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 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.

Whilst some may view the requirements for EU chartering as complex and confusing, the rules now are in fact much clearer and in most EU member states there is greater clarity. Much of the recent uncertainty related to non EU flagged vessels and whether these vessels can legitimately undertake charter activity throughout the EU.

The 2 options for charter operations in the EU are

1. Operate under the YET scheme (limited cruising area for charters)
2. Bring the yacht into Free Circulation as part of  a commercial charter operation. Before any yachts can charter in the EU, they must be deemed as EU goods. Therefore each yacht must be formally imported into the EU and VAT thereon must be accounted for. Again this may sound onerous, but in fact a correctly organised yacht importation is again a straightforward process, provided sufficient notice is given. 

The owning company must have an EU VAT registration. This may be in one or more EU jurisdictions and must facilitate payment of VAT on charter fees to the relevant member state. This may sound onerous, but is in fact a relatively straight forward process, even for a Cayman, or other non EU corporations

The key to successful chartering is to meet the relevant criteria. Failing to do so is inevitably the cause of a disrupted charter. Whether the vessel is a large Cayman flagged, US owned vessel or an EU flagged and owned vessel, meeting the criteria is not a big undertaking.