In the EU, VAT is regulated by the Sixth Directive. An EU Directive sets out objectives, and the member states have to pass legislation to give effect to the terms of the Directive. However, it is up to the individual countries to make their own laws to reach these goals. This is the reason why the rules and regulations differ from country to country.
Common requirements for chartering in the EU.
• Yachts must be commercially registered
• Yachts must be in “Free circulation” in the European Union waters
• The owning company must be VAT registered in each country where the yacht is made available to the charterer
Meaning of free circulation status for non-EU flagged yachts
Non-EU commercial flagged yacht (if not VAT paid), must be imported into the European territory, obtaining the importation document called SAD (Single Administrative Document) or DAU. A yacht is in free circulation until it’s exported out of the EU.
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