EU Virtual Customs Warehouse: Simplifying Luxury Asset Importation & Compliance

Introduction 

Equiom Tax Services Limited’s ‘Virtual Customs Warehouse’ (VCW) facility launched in January 2014 and was born out of requests from our clients and intermediaries to provide a facility where VAT and Customs Duty could be compliantly suspended on luxury assets entering the United Kingdom (UK)/Isle of Man (IoM), bridging a gap in the yachting and aviation services marketplace. 

Our extensive experience in handling a variety of luxury asset importations in both the UK and European Union (EU), together with our Authorised Economic Operator (‘AEO’) status, VAT and Customs Duty consulting expertise, ensured we met the stringent criteria required to achieve VCW authorisation. 

We are now delighted to bring to market an EU VCW service, operated in conjunction with our trusted AEO partner on the ground in Monaco and France. We believe this is an industry-first offering of such a service in these jurisdictions.  

This facility is part of our market-leading yachting and aviation proposition to provide a wide range of cost-effective ownership solutions. 

What is Virtual Customs Warehousing? 

In essence it enables us to suspend the payment VAT and Customs Duty in the EU on the importation of luxury assets. Our VCW proposition can be offered in both Nice and Monaco in order to accommodate yachts and aircraft, providing flexible geographical options to our clients and intermediaries. 

Provided the asset arrives at a specified location in Nice or Monaco, the location where the asset is ‘stored’ (such as the berth or hangar) is designated as the VCW. Whilst the asset remains in the VCW, no VAT or Customs Duty crystallises. Importantly, services provided to the asset whilst it is held within the VCW are treated as services provided outside the EU, resulting in no additional VAT cost. 

When the asset leaves the VCW, it can either then be formally imported into the EU to gain EU free circulation, transferred to a different Customs procedure (such as Temporary Admission or Inward Processing) where appropriate, or exported outside of the EU without incurring VAT or Customs Duty. 

What is the EU VAT liability associated with invoices issued by brokers in connection with the purchase and or sale of yachts and aircraft whilst in our EU Virtual Customs Warehouse?  

In the sale and purchase of ships and aircraft, transparent intermediaries (more commonly known as brokers) almost always act on behalf of their respective principals (sellers or buyers) to facilitate transactions. 

In their capacity as transparent intermediaries (since they act on behalf of their principals) their commission invoices (generally a percentage of the sale price) follow the regime for the sale of the vessel or aircraft and should therefore be issued free of tax when the sale of the vessel is carried out under VAT suspension or exemption. 

Who can use the facility? 

Our VCW facility is aimed at businesses bringing in non-EU yachts and aircraft. There are a variety of circumstances in which an owner, bank, broker, lawyer or aircraft operator may wish to suspend the payment of VAT and Customs Duty when bringing a yacht or aircraft into the EU. These may include, for example: purchase/sale of the asset with title transferring in the EU; mortgage and security registration requirements; a temporary visit to the EU; and/or asset registration amendments. Equiom can provide VCW services for a short or long-term period. Furthermore, our AEO status enables guarantees to be removed, meaning there is no securities or bank guarantee required.   

Summary 

Equiom Tax Services Limited and our trusted AEO partner have obtained full VCW authorisation in France and Monaco, enabling qualifying yachts and aircraft to be stored in the EU with VAT and Customs Duty suspended. Clients using this facility do not need to place securities or bank guarantees, thus bringing flexibility, responsiveness and cost efficiencies.  

Our expertise 

Our VAT and Customs Duty team are highly experienced with the indirect tax formalities associated with importation services. Our aviation services offering is led by the following team members. We would be delighted to discuss your individual requirements in order for us to ascertain the most beneficial and cost-effective solution for you or your client.  

Get in touch, contact Mark A Hagan or Richard McGlashan for more information.  

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 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.    

Details of our Regulators and the authorisation held can be found at: www.equiomgroup.com/regulatory