT treatment varies between jurisdictions, requiring careful navigation of local regulations to optimise tax efficiency.  

VAT planning plays a crucial role in ensuring compliance and financial efficiency. Yacht operators who take a proactive approach to VAT structuring can achieve VAT neutrality, allowing them to optimise operational savings  while remaining compliant.  

Speak to Equiom Tax Services Limited if you would like further information on achieving VAT neutral commercial chartering in the UK:

Achieving a VAT neutral position for commercial yacht chartering requires specialist technical expertise. At ETSL, our Indirect Tax team, with more than 30 years of experience, provides tailored VAT and Customs solutions to ensure compliance and financial efficiency.  

We can assist clients with:  

• Qualify UK free circulation status for commercial yachts  

• Facilitate the UK importation  

• Arrange for the relevant VAT registration and licence requirements  

• Charter contract requirements  

• UK Border force disclosures  

• Ongoing VAT compliance obligations  

Our yacht services are part of Equiom Group’s leading Luxury Asset Services, delivering cost-effective ownership solutions for affluent individuals. 

To explore how Equiom can assist with commercial yacht chartering in the UK, contact Rachel Purnell or Mark A Hagan for expert guidance. 

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. This article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained within this article without obtaining specific professional advice. Please contact Equiom Group to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it. 

For information on the regulatory status of our companies, please visit www.equiomgroup.com/regulatory