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Yacht Legal

Yacht Legal

Legal Matters for Yachts

What are the requirements to import a boat for personal use?

To import a personal boat into the United States, the following documents should be submitted to the CBP Officer at the Port of Entry:

  • Proof of ownership such as a bill of sale.
  • Proof the boat conforms to EPA Standards. Complete Environmental Protection Agency (EPA)

Rates of Duty: Pleasure boats are generally dutiable when imported into the United States. The following duty rates apply to boats imported for recreational purposes:

  • Sailboats and motorboats other than outboard motorboats: 1.5 percent
  • Outboard motorboats: 1 percent
  • Inflatable vessels: 2.4 percent
  • Canoes: Free of duty
  • Rowboats/other vessels not designed for use with motors or sails: 2.7 percent

Rates are subject to change; see Chapter 89 of the Harmonized Tariff Schedule (HTSUS) for changes.

NOTE: A boat trailer is defined as a "motor vehicle" and must have affixed to it a 17-character VIN (Vehicle Identification Number). DOT Form HS-7 must be completed in order to import the trailer. For questions about Importation Certification with the National Highway Traffic Safety Administration (NHTSA) call (202) 366-5291.

Jet Skis: In order to import jet skis into the United States, the engine must comply with the Environmental Protection Agency (EPA) regulations. Customs and Border Protection Officers enforce compliance with EPA regulations at time of entry. An importer is required to fill out the EPA form EPA Form 3520-21 at the time of importation certifying compliance with the regulations.

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1. Regulations for Yacht Charter in Greece

Regulations for Yacht Charter in Greece

It is the purpose of this guide to set out our understanding of the basic rules applicable to the charter of yachts in Greek waters.

On 14th April 2014 a new law was published in Greece titled Law 4256/2014 (G.G. A' 92) "Touristic Yachts and other provisions".

The law introduces significant changes to the legal and fiscal treatment of yachts operating for charter in Greek waters.
Highlights of the new law in respect of the charter of yachts include the removal of the requirement for yachts wishing to start and end the same charter in Greece to be in possession of a valid Greek charter licence and the creation of an online "Registry of Touristic Yachts and Small Vessels".

At the moment our agents in Greece are awaiting further information regarding the implementation of the new rules from a practical perspective. In particular they await confirmation of when the electronic registry is going to be operational. Port authorities and customs have yet to be advised on how they should implement the new rules.
For the time being it is recommended that owners observe the previous rules until such time as the new electronic registry is operational and the implementation of the new rules becomes clear.

The previous rules applicable to the charter of a yacht in Greece were determined on whether or not the yacht was in possession of a Greek charter licence:

1. Charter yachts in possession of Greek charter licence
  • To start and end yacht the same charter in Greece the yacht must be in possession of a valid Greek charter licence.
  • A Greek charter licence can be held by any European Union (EU) registered yacht owned by an EU company or citizen.
  • The prerequisite to apply for, renew and maintain a Greek charter licence is that the yacht will genuinely be engaged in bona fide genuine commercial charter activity. The authorities will expect a yacht operating under a Greek charter licence to be engaged in charter activity for at least 200 days within the 5 year validity period of the Greek charter licence.
  • A Greek yacht charter company is able to enjoy tax free profit from its charter activity whilst any other EU company will pay tax on all profit generated in Greece unless its country of incorporation has a double taxation agreement with Greece.
  • If the EU yacht owning company is not a Greek company it has to open a branch office in Greece. The branch office will obtain a local VAT number and will pay VAT in Greece on charter fees.
  • The Greek VAT rate on yacht charter fees is usually 6.5% on charters of more than two days that are not static.
  • Certain advantages are available to Greek registered commercial yachts in Greece namely:
    - VAT exemption for the value of the vessel on purchase
    - Marina and mooring fees in certain cases discounted
    - Fuel in certain cases can be purchased without duty and local taxes
2. Charter yachts not in possession of Greek charter licence
  • EU registered commercially certified and registered yachts that are not in possession of a Greek charter license and non EU flag commercial yachts holding a valid charter agreement may embark or disembark in Greece but not both, so if the charter starts outside the country it can finish inside and vice versa. Under such circumstances the law also stipulates that once a charter has commenced no guest may join or leave the vessel until either the charter has finished or the vessel has left the country.
  • A 'Dilotiko' must be obtained at the first Greek port of arrival. This is a customs requirement and is applicable to yachts of both EU and non-EU registration. The 'Dilotiko' allows the yacht to remain in Greek waters without any restriction on its length of stay and for certain essential spares can be imported tax free.

