With the legislative and regulatory requirements of the maritime industry continually changing, it is of utmost importance to stay abreast of new developments and to give careful consideration to how and where an owner plans to use the vessel, in order to ascertain any tax or VAT exposure.
With a comprehensive understanding of the maritime industry our members are experienced in assisting owners and their representatives in understanding the diverse requirements associated with the ownership and operation of a range of vessels, including but not limited to motor yachts, sailing yachts, cargo ships, tankers, offshore vessels and other carriers.
Depending on how and where a vessel will be used can determine whether tailored tax planning could offer any fiscal benefits and/or minimise any liabilities so it is important for owners to get the appropriate professional advice and guidance to ensure that their vessels remain compliant.
Is the Isle of Man in the EU?
The Isle of Man is not part of the UK, however, following the 1979 Customs and Excise Agreement, it is treated as part of the UK for VAT purposes. This means that goods sent to or from the UK to the Isle of Man are not treated as exports or imports but as local goods upon which VAT must be charged at the applicable UK VAT rate.
It also means that goods arriving from outside the EU into the Isle of Man are treated as imports and goods leaving the Isle of Man for a destination outside the EU are treated as exports.
Yachts purchased from EU and non-EU countries
VAT is chargeable on imported yachts and on yachts purchased and owned by residents of the EU who are using their yacht within the EU. The question of whether VAT due can be reclaimed or potentially deferred will depend on whether the yacht is for private use or commercial use.
Certain VAT relief measures are available which can benefit a privately registered yacht with a non-EU owner. In this case a yacht can be imported into the EU under the Temporary Admission regime. It can cruise EU waters for up to 18 months without having to pay any VAT. This process can be renewed every 18 months up to a maximum period of 10 years.
Where VAT may be an issue, Isle of Man Maritime members have the specialist knowledge needed to advise and assist with suitable ownership and structuring arrangements that may reduce the effective VAT rate and to facilitate importation of yachts effectively and efficiently into the EU.
The Isle of Man’s stable political and economic environment provides obvious benefits to owners who use it to structure ownership of their vessel including favourable taxation treatment (both in terms of VAT planning and corporate tax). Other advantages include:
- No annual tonnage tax.
- No income tax payable on charter profits.
- Entitlement to the support of the UK government, including worldwide consular services.
- If a vessel is owned by a company, then all transfer taxes and re-registration charges can be avoided by simply effecting a transfer of shares in the company instead of changing ownership of the vessel.
- A company is not subject to any charge to inheritance tax. If the shares of the company are held within a suitable trust, then it is possible to protect against worldwide inheritance tax.
For more information, please speak to one of our members, below:
|Contact: Kate Shaw
|Contact: Oscar Brown
|Contact: Rachael Hughes
|Contact: Lesley-Anne Walker
ISLE OF MAN MARITIME
Isle of Man Maritime Limited is a not-for-profit organisation, which was formed to develop, support and promote the Isle of Man’s growing maritime sector.
For more information on Isle of Man Maritime or our Membership, contact email@example.com.