An Insider’s Guide to VAT in the Mediterranean

* Reduced VAT for cruising into International Waters (12Nm offshore)

† Eligible to use the ECPY Transport/Cruising Contract with up to 0% VAT

** Varying VAT rates may apply to different vessels, please see full details for a complete explanation.

N.B. When chartering a yacht in the EU, VAT is due in the EU country where the yacht becomes available to the charterer, i.e. where the charter starts. Charters starting outside the EU, (e.g. Montenegro) and then entering EU territorial waters may be subject to VAT rates on a pro rata basis depending on the country/countries visited.

In the EU, VAT is regulated by the Sixth Directive. An EU Directive sets out objectives, and the member states pass legislation to carry out the Directive terms. However, since each member state makes its own laws, regulations differ from country to country. Below, we have highlighted the important VAT rates and regulations for the most popular charter destinations in the Mediterranean.

France and Monaco

The standard 20% rate in France is due on the charter fee and the delivery and re-delivery fees for charters starting from a French or Monegasque port.

No French VAT is due on charters starting in a non-EU country (example: Montenegro) and entering French/ Monegasque waters during the trip. However, if the itinerary includes multiple countries, other EU member states may charge VAT for the days spent in their national waters.

Cruising International Waters

A lump-sum reduction is allowed in case of cruising into international waters (outside of 12 nautical miles). Under certain conditions the charterer would benefit from 20% VAT on 50% of the charter fees and delivery/re- delivery fees if any.

Transport/Cruising Contract

Created by the European Committee for Professional Yachting (ECPY), a transport/ cruising contract only applies in France or Monaco. It precisely outlines a guest cruising a pre-determined itinerary, including embarkation and disembarkation ports. Therefore, the guest is a passenger, similar to a cruise-ship passenger, and does not have the freedom to use the yacht like a charterer. But, the main advantage of the transport contract is a reduced standard French VAT rate of 10% for the charter contract for cruising in national waters. In the case of international voyage with a real stopover outside France (i.e. Porto Cervo), 0% VAT is due.  Another advantage is that the fuel can be purchased without duty free (example: €0.6/L opposed to €1.6/L). However, the MYBA contract is the most widely used contract in the industry, meaning the ECPY contract should be obtained on a case by case basis. Some owners are unfamiliar with the ECPY contract and may not accept the ECPY terms.

Italy

The standard 22% Italian VAT rate is due on all charters starting in Italy for yachts over 24m. For yachts below 24m, there is a fixed VAT rate of 8.8%. If the charter starts outside the EU, VAT is applied to the number of days spent in Italian territorial waters

Cruising International Waters

Yachts over 24m are eligible for a reduction in VAT to 6.6% if a voyage into international waters is made (12NM offshore).

Italian VAT is charged on the charter fee, delivery/re-delivery fee, fuel consumption, and expenses related to the APA, unless already VAT paid at the source. It’s not due on charters starting in another EU country.

Spain

Standard VAT rate in Spain is 21%, and no reduction is possible for international voyages. Canary Islands don’t have VAT, they have IGIC that is 7%.

For charters starting in Spain, VAT is due on the entire charter fee, including the delivery/re-delivery fee if it’s included in the contract. For charters starting outside the EU and entering Spain, VAT is due only on the number of days spent in Spanish territorial waters.

Croatia

In Croatia the VAT rate on charter fees is 13%. No reduction is permitted on Croatian charters involving international voyages.

13% VAT on the whole amount of the charter fee is due on all charters starting in Croatia with cruising area within EU waters.

For charters starting outside the EU (example: Montenegro) and then entering Croatian waters, 13% VAT on charter fees is due on a pro rata basis (the number of days spent in Croatian territorial waters, including the day of arrival to Croatia).

For charters starting in Croatia but ending outside the EU (example: Montenegro) 13% VAT on charter fees is due on a pro rata basis (number of days the cruise held in EU waters).

Greece

All yachts starting or ending charters in Greece, must have a Greek charter license. The VAT for yachts with a Greek charter license is 24%, however there is a 50% to 60% discount (depending on cruising permits) for charters that last more than 48 hours bringing the VAT down to 12% and 9.6% respectively.

There is no VAT for yachts cruising in Greece that do not have a Greek charter license; however, in this case the charter must begin and finish in a port outside of Greece and must not include any change of guests while in Greek waters.

Turkey

The VAT rate is 0% while cruising in Turkey, however local cruising taxes apply. Yachts with a Turkish flag are taxed at 18%. Non-EU flagged yachts may start and end charters in Turkey as long as they cruise outside of Turkish waters throughout the itinerary.

Montenegro

The VAT rate is 0% while cruising in Montenegro. If the itinerary includes cruising in Croatia, then Croatia’s VAT (13%) is due for each day that the yacht spends in Croatia.