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In the world of luxury assets with elegant yachts gracing the seas and awe-inspiring sights of aircraft soaring through the skies, a fascinating journey unfolds. However, in this world of lavishness, those involved are also dealing with less glamorous concerns including the intricate matter of Value Added Tax (“VAT”). This article delves into the influence of EU VAT on luxury yachts and aircrafts (hereinafter “Asset”), with a view of untangling the complex details for clearer understanding.

The VAT treatment of the transfer of a Luxury Asset

The transfer of an Asset for a consideration (paid or payable) generally falls within the scope of EU VAT. However, this is dependent on various aspects namely, the status of the parties involved (whether a taxable or non-taxable person), the status of the yacht or aircraft (whether new built or second-hand and VAT paid or not), the intended use of the yacht or aircraft (whether for commercial or private use), and the jurisdiction in which the supply shall be deemed to take place (including whether within or outside the EU Community).

The VAT treatment of chartering of a Luxury Asset

Similar to the above, the place where a transaction involving the hiring of a means of transport takes place, may vary depending on the status of the lessee (whether a taxable or non-taxable person), the term of hire (whether its long or short term) and the status of the Asset (whether it’s a pleasure boat or otherwise).

It follows that, in principle, the hiring of an Asset is treated as a taxable supply. However, an exemption may apply where the Asset is hired to another taxable person who would be using the Asset himself to carry out commercial hiring operations.

The “VAT Paid” Status

The term “VAT Paid” is not defined in the VAT legislation however, the general understanding is that it represents the status of an Asset that is allowed to roam freely within the EU Community without being subject to further Customs formalities. An Asset is solely deemed to have a “VAT Paid” status to the extent that VAT was paid in full on the purchase price of that Asset in an EU Member State without the possibility of it being recovered or refunded. Additionally, such status must be preserved over time. It follows that the “VAT Paid” status can easily be forfeited if the Asset is exported outside the EU Community and re-enters the EU Community beyond a period of 36 months, even if returned by the same person or if the Asset is exported outside the EU Community and re-imported by a person other than the one who had exported it.

An Owner of an Asset can prove such status through documentation such as a VAT Paid Certificate[1], tax invoice / fiscal receipt, Customs import documents, confirmation of payment to the Tax Authorities.

[1] The VAT Paid Certificate is a document issued by Tax Authorities of certain Member States which certifies that VAT on a particular Asset was paid.

Practical VAT Arrangements for the Importation / Acquisition of Luxury Assets in Malta

If the Asset is used and enjoyed within the EU Community, the Owner is required to immediately pay VAT upon acquisition or importation of that Asset. However, a VAT deferral solution on the importation of the Asset may exist in line with European jurisprudence, and which may permit the non-immediate payment of the VAT to the extent that the Owner undertakes to commercialise the Asset via a specific practical leasing arrangement and to the extent that certain criteria are satisfied. Likewise, input VAT recovery may be possible on the intra-Community acquisition of the Asset insofar as the Owner commercialises that Asset.

How can the VAT experts at Zampa Debattista assist you?
At Zampa Debattista, our dedicated VAT Experts are committed to providing invaluable support to yacht and aircraft owners as they navigate the intricate world of VAT. Our comprehensive services include:
  1. Personalised Advisory Services – Our team of experts offer tailored VAT advice that suits your specific circumstances. Whether you’re acquiring, chartering or operating a yacht or aircraft, we ensure that your VAT strategy aligns with your objectives.
  2. Compliance Optimisation – With an in-depth understanding of both international and local VAT regulations and leveraging our strong relationships that we maintain with the Malta Tax Authorities, through our VAT representation we can ensure your ownership complies with all necessary obligations, avoiding any potential pitfalls.
  3. Transparent Planning – Our transparent and forward-looking approach empowers you to make well-informed decisions whilst navigating the VAT landscape with more confidence. This ensures that your ownership of a yacht or aircraft remains a seamless luxurious experience and a tax-optimised endeavour.

Take a look at our VAT website to learn more about our services.

Matthew Zampa


Christabel Spiteri

VAT Leader

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