Chris is the founder of Dominion Marine Corporate Services. An ACIB qualified trustee, Chris worked for the Williams & Glynns Trust Company (RBS) in London ...Contact Chris Allix
An Alternative Solution to Temporary Admission Relief
The Mediterranean summer season is now in full swing with clients deciding whether or not, and how to sail in Europe. As the superyacht industry is aware, European Customs are getting stricter with regard to the operation of superyachts, with two principal methods of clearing Customs:
You can import a yacht under the French Exemption, but then the yacht must charter to third parties and each time the client uses their yacht there must be a charter contract in place at the full commercial rate with VAT paid.
The YET (Yachts Engaged in Trade) scheme is in place for Cayman Islands and Marshall Islands registered yachts in Temporary Admission, but this only applies to charters commencing in French or Monegasque waters.
You can import the yacht under Temporary Admission Relief (TAR) and in most European countries there is no actual documentation, just a verbal declaration on arrival. However there are some very strict rules to be observed:
(a) The yacht can only be used by the client and their immediate family, except under the YET scheme in France and Monaco.
(b) These family members cannot be resident in the EU (this is different from being a non-EU citizen).
(c) The yacht can only stay in EU waters for 18 months.
These restrictions can now be mitigated by Dominion Marine’s Cyprus Rental Solution which allows the clients friends and family to use the yacht (whether resident or not in the EU) without the client being present, thereby also removing the 18-month time restriction.
The yacht can be formally imported into Europe, thus being under ‘free circulation’ and deferring VAT by calculating the tax on the annual depreciation, which has been agreed at a minimum of 3% (subject to a professional valuation), and the rate of tax being 19%.
The solution is based on a Cypriot five year bare boat charter, but with no penalties for early termination. Hence, if the rules or rates in Cyprus change, the rental agreement can be terminated and the yacht reverts back to TAR.
Dominion Marine developed the solution with a ‘big four’ accountancy firm in Cyprus, and with this structure in place there is no requirement for the yacht to sail to Cyprus. There is also a high degree of ‘Asset Protection” since the client is the renter, not the owner of the yacht.
Should the client decide not to return to EU waters or to sell the yacht at some point during the rental period, the contract would be cancelled with a credit note for the remaining period and the VAT would be reclaimed accordingly.
For further information, please contact Dominion Marine on firstname.lastname@example.org or telephone +44 (0) 1624 682400