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VAT treatment of commercial pleasure vessels that cease their activity and are intra-community supplied or exported

Iason Skouzos - TaxLaw > Practice Areas  > Tax Law  > VAT treatment of commercial pleasure vessels that cease their activity and are intra-community supplied or exported

VAT treatment of commercial pleasure vessels that cease their activity and are intra-community supplied or exported

According to article 24 of the Greek VAT Code, the supply (sale) of goods that are exported outside of the Community (export) by the seller or a person acting on behalf of the seller, is exempt from VAT.

Similarly, according to article 28 of the Greek VAT Code, the intra-community supply (sale) of goods that are dispatched or transported to another EU Member State by the seller or the acquirer or a person acting on their behalf, to another taxable (i.e. subject to VAT) person or to a non-taxable legal person acting in that capacity is exempt from VAT.

Therefore, in case of the sale of a commercial pleasure vessel whose operation (activity) in Greece is ceased due to the fact that the vessel is sold for export outside the EU or is intra-community supplied to another EU Member State, the following tax treatment applies, as the Tax Administration has communicated through its document ΕΔΥΟ Δ17Ε 5004601 ΕΞ 31.1.2012:

In case of commercial pleasure yachts that have been customs cleared into Greece with a VAT exemption and for which the commercial license ceases to be in effect due to the fact they are exported or intra-community supplied, and for which all required reporting obligations and formalities have been met (i.e. Listing & Intrastat returns, Export Customs declaration etc.) and from the submitted documentation it derives that the required minimum chartering days of the vessel up to the time of the vessel’s sale to a foreign company and its de-registration from the Greek Registry have been fulfilled (namely that the conditions under which the VAT exemptions had been have been fulfilled up until the time of the export or intra-community supply of the vessel), then no Greek VAT is due to the competent customs authorities and the VAT exemptions that had been granted are not revoked.

However, in case that the required minimum chartering days of the vessel up to the time of the vessel’s sale to a foreign company and its de-registration from the Greek Registry have not been fulfilled, so it is evident that the conditions under which the VAT exemptions for the vessel had been granted have not been met and the vessel has not been used in accordance with the relevant legislation, the competent customs authority revokes the initial VAT exemptions and collects the corresponding