VAT exemption of a sale of a commercial pleasure yacht – Conditions and applicable procedure
- Conditions for the VAT exemption
According to the provisions of article 27 par. 1 case (a) subcase (aa) of Law 2859/2000 (Greek VAT Code), a VAT exemption is provided for the sale of vessels falling under the below categories (and excluding vessels for private use intended for recreation or sport):
aa) vessels intended to be used in high seas navigation and which carry out passenger transport for a fee or with which commercial, industrial or fishing activities are carried on,
bb) coastal fishing vessels,
cc) vessels intended for dismantling,
dd) warships and State vessels,
ee) lifeguards and other maritime assistance vessels.
In relation to vessels that are intended to be used for navigation on the high seas and which carry passengers for a fee or which are used for the purpose of commercial, industrial or fishing activities (i.e. category (aa) above), they must cumulatively meet the following conditions:
- they have been designed for navigation on the high seas, namely seagoing vessels having a hull of an overall external length of not less than 12 meters and which fall within the combined nomenclature (CN) codes 8901 10 10, 8901 20 10, 8901 30 10, 8901 90 10, 8902 00 10, 8903 91 10, 8903 92 10, 8904 00 91 και 8906 90 10 of the EU Common Customs Tariff (Regulation No 2658/87 – the tariff and statistical nomenclature and the Common Customs Tariff).
- they are used for carrying out activity mainly on the “high seas” (defined as the sea area beyond 6 nautical miles from the natural coastline of the mainland or island country – the width of the coastal zone of Greece).
Especially for the vessels that fall under the CN codes 89039110 and 89039210 (yacht and recreational crafts), they fall under the above-mentioned exemption on the condition that they are classified as commercial pleasure vessels regulated by the specific legislative framework in effect from time to time (previously under L. 2743/99, then L. 4256/2014), and currently under L. 4926/2022.
Further to the above, Ministerial Circular POL 1177/2018 stipulates the conditions for the activity of vessels mainly on the high seas for the purpose of granting the VAT exemptions and the means of evidencing such activity, whereas Ministerial Circular POL 1187/2018 provides for the procedure that must be followed for the granting of the applicable VAT exemptions.
In specific, according to Ministerial Circular POL 1177/2018, the commercial pleasure vessels of L. 4256/2014 (currently L. 4926/2022), as vessels that do not carry out predetermined charters, are considered to carry out an activity mainly on the high seas, for a specific calendar period, if more than 60% of the total distance traveled for that period, based on the charters they carry out, is carried out in territorial waters of another state in accordance with the provisions of par. 1 of article 2, or beyond 6 nautical miles from the natural coastline of the mainland Country if the port of departure is located in the mainland Country, or beyond 6 nautical miles from the natural coastline of the island where the port of departure is located.
The Circulars set out a detailed procedure for the evidencing of the activity mainly on the high seas and the granting of the VAT exemptions.
However, due to various technical difficulties, there are currently transitional provisions (for the moment up to 31.12.2022 and in anticipation of further extension for 2023) based on which the person claiming the VAT exemption (buyer) declares that the vessel will carry out activity mainly on the high seas.
Based on Ministerial Circular POL 1187/2018, for the application of the VAT exemptions for the above-mentioned vessels, the following procedure must be followed:
a) the procedure stipulated by Ministerial Circular Α.Υ.Ο. Π. 8271/4879/POL 366/18.12.1987 and
b) the evidence of the carrying out of “activity mainly on the high seas” according to the provisions of Ministerial Circular POL 1177/18 (which however for the moment its full application is suspended, as noted above).
- Procedure for the VAT exemption (Ministerial Circular Α.Υ.Ο. Π. 8271/4879/POL 366/18.12.1987)
The procedure for the application of the exemption on the sale of a vessel is provided by Ministerial Circular Α.Υ.Ο. Π. 8271/4879/POL 366/18.12.1987 (Chapter B).
In specific, based on article 6, for the application of the VAT exemption of the sale of vessels intended for navigation on the high seas and which carry passengers for a fee or which are used for the purpose of commercial, industrial or fishing activities, the procedure entails the following steps:
The buyer submits to the competent tax officer the following documentation:
a) an application/declaration containing the following data:
– the full details of the buyer and the seller
– the VAT/tax id number of the buyer and the seller
– the Port Authority where the vessel will be registered as well as the competent tax office
– the full details of the vessel (type, name, tonnage, vessel’s registration number etc.)
– request for the issuance of a certificate for the purchase of the vessel without VAT (VAT exemption certificate)
b) supporting documentation regarding the commercial classification of the vessel, such as, indicatively:
– a certified copy of the loan granted according to the Greek legislation for the funding of the purchase by a bank, financial institution etc. from which the commercial nature of the vessel is derived;
– a certified copy of the document of nationality of the vessel or the commercial license of the vessel issued by the Minister of Maritime Affairs.
If at the time of the filing of the above application the buyer does not have any supporting evidence for the commercial classification of the vessels, then he must explicitly undertake the obligation to submit to the tax officer within 45 days one of the available supporting documentation evidencing the commercial nature or, otherwise, the obligation to pay the corresponding VAT to the State.
In case the buyer does not submit to the tax officer within the above deadline the supporting documentation required, then the tax officer proceeds immediately to the assessment of the VAT to the buyer. Prior to the expiration of said deadline, the buyer can request for an equal extension of the deadline.
c) a copy of the acquisition title of the vessel (invoice, public or private document).
The tax officer confirms from the provided information that:
– the applicant (buyer) is a person subject to VAT and carries out or intends to carry out the business activity of the commercial exploitation of the vessel, and
– the vessel is classified as commercial
and grants to the buyer a VAT exemption certificate subject to and to the extent that the exemption applies for as long as the vessel maintains its commercial classification.
The buyer submits the relevant VAT exemption certificate to the seller so that the seller can attach it to the invoice for the sale of the vessel (or to the private or public document of the sale) and indicate thereon “Without VAT according to Ministerial Decision AYO Π.8271/4879/18.12.1987”.
Regarding sales of vessels after their registration at the vessel’s Registry, the VAT exemption certificate is granted in two copies, one of which is submitted by the seller to the Registry for the de-registration from or transfer of the vessel to the relevant Registry.
* The information is accurate to the best of our knowledge as at the time of writing. We have no obligation to update it. We accept no responsibility against any third party who is not a client of the firm and has not signed the terms of our engagement.