Operational Lease for Private Yachts

Owners looking to lease a yacht over the planned period of ownership should considers a a bespoke programme that takes into consideration their specific needs and the unique circumstances surrounding each and every yacht. Bruce Maltwood looks at the technical aspects.

Using an operational lease established by our specialist yacht ownership team in Malta,  the yacht is free to operate throughout the EU by both EU and non-EU residents on a private pleasure basis. This eliminates the costs and paperwork associated with commercial use which restricts owners who want the freedom to use the yacht when and how they want, sometimes at a moments’ notice.

The lease term can be set for any period but is envisaged to coincide with the anticipated period of ownership of the yacht. The lease fee will be calculated based on the specifics of each yacht taking into consideration age, value, condition, and market conditions at the time of establishment. The lease can be terminated at any point during the term, returning the yacht to a non-VAT paid status as would also be the case if the lease ran to full term.

A Maltese company is set up and will act in the capacity of yacht owner for the duration of the lease and will lease the yacht to a corporate or individual Lessee as required. VAT at the Malta rate of 18% will be applied to the lease fee and payable to the Lessor by the Lessee. If and when the Malta authorities finalise the arrangements surrounding the use and enjoyment rules as laid down in Article 59a of the VAT Directive, then this can be applied to both existing and new lease arrangements.

With such uncertainty surrounding the world economy, this enables EU resident owners to use yachts on a private pleasure basis throughout the EU without the upfront outlay of VAT either on acquisition or entry into the EU. This is especially attractive to UK residents who wish to hold fire on paying VAT until clarity is obtained regarding Brexit and the future position of the UK in relation to the EU.

This arrangement is an operational lease as commonly used across the EU for other assets including cars, trucks, land, and buildings. This is not a one size fits all and the individual circumstances surrounding each owner and yacht should be examined to determine if this operating lease is suitable for them.

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