2. Regulations for Yacht Charter in Spain

Regulations for Yacht Charter in Spain

It is the purpose of this guide to set out our understanding of the current conditions applicable to the charter of non Spanish registered yachts in Spain.

We understand that the following conditions apply to the charter of non Spanish registered yachts in Spain:

  • The yacht owner must fiscally register in Spain and obtain a Spanish VAT / tax identification number,
  • Spanish VAT is chargeable on all yacht charters starting in Spain at the prevailing standard rate (currently 21%),
  • The yacht owner must apply for and hold a matricualcion tax exemption certificate,
  • The yacht owner must hold a certificate of authorisation issued by the national maritime authority as well as a certificate of authorisation from the appropriate local government in each region where the vessel will charter,
  • Charter in Spain can be performed by all EU registered commercially certified and registered yachts but the position for non EU registered commercial yachts varies from region to region.
  • In certain regions and depending on overall length the vessel may be required to hold a certificate of inspection issued by the Spanish maritime authority in addition to their national flag state commercial certification,
  • Usage by the beneficial owner or any related party is only permitted under the exemption where the beneficial owner or related party is not resident in Spain.
  • Where the yacht is chartered by a beneficial owner or related party it is recommended that they charter the yacht at arm's length on the same commercial terms as any third-party, (it is suggested that beneficial owner or related party charter should not be excessive in comparison to overall charter activity).
3. Regulations for Yacht Charter in Italy
Regulations for Yacht Charter in Italy

It is the purpose of this guide to set out our understanding of the current conditions applicable to the charter of yachts in Italy.

We understand that the following conditions apply to yacht charters commencing in Italy:

  • The yacht owner must fiscally register in Italy and obtain an Italian VAT number,
  • Italian VAT is chargeable on all yacht charters that are either static charter in Italy or start in Italy and remain within Italian water for the duration of the charter at the prevailing standard rate (currently 22%),
  • The VAT chargeable can be reduced for charters that enter international waters (more than 12 nautical miles offshore) based on a predetermined ratio of time spent inside and outside EU waters based on the type (i.e. motor or sail) and length of the yacht as follows:
Motor Yachts
Length
% of charter subject to VAT
Effective rate of VAT
Over 24 metres in length
30%
6.6%
Between 16.01 and 24 metres in length
40%
8.8%
Between 12.01 and 16 metres in length
50%
11%
Sailing Yachts
Length
% of charter subject to VAT
Effective rate of VAT
Over 24 metres in length
30%
6.6%
Between 20.01 and 24 metres in length
40%
8.8%
Between 10.01 and 20 metres in length
50%
11%
  • Charter in Italy can be performed by both EU and non EU registered commercially certified and registered yachts,
  • A central charter agent must be appointed and the owner must prove that they are genuinely making every effort to offer the vessel for charter on a bona fide commercial basis,
  • Usage by the beneficial owner or any related party is permitted provided that they charter the yacht at arm's length on the same commercial terms as any third-party, (it is suggested that beneficial owner or related party charter should not be excessive in comparison to overall charter activity),
4. Regulations for Yacht Charter in Croatia
Regulations for Yacht Charter in Croatia

It is the purpose of this guide to set out our understanding of the basic rules applicable to the charter of foreign yachts in Croatia waters following the country's accession to the European Union on the 1st July, 2013.

