VAT obligations for superyacht owners during Covid-19

By Rachel Purnell, Senior Manger - VAT and David Prescott, Consultant - VAT

This year’s yachting season has started out quite different to the norm with uncertainty around charters and much less activity than usual. Here Rachel Purnell and David Prescott from Equiom’s VAT team answer the top five most frequently asked questions regarding VAT obligations during this challenging chartering season caused by the global Covid-19 crisis.

If a booked charter is cancelled due to Covid-19, do I still need to pay the VAT that was due on the charter agreement?

No – VAT is only due where a supply of the yacht has actually taken place. Consequently, charter fees (including VAT where appropriate) can be safely refunded, as no VAT liability will be payable to a Member State.

Will the changes to VAT on charters commencing from either France or Italy still apply from 1 April 2020?

France and Italy both declared on 1 April 2020 that the previously announced changes to VAT on charter fees have been withdrawn. The existing VAT regimes for charters commencing from France or Italy remain unchanged.

If I have to pay EU VAT, when am I required to make this payment?

The requirement remains to submit VAT returns by their due date. However, due to the current emergency, several Member States have already announced that they are deferring the ‘payment due date’ for a period of up to 2 months and they will not penalise late payments.

It is understood that a commercial charter yacht should predominantly be used for business representing supplies to third parties. Taking account of the current exceptional circumstances, will there be problems if I am unable to find charterers for my yacht in 2020, meaning that the owner is the main user of the yacht?

While there have been no official announcements to date, it is hoped that Member States will take a pragmatic approach in what will be a very challenging charter market in 2020. It remains important therefore that business use of charter yachts continues to be earnestly pursued and every effort made to attract charterers for the yacht.

Is there anything that I should do to prepare for when yacht chartering can recommence?

Eventually, these exceptional and trying times will end and yachts will resume charter activities. To avoid inevitable delays we recommend that you ensure your yacht is charter ready, has all necessary charter licences in place and is VAT registered / fiscally represented in the Member States where you plan to charter.  

If you have any questions relating to superyacht VAT, please contact Rachel or David. 

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein 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.