Vat on pleasure yachts
A finance-lease agreement of a pleasure craft is an agreement whereby the lessor (owner) leases to a lessee (user) and, included within this agreement, the lessee is given the option to buy the boat at a reduced rate at the end of the lease agreement.
The lessee, given that certain conditions apply, may be considered to be the owner and would only pay VAT on the lease depending on the length of time the pleasure yacht is used within the EU territorial waters. Since it is difficult to track the exact movements of a yacht, in order to determine whether the yacht stays within or outside EU waters, a deemed usage percentage based on the size of the yacht in question has been established by the VAT department and published within the guidelines, thereby reducing the Vat charge at predetermined rates.
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