Croatia charter rules for EU-flagged and Non-EU flagged yachts
Following Croatia’s accession to the EU on 1 July 2013, the VAT rate for Croatian charters was set at 13%. An inspection of documentation and equipment must be undertaken upon arrival into Croatia and prior to commencing charter operations.
In addition, Croatia joined the European Economic Area in January 2023 which has resulted in the calculation of the VAT on charters to be calculated in Euro, whereas previously the charter fee would be converted into Croatian Kuna and VAT calculated upon such a converted value, resulting in exchange differences being suffered by the third-party charter guest, or the owning company.
Upon entering Croatian waters, the yacht must immediately proceed to the nearest official Port of Entry and obtain clearance. This applies day or night with penalties applied for those yachts that delay, even for a short period in the middle of the night. The authorities use AIS to track yachts entering their waters and will use this to evidence such delays. When leaving Croatia, you must also obtain clearance from the harbourmaster and leave Croatian waters immediately and by the shortest route.
The appointment of a Croatian ship agent is mandatory for EU and non-EU yachts over 45 metres in length.
VAT at 13% is applied on all charters starting in Croatia and on the number of days spent in Croatia if the charter starts outside the EU. Duty free fuel, supplies and service is not available.
A VAT registration and an e-crew registration must both be obtained in the name of the yacht owning company prior to the commencement of charter activity. Guests are free to embark and disembark in Croatia.
NON-EU FLAGGED YACHTS (inc. Isle of Man)
For a non-EU flagged vessel, a cabotage license is required in addition to the registrations required for EU flagged vessels. The registration process is anticipated to take up to a month. The licence will be valid for one year and will be on a first come first served basis.
Croatia is another cruising ground where commercial operations for non-EU flagged yachts are restricted. As covered in our article VAT and Charter Operations, an EU flag is preferential although it is understood that the choice of flag is often driven by a wide range of other factors.
The charter rules vary in every member state making it more and more difficult for yacht owners to understand their obligations and plan ahead for the charter season, especially for those yachts operating in a multitude of member states. The costs of setting up and maintaining fiscal registrations in each member state that the yacht is going to operate from also adds more costs to the raft of expenses to run a charter yacht in the EU. Depending on the jurisdiction, time frames as long as three months exist when putting the necessary arrangements in place, therefore owners will need to plan ahead and apply now for the 2024 season rather than waiting for charters to be secured prior to making any such arrangements.
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