Focus VAT in the EU shown by the example charter-business

VAT will be charged to all commercial yachts embarking guests in third countries outside EU, pro rata to the time they spend in Croatia. For instance, if a yacht embarks guests in Montenegro and comes to Croatia for 3 days, charter guests have to VAT tax Croatian VAT for these days.

All non-EU flagged commercial yachts will be allowed to perform charters in Croatia under a charter license (valid for a calendar year). There is no longer a Limit on the yacht’s length in order to perform charters in Croatia. All Non-EU Charter Yachts under this license may embark guests in Croatia. The number of licenses issued might be limited based on the Croatian market supply situation. Commercial Charter providers are allowed to offer and perform charters in Croatia via their own legal structure in Croatia or via local Charter Agencies.

Commercial yacht owners and owning companies from the EU are NOT obliged to have a VAT and fiscal representative in Croatia, while yacht owning companies from non-EU countries ARE obliged to have a VAT and fiscal representative in Croatia.

Private guests on private yachts can be embarked and disembarked in Croatia regardless of flag. In cases where the owner and family members are not onboard, the authorized Captain must hold a guest-list as: 1) names of guests and, 2) length of time that these guests will spend on the yacht. This list of people will have to be authorized by the Captain’s signature and the yacht’s stamp.

VAT for charter activities in Croatia is still 13% for weekly charters and 25% for daily charters.

Read on the topic in boote EXCLUSIV Ausgabe 2/2014 – Charter als Betriebskonzept?

The subject of yacht charter in EU includes: to what extent has EU harmonised the regulations, especially of tax systems. Thus, offering charter services could soon turn into a legal, fiscal and financial adventure for the one who does not consider and prepare his development plan seriously and professionally.

For this, following four basic questions should be answered:

  • How do legal and fiscal policies affect charter yacht in EU? Are there special taxes on yacht?
  • Is a charter approval specific to the country required?
  • Is a legal entity or representative necessary in the respective country via whom the charter Business can be operated due to fiscal aspects?
  • Which VAT is incident upon charter turnover in which country, what is its rate and how can it be transferred?

A complex Matrix should be prepared for these questions:

  • Which flag does the yacht have?
  • Does the yacht owner (natural person or corporate body) belong to EU or NON-EU?
  • Who are the shareholders, if it is a corporate body? Do they use the yacht personally?
  • Are the guestscitizens of EU or NON EU?
  • Where does the charter tour start – EU or NON EU? Which countries are involved and how? Are their proper routes inside or outside the 12 sm [sea mile] zones of countries or mixed tours?
  • What is the duration of tour?

There are legal solutions specific to individual cases; there is no standard solution!

Following is an example only for question IV. Chart V was created in Italy as Croatia was not an EU member then. Today you can apply this to Montenegro instead of Croatia. And since October 2013, the basic Italian VAT on charter is 22%.
Source: SOS Yachting, Milano