Why is VAT applied to yacht charters? For years, EU countries and yachting professionals interpreted VAT rules loosely, often exempting charters, fuel, and yacht supplies. However, in 2010, the European Court of Justice ruled that yacht charters for leisure are not VAT-exempt. Today, any charter under 90 days is subject to VAT at the rate determined by the jurisdiction where your journey begins or where services are rendered - a detail as essential as the itinerary itself. VAT rates differ significantly across EU member states.

In most EU countries, VAT is applied to the full charter fee based on the rate in the country where the journey begins. For example, if a charter starts in Spain, VAT is paid to Spanish authorities — even if the yacht cruises through neighboring countries like France.  For charters originating outside the EU but entering its waters, VAT is applied proportionally to the days spent within EU territorial waters. Spending over 50% of the charter in international waters may qualify for partial VAT reductions, but this requires precise tracking of the yacht’s movements to ensure compliance.

When indulging in a superyacht charter, the nuances of VAT extend beyond geography to currency. If your charter is priced in euros, the VAT will naturally follow suit. However, for charters in U.S. dollars, VAT payments cannot be made in dollars. Instead, the VAT invoice will reflect a seamless conversion to euros, calculated using the prevailing exchange rate on the date your unforgettable journey concludes. 

Charterer’s nationality and the yacht’s flag, can also affect VAT liability. Non-EU clients or yachts flagged outside the EU often face different rules, while specific countries like France or Italy offer reduced rates for certain charter types or travel distances.

Ahead of embarking on a superyacht journey, all payments outlined in charter agreement must be meticulously arranged. These include the charter fee, Advance Provisioning Allowance (APA), VAT, security deposits, and any delivery fees. VAT, seamlessly integrated into your final charter fee, is typically due one month prior to departure. This payment is securely held in a stakeholder’s account before being transferred to the appointed Fiscal Agent, ensuring every detail is impeccably managed for your journey of unparalleled sophistication.

Proper VAT registration, accurate documentation, and accounting for fees, including the Advance Provisioning Allowance (APA) where applicable, are crucial. Consulting a Charter Broker is the best way to navigate the complexities of VAT laws, as rates and rules vary and can change. This ensures a smooth and legally compliant charter experience across Europe’s stunning waters.