In accordance with the Council Directive 2006/112/EC on the common system of value added tax the importation of goods, including yachts, refers to the entry into the EU of a yacht which has not been previously placed into free circulation within the EU. This means that yachts deriving from a third country, i.e. a country which is outside the EU, shall be considered to be in free circulation in a Member State of the EU only if the import formalities have been complied with.
In accordance with the above description yacht importation in the EU shall take place in those instances where the yacht which is to be utilised within the EU is found outside the territory of the EU and must be brought into a territory/territorial waters of an EU Member State in order to adhere to all the import formalities required for its use and enjoyment within EU waters.
In accordance with EU law, the chargeable event shall occur and VAT shall become chargeable when a yacht is imported. However, when on entry into the EU yachts are placed under temporary importation arrangements with total exemption from import duty, the chargeable event shall occur and VAT shall become due only when the yacht shall cease to be covered by those arrangements. This means that as long as a yacht follows the time frames and established periods for entry or otherwise in the EU, no VAT shall become due at any point in time of the yacht’s cycle inside and outside of EU waters.
In accordance with Council Regulation (EEC) No 2913/92 establishing the Community Customs Code, temporary importation shall allow the use in the customs territory of the EU of yachts which are not found in the EU and which are intended to be re-exported without having undergone any change except that of normal depreciation due to use made.
In line with Commission Regulation (EEC) No 2454/93 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code total relief from import duties is granted when a yacht is registered temporarily with the customs territory of the EU with a view of re-exportation of the same in the name of a person established outside the territory. The period of time a yacht can be used in the EU waters once it has been temporarily imported is limited to a period of 18 months.
1. What does the procedure of temporary importation involve?
Non-EU yachts which are owned by non-EU resident persons/companies may be temporarily brought into and used for private purposes in the EU, or more strictly in the customs territory of the Community, without the payment of customs duties or VAT. This procedure can only be availed of by non-EU residents and non-EU companies and is not available to EU residents/companies.
The period of temporary importation and use of the yacht in the EU is limited to eighteen months, after this time period the yacht must leave EU waters. The re-exportation of the goods from the customs territory of the Community is the usual way of ending or ‘discharging’ a temporary importation procedure. If the yacht does not leave before the end of that time then customs duty and VAT shall become due.
A yacht is temporarily imported into the EU and not into one of the constituent Member States, even though this is inevitably done through one of its Member States. This means that the yacht can move from one Member State to another with no further customs formalities during the eighteen month period.
2. What procedures would have to be undertaken in case of non-EU yachts imported by an EU resident/Company?
In this case the applicable importation procedure would be that of the Code 4200 importation – the suggested advice would be to incorporate or utilise a third offshore company in order to be in a position to achieve a free VAT status, similar to that which applies in the case of yachts imported from third country territories.
3. Can the 18 months be extended if the yacht is not used and what is the procedure involved?
Indeed, the eighteen-month period may be extended for the time during which the yacht is not used. Article 553(2) second sub-paragraph of the implementing provisions of the Customs Code allows for this. However, the maximum overall period during which the yacht can remain in the EU is 24 months (Article 140(2) of the Customs Code).
4. Can another period of temporary importation be availed of? How long must one wait?
A yacht is not limited to a single period of temporary import. One can sail the yacht out of the EU and come back again for another holiday whereby a new period of temporary importation can begin. The customs rules do not provide for a “minimum period” during which the goods must remain outside of the customs territory of the EU.
5. How long would importation procedures into the EU through the Maltese Custom Authorities employ?
The Maltese Customs Authorities are aware of the short time frames and the fast pace with which the industry operates, and co-operate in providing an efficient service in the clearance of customs documentation.