How do US owners charter their yachts in Europe?

Many US yacht owners want to cross over to Europe to enjoy one or more seasons in the cruising grounds offered within the Mediterranean.

If these owners wish to charter their yachts during this period in EU waters, this is certainly possible, but a number of important issues relating to EU VAT need to be addressed.

Typically, US owners of superyachts hold their yachts via a corporation. Many are held by Cayman Island corporations and are often accompanied by a Cayman Island registration/flag. Some of these vessels may have operated as charter vessels in the EU during previous seasons and can continue to do so, but certain considerations need to be made.

While some may view the requirements for EU chartering as complex and confusing, the rules have now stabilised. However, each EU member state has differing requirements and rules surrounding charters being undertaken in their waters. Much of the historic uncertainty related to non-EU flagged vessels and whether these vessels can legitimately undertake charter activity throughout the EU has been removed. However, certain restrictions remain in force, primarily affecting yachts under 35 metres.

The two options for charter operations in the EU are:

• Operate under the YET scheme (limited cruising area for charters)
• Bring the yacht into free circulation in the EU as part of a commercial charter operation. 

Before any yachts can be chartered in the EU, they must be EU goods in free circulation which requires the importation of the yacht into the EU. This must be undertaken in the location where the yacht first enters the EU; therefore, this process needs to be planned in advance. Praxis Yachts can advise on the most appropriate locations and put in place the requisite arrangements.

To begin chartering operations, the owning company must have fiscal arrangements as well as any requisite charter licences in place for any EU jurisdictions where charters will commence. Utilising our network of agents across the EU, Praxis can take care of all such arrangements for both EU and Non EU owners.

The key to successful chartering is meeting the relevant criteria. Failing to do so inevitably results in a disrupted charter and financial penalties. Praxis can manage all such arrangements, whether the vessel is a large Cayman flagged, US owned vessel or an EU flagged and owned vessel.

Find out more about our VAT management support services or contact Bruce.

Please note that this article is intended to provide a general overview of the matters to which it relates. It is not intended as professional advice and should not be relied upon as such. Any engagement in respect of our professional services is subject to our standard terms and conditions of business and the provision of all necessary due diligence. © Praxis 2023