Definition
VAT (Value-Added Tax) is the consumption tax payable on yacht and tender sales within the EU and UK, with the VAT status of the asset (paid, ex-VAT, or held under Inward Processing) determining where and how it can lawfully be used.
Background and use
For tenders, VAT cuts in two directions: at purchase and at cross-border movement. A new tender bought from an EU yard for an EU-resident owner is normally invoiced VAT-paid (rates run from 17 percent in Luxembourg to 27 percent in Hungary, with most key yacht jurisdictions, France, Italy, Netherlands, between 20 and 22 percent). The VAT-paid status is what gives the boat free circulation across the EU customs union.
If the buyer is non-EU, or if the boat will live outside the EU on a temporary import, the deal usually closes ex-VAT under one of the customs reliefs: Temporary Admission (TA) for visiting non-EU yachts, Inward Processing (IP) for boats undergoing refit or sale-pending status. The mothership's VAT regime drives the tender's: a TA-registered yacht can carry a TA-status tender; bringing a VAT-paid tender onto a TA yacht complicates that yacht's onward movement.
Post-Brexit the UK runs a separate VAT regime. A boat with UK VAT-paid status enjoys free UK circulation but is treated as ex-VAT for EU purposes, and vice versa. Most large new-build tenders for British owners now invoice through Channel Islands or Isle of Man structures specifically to manage this split.
Related considerations
- Lost VAT-paid status (export, then re-import without relief) means re-paying VAT.
- TA in the EU runs 18 months for non-EU flag, with restart on departure.
- Inward Processing requires a customs guarantee and a defined exit plan.
- VAT status is a contractual representation in the MOA; misrepresentation triggers warranty claims.
- Charter use changes VAT treatment; commercial yachts apply the reduced charter base where available.