Operational leases for private yachts
28 June 2019
For owners who wish to lease a yacht over the planned period of ownership, the Praxis Yacht Services team can put in place a bespoke programme that takes into consideration the specific needs of the owner and the unique circumstances surrounding each yacht.
While operating under the lease, 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 moment’s 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 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 content is intended to provide a general overview of the matters to which it relates. © Praxis Group