What is temporary admission for luxury yacht outside the EU?
The concept of “temporary admission to the EU”, the one related to permanence in territorial waters, may be different depending on whether recreational crafts belong to a Member State of the EU or to a third country.
For recreational crafts belonging to a Member State there are no constraints with regard to sailing in territorial waters of the EU.
Conversely, recreational crafts flying the flag of a non-EU State, while being free to navigate in the territorial waters of the Union, they are required to comply with specific rules established on the basis of a single regulation for all Member States . This is in order to benefit from entry without the payment of duties and without authorizations (the so-called "temporary admission").
The temporary admission regime differs according to whether it is a "commercial use" or a "private use" of a means of transport.
Private means of transport, including recreational crafts, may benefit from temporary admission, provided that:
⦁ they are registered outside the customs territory of the EU;
⦁ registration is in the name of a person established or resident outside the customs territory of the EU. Or, if they are not registered, they are owned by a person established outside the customs territory of the Union;
⦁ they are imported and used by persons residing in that territory.
Customs declarations of luxury yacht outside the EU
Art. 212 of EU Regulation no. 2446/2015, dictates the procedure and conditions for granting total exemption from import duties for means of transport.
With reference to the aforementioned article, the Central Legislative Directorate of the Italian Customs Agency confirmed that for a "Pleasure Yacht" registered in a third country, the request for customs declarations certifying the time of entry into the customs territory of the Union is not to be considered as mandatory, but optional. This, by virtue of the fact that the simple crossing of the Union border entails the constraint of the "temporary admission" regime.
However, in the event that the owner of the vessel still decides to submit the aforementioned verbal declaration, in order to have the time of entry into the territory of the Union and the consequent beginning of the period in which he could remain in the territory (deadline for discharge) certified by the Customs Office, the owner himself will be considered burdened to prove the existence of the conditions provided for by the legislation and to prove the origin from a non-EU country.
Luxury yacht outside the EU: VAT exemption, when may it occur?
Before we start discussing the regulations related to VAT exemption, it is necessary to define the so-called "commercial yachts".
Commercial yachts have the following characteristics:
⦁ hull length greater than 24 meters;
⦁ gross tonnage not exceeding one thousand tons;
⦁ used in international navigation exclusively for rental for leisure purposes.
Even in the presence of these characteristics, the shipowner has no obligation to register his vessel in the International Register, even if used through rental contracts for leisure purposes. Without registration the term "recreational craft" may be applied.
On the contrary, the registration determines the recognition of its commercial nature, namely:
⦁ the authorization to transport passengers for a number not exceeding 12, excluding the crew;
⦁ possession of the class certificate issued by one of the organizations recognized today in Italy (ABS, BV and RINA and GL);
⦁ the submission to special technical and management standards provided for by the Safety Regulations;
⦁ various tax and social security benefits. In detail, they will be considered as included in the non-taxable regime, provided that they sail on the high seas.
Luxury yacht outside the EU: VAT regime for port and shipbuilding services
Services relating to the use of dry docks, construction, maintenance, repair, modification, transformation, fitting out, furnishing of engine systems, their components and spare parts, as well as services related to ship dismantling, these are all included in the VAT non-taxable regime.
Furthermore, those services provided in ports, which directly reflect the operation and maintenance of systems, fall within the scope of non-taxable services, as they are connected to international services.
These services are not taxable only if the territorial condition exists, that is, if they are carried out on the territory of the State.
In relation to marinas, for mooring purposes, it is instead undisputed that they could not fall within the notion of port for VAT purposes, given their purely character of nautical parking. Consequently, the services provided in marinas may not benefit from VAT exemption.
Temporary admission for luxury yacht outside the EU: our Law Firm
Arnone&Sicomo Law Firm has a maritime law and admiralty law department. Our maritime lawyers assist Italian and foreign customers in the purchase procedures of luxury yachts in Italy or abroad, as well as of any other type of vessel.
The maritime lawyers of our maritime law department follow the procedures for luxury yacht purchase, as well as all procedures related to VAT and customs regimes.
We also have a team of tax and customs lawyers able to assist a client who has suffered an infringement procedure or received tax and customs penalties.
If you have questions about VAT and customs regimes applicable within the EU to luxury yachts outside the EU, or simply need assistance with purchasing, please contact us. We will be glad to help you.