by Bernard Corcos 
Often hailed as the epicenter of the global yachting industry, the Mediterranean, with Monaco as its shining gem, requires navigating a complex web of Mediterranean yacht tax regulations. To fully enjoy the Mediterranean experience, yacht buyers must be aware of these tax implications.
When acquiring a yacht for use in the Mediterranean, it’s crucial to consider the yacht’s purchase location and the owner’s residence. These factors dictate the Mediterranean yacht tax and duties, such as VAT and import duties. For EU residents, buying a new or used yacht without VAT usually requires paying VAT at the delivery location, unless the yacht is for commercial use or leased. Non-EU residents can use their private yachts under Temporary Admission for up to 18 months without Mediterranean yacht tax, or benefit from VAT exemption if the yacht is offshore-registered and meets import regulations.
Understanding the specific legal and tax implications involves analyzing operational tax issues, flagging requirements, the nationality and residence of intended users, cruising areas, and potential charter activities.
The tax residency of the yacht owner plays a critical role, especially regarding income generated by the yacht or capital gains on its sale. Tax obligations vary depending on the chosen legal structure and any relevant double tax treaties, which may include special rules for ship and yacht operations.
Countries like France impose special wealth taxes on personal assets, including yachts, which may affect yacht owners based on their tax residency. Some jurisdictions tax the use of corporate-owned yachts as a benefit-in-kind. It’s also vital to consider Controlled Foreign Corporation (CFC) rules, which may impose additional tax constraints. For instance, new Russian CFC laws could tax undistributed profits of foreign entities at different rates depending on the residency of the UBO.
The introduction of the Common Reporting Standard (CRS) for tax information exchange adds another layer of complexity. UBOs should be aware of what information is reported to their home jurisdiction, including details on yacht ownership structures and account balances, and stay updated on transparency developments that could lead to public disclosure.
Asset protection and estate planning are crucial for yacht owners. The applicable law for an estate is determined by conflict of law rules, which might designate different laws for movable and immovable assets. Common law jurisdictions typically allow more freedom in estate disposition, while civil law jurisdictions may impose forced heirship rules. Given the yacht’s high value, careful planning is essential, including Will, life insurance, prenuptial agreements, gifts, and succession planning.
This information serves as a general guide and should not replace specialized legal or tax advice tailored to specific circumstances regarding Mediterranean yacht tax, ownership, registration, and operation.
