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Quite some clients ask us about the VAT (Value Added Tax) status ‘exempt on age’. Specially for late classic yachts, this is an important topic, to not run into tax authority troubles.

Even though the EU was formed nearly 30 years ago, there are still a number of yachts operating within the EU under the status of VAT exempt on age. This status is applied to privately owned yachts built before 1st January 1985 and also lying within the EU at midnight on 31st December 1992. Yachts complying with this criteria may be deemed VAT paid under the Single Market transitional arrangements.

As Austria, Finland and Sweden joined the EU later, the relevant dates for vessels in these countries are ‘in use’ before 1st January 1987 and moored in EU on 31st December 1994.

Documents to evidence age:

Builder’s certificate, flag registration, insurance documents or a marine survey

Documents to evidence location:

Receipt for moorings, receipt for harbor dues, dry dock records or  log books

Those proofs may be required by the local customs and often it can be difficult to provide, as receipts or invoices going back that far have often been lost or destroyed or simply not passed on as ownership has changed hands. If documentary evidence of the location of the vessel on 31st December 1992 cannot be provided, best to hand to the the local customs whatever existing documents there are for them to review and they may issue a letter of comfort that the yacht is considered by them as VAT exempt.

Change of VAT exempt status

The status of being VAT exempt on age in the EU will be retained unless a chargeable event has taken place. Examples of a chargeable event include re-entry into the EU following an export from the EU for more than 3 years, a change of ownership  outside the EU or as a result of a refit period affecting the value of the yacht.