Shipyard Works – Handle with Care!
When undertaking shipyard refit works, especially when considering using Inwards Processing Relief to zero rate VAT on works, (often referred to as TPA), owners should take care.
The popularity of the TPA process for shipyard works has increased year on year however, there are several pitfalls that can have massive repercussions financially.
As advisors to yacht owners, we are always looking for opportunities and efficiencies to save costs for owners and the TPA process is one such example when used correctly. The TPA process however can only be used by qualifying yachts which are:
1/ non-EU flagged
2/ non-EU owned
3/ AND not in free circulation in the EU
These criteria might seem straightforward, but we are seeing an ever-increasing number of cases where people get it wrong, especially when it comes to point 3 above. The TPA process is for non-EU yachts only, irrespective of the choice of flag, company or residency of the beneficial owner.
The TPA process was originally put in place so that EU yards would not be disadvantaged over non-EU yards when it comes to competing for shipyard contracts for Non-EU yachts. A qualifying yacht can benefit from VAT free works, but only as long as all the correct steps are followed under the procedure. The yards themselves are not best placed to comment on the suitability of the TPA process for an individual yacht so the correct expertise should be consulted before engagement.
Praxis Yacht Services has been providing such services to yacht owners for over 50 years and has seen a massive increase in both the fluidity and complexity of legislation effecting yacht ownership and operation. It is not just a case of positioning the right structure at the outset, it is very much an ongoing partnership for the complete lifecycle of yacht ownership. It is imperative that a watchful eye is maintained but this can only be effective if the people with the requisite knowledge and experience are involved in the day-to-day decision-making process.
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