A client approached Mann Made Group regarding the best structure for a private sailing yacht which is currently owned by a BVI company. The yacht is registered under a BVI flag and is currently moored outside of the EU.
The client would like to lease the yacht to a third party on the understanding the third party will ultimately purchase the yacht at the end of the lease period. The lessee wants the yacht to ultimately have a VAT Paid status and wants to moor the yacht in Malta and sail the vessel throughout EU waters.
Mann Made’s Conclusion:
Based on the client’s requirements Mann Made reviewed various options and concluded that a Maltese leasing structure would be best suited to this client.
There are various requirements that must be followed to be approved by the Maltese VAT authorities for this type of lease structure and these were ideal for the client so this process was started. Two of the requirements are that the yacht must be owned by a Maltese Company before it is imported into Malta, and before this happens approval from the Maltese VAT authorities must first be established.
Therefore, a new Maltese company was incorporated and the ownership of the yacht was transferred from the BVI Company to the Maltese company. A lease agreement was then drawn up with the lessee, with the yacht then being imported into Malta.The Maltese VAT department have issued guidelines on the VAT treatment of pleasure yachts in leasing arrangements. These guidelines clarify the taxation of yachts owned by a Maltese company for the purpose of leasing to a third party. It enables the yacht owners to import the yacht with no VAT payable and then pay the VAT on the yachts based on a percentage of the time the yacht is expected to sail in EU waters, and obtain a VAT paid certificate accordingly.
The percentage of VAT to be paid is determined by the Maltese VAT Authorities based on the size of the yacht and its means of propulsion.
In this case the VAT authority guidelines indicated the yacht is expected to sail in EU waters for 50% of its time, meaning that the effective rate of tax on the vessel is reduced from the full 18% to only 9%.
Mann Made Malta and its team worked very hard and were able to obtain the following in a matter of days:
- The Maltese company was incorporated
- The ownership was transferred from the BVI Company to the Maltese Company
- The Lease arrangement was put in place together with the payment schedule
- Approval was obtained by the Maltese VAT authorities that the effective VAT rate would be 9%
- VAT registration was applied for (and received within one week)
- The yacht was imported into Malta
Once the structure details had been agreed with the client we then discussed the flag status and it was agreed that it should be transferred to Malta from the BVI due to the particularly good reputation of the Maltese Ship Registry, the fact that the yacht is owned by a Maltese company, and that Malta itself is on the OECD ‘white list’ as well as the white list of various port authorities.
As well as setting up structures like this Mann Made also provides a full portfolio of services for the Maltese company including the provision of directors, secretary, bank signatories, VAT agent as well as all bookkeeping, accounting and tax matters.