We understand that the following basic rules are applicable to the charter of yachts in Croatia:

  • The owners of all yachts intending to perform charter in Croatia must appoint a fiscal representative and obtain a Croatian VAT number,
  • The VAT rate applicable to yacht charters starting in Croatia is 13%,
  • Charter in Croatia can be performed by all EU registered commercially certified and registered yachts regardless of size,
  • Charter in Croatia can only be performed by non EU registered commercial yachts that are over 40 metres in length that hold a Croatain charter licence,
  • Charter in Croatia can only be performed by non EU registered commercial yachts under 40 metres in length if they have picked up the charter party outside Croatia, (embarkation of any charter guests in Croatia is forbidden although the charter party can disembark in Croatia),
5. Is VAT applicable on the charter fee?
In European territorial waters Value Added Tax (VAT) is normally charged on the Charter Fee and rates can vary according to the place of embarkation and the chosen itinerary. Your broker will be able to advise you on the latest tax situation for any country you wish to visit.
6. Regulations for Yacht Charter in Turkey

There are numerous ports of entry all along the coast of Turkey one can choose during his registration in Turkey; Trabzon, Samsun, Sinop, Bartin, Eregli, Istanbul, Tekirdag, Derince, Gemlik, Çanakkale, Akçay, Ayvalik, Dikili, Izmir, Kusadasi, Bodrum, Datça, Marmaris, Fethiye, Kas, Finike, Kemer, Antalya and many others.

A Yacht Registration Form should be completed, followed by custom, health and port procedure. One is allowed to sail the Turkish waters only for the purpose of travel, leisure or sport. It is not permitted to sail for commercial purposes. The Harbor Master's Office should be informed about all changes occurred during the journey, and relating the crew. In case of departure or entering Turkey for reasons of emergency or exceptional conditions, the case should be reported to the Turkish officials at the first port of arrival.

When leaving any port of Turkey, the relevant part of the Yacht Registration Form should be completed and reported to the Harbor Master's Office, followed by the custom procedure. Private yachts cannot be used for commercial purposes. Therefore, guests on private yachts cannot be charged for cruises.

No one is allowed to exchange goods (that have not been through customs procedure) with other yachts; such an act will be subject to legal procedure for it is considered an act of crime. Diving is permitted only with proper equipment and in non-restricted areas. Foreign divers should have official documentation of training and must be accompanied by a licensed Turkish guide.

7. Ownership of a boat in Thailand

If a foreigner wishes to purchase a vessel and register it under Thai law, many considerations have to be taken into account. This article aims to provide a general guideline for foreigners on the procedures and regulations involved in the purchase and registration of a vessel for commerce.

Type of Vessels

In terms of nationality, the vessels can be classified as either a Thai registered vessel (Thai Vessel) or a foreign registered vessel (Foreign Vessel). For the latter, the Customs Department imports into Thailand on a temporary basis, generally for six months. This temporary importation is not considered a formal importation as taxes are not applied. Yet, an importer must execute a Guarantee Agreement with the Customs Department certifying that if an importer does not take the vessel out of Thailand within a specified period, he/she shall be fined at the amount depending on the size and quality of the vessel.

The purpose of importation of the Foreign Vessel could be anything from tourism or pleasure to sport but the importer must not use such vessel for commercial purpose. In other words, under Thai maritime law, the Foreign Vessel is basically a non-commercial boat.

Apart from the Customs requirement, there are no other particular restrictions applied to the Foreign Vessel.

The Benefits of owning a Thai Vessel

The major benefit obtained from owning a Thai Vessel is the right to engage in business and fish in Thai waters. A vessel which qualifies to be registered as a Thai Vessel but which has never been registered as such cannot enjoy such benefits. However, it will still be subject to the same fees, liability to fines and forfeiture and punishments for offences committed on board as a Thai vessel (Section 54 Thai Vessel Act).

