Every summer, hundreds of well-heeled travelers migrate to the Western Mediterranean. They travel there to enjoy a private yacht luxury charter vacation. Coastal towns like Nice and St Tropez in France participate. San Remo and Portofino in Italy also host dozens of superyachts. The boats are packed with charterers from around the world. It’s an affluent vacation. Even the wealthy cringe when their exclusive yacht rental holiday is socked with VAT charges often in excess of 12%. They know the value of their hard-earned dollars. We make sure that their memorable and valuable vacation funds are spent wisely.
Imagine spending €725,000/wk to rent a yacht. For example, Admiral superyacht PLANET NINE as your holiday hire. Just envision incurring an additional €87,000 in VAT? Ouch!!!
Over the years, we composed many blogs about the challenges of VAT taxes. Yacht rental guests need to stay aware of the laws. In some years, yacht charters were VAT exempt. In others, the exemption was rescinded. The rates go up, down, and often vary among various European Union countries, like France, Spain, and Italy.
Fortunately, with a little advance planning, it might be possible to reduce your charter’s VAT liability by up to 50%. Jana Sheeder, our company’s President explains:
“If you rent a luxury yacht for a vacation in the South of France, say, Nice, Antibes, Cannes, and neighboring Monte Carlo (in the principality of Monaco), you will incur a VAT charge of 12%. However, if leave European Union waters during your charter, the VAT is reduced by 50%. The easiest way to accomplish this is to schedule an overnight run to the island of Sardinia, off the French coast. Spend a day of so in the area, then cruise back to the South of France. Not only is this a worthwhile itinerary, you’ll also enjoy a tremendous discount in your VAT expenses.”
To accomplish this, and to be in full, legal compliance with the European Union statutes, Jana adds a clause to the client’s yacht charter agreement that reads, in part
“It is agreed between the parties that the yacht will cruise in international waters for part of the itinerary, which has not been determined, so VAT will only be charged on the 50% of the charter fee. In the event the yacht does not cruise in international waters and VAT becomes due on the total amount of the charter fee, the charterer hereby agrees to pay the outstanding VAT on the total amount of the charter fee in cleared funds and without delay to the stakeholder. VAT is calculated with a lump sum reduction of the time spent in EU waters in application of BOI-TVA-CHAMP-20-50-20-20120912 Article 90.”
In addition to reducing VAT expenses in France, it’s also possible to find similar savings in other Western Mediterranean destinations. Similar money-saving strategies apply for charter yacht luxury vacations in Italy as well.
For example, if a charterer wants to start and end a 10 night trip in Naples, Jana will encourage the client to end the charter in Sardinia, to the west, or Sicily to the south, in order to cruise through international waters, and qualify for a reduced VAT fee.
In conclusion, with just a little advance planning, it’s possible to save thousands of dollars on your next luxury rental yacht vacation!
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