EC Chases Tax Dodging Luxury Yachts

March 9, 2018 Taxation in EU

tax on luxury boatsBRUSSELS – Greece, Malta, and Cyprus may lose their status as prime destinations for registering luxury yachts.

On March 8th the European Commission issued a statement confirming that it has opened infringement procedures against Cyprus, Greece, and Malta for their tax treatment of luxury yachts.

The alleged infringement concerns the member states establishing and enforcing guidelines which may greatly reduce the VAT applied to the lease of luxury yachts and boats.

Under current EU rules, member states are able to forego applying VAT to the supply of services which are utilized and enjoyed outside of the EU.

The three member states issued guidelines in which the larger the boat, the more of the lease is estimated to take place outside of the EU.

The rules made it easier for large yachts to pay less tax, if they were registered in Malta, Greece, or Cyprus.

Explaining the reason behind the infringement procedure, the Commissioner for Economic and Financial Affairs, Taxation and Customs Union, Pierre Moscovici, for We cannot allow this type of favourable tax treatment granted to private boats, which also distorts competition in the maritime sector. Such practices violate EU law and must come to an end.”

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