Requirements

Any mechanically propelled vessel being registered to engage in business in Thai waters must weigh at least ten tonnes. Therefore, boats weighing less than ten tonnes such as some sailboats or recreational motorboats do not need to be Thai registered in order to engage in business. They only require a boat permit. A foreigner must bear in mind that in essence he/she, as an individual, has absolutely no right to own a Thai vessel. The law explicitly stipulates that the owner of a Thai vessel, which trades in Thai waters, shall be either a Thai national as an ordinary person or a juristic entity registered under Thai law.

How can a foreigner buy a Vessel?

The most common and well-known business vehicle used by foreigners to purchase a vessel is to form a limited company. In order for a limited company to own a Thai vessel, several conditions must be satisfied:

  • At least 50% of the company directors must be Thai nationals
  • There must be no company regulation permitting the issue of a bearer share certificate
  • No less than 70% of the share capital must be contributed by a person who is not deemed to be an alien, as defined by the Foreign Business Operation law (sections 7 and 8 Thai Vessel Act).
8. How long can the yacht stay in the EU?

Normally, you can use the vessel in the EU for one and a half years. In technical terms, the period for discharge for privately used means of sea and inland waterway transport is 18 months.

9. Can you have another period of Temporary Importation? How long must you wait?

Yes, you are not limited to a single period of temporary import. You can sail the yacht out of the EU and when you came back again for another holiday a new period of temporary importation can begin.

The customs rules do not provide for a 'minimum period' during which the goods must remain outside of the customs territory of the EU.

10. What is APA?

The charter fee generally covers only the hire of the yacht and crew, all other expenses are in addition to the charter fee. These additional expenses are covered by the Advance Provisioning Allowance.

The APA is usually 30% of the charter fee (sometimes 35% if the yacht burns a lot of fuel or if you intend to do more than about 4 hours of cruising per day).

The APA covers the cost of fuel, food, wines and liquors, dockage, communications, etc. Any APA not used will be returned to you at the end of the charter as you leave. On the other hand, if expenses exceed the APA (maybe excessive cruising so high fuel costs, requests of rare liquors, etc.) you will be expected to reimburse the yacht as you leave the charter. This is rare but you need to be aware of this possible expense.

11. News about the Spanish Matriculation Tax

Alex Chumillas Amat of Tax Marine Spain informs us that the new criterion adopted by the Spanish Tax Agency and introduced in the Spanish Excise Duties Law allow chartered yachts, regardless of their length, to benefit from Matriculation Tax relief. Before the law amendment the exemption only applied to chartered yachts less than 15 metres LOA.

12. Breaking news regarding the Italian yacht tax

BWA Yachting informs us they have learned that in Italy today, an amendment was passed that modifies the recent "Berthing Tax" law that have had many in our industry worried. It is understood that only Italian flagged vessels will be required to pay this tax and therefore all non-Italian flagged vessels will be exempt.

13. New rules for harbour master formalities in Italy

As a result of the intensive collaboration activity with Federagenti (The Association of Italian Shipping Agents) on the 18th May 2010, the General Management for Sea Freight Transport of the Ministry of Transport has informed the Italian Harbour Master's Office in Rome of the new procedure about the Harbour Master's formalities regarding arrival and departure of Italian, European and Non-European commercial yachts or pleasure vessels.

14. General Boat Related Tax Information

Sales taxes are levied in the U.S. by the individual states. Each state is somewhat different in their approach to this subject. Whether you owe this tax has to do with where the yacht is registered and where and how the yacht will be used. If you understand the system, you will know how to gain legal exemption.*This information is general in nature and purchasers are encouraged to seek experienced legal counsel in yacht acquisition planning and implementation. Catamaran Guru is not a licensed Tax Attorney or CPA and is not qualified to give legal or tax advice but we can put you in touch with experts who are.

Write Off Ownership Expenses

If you live in the US or most European countries, you can reduce your taxable income by writing off certain yacht ownership expenses. The most common U.S. tax benefit is to treat your yacht as a second home, which is possible if you don't already have a second home and your primary residence is valued at less than $1 million. This method will allow you to write off your interest expense on your loan. The other method is by actively managing your yacht in a charter business. Many travel agents do this. This method will allow you to write off your operating expenses as well as interest expense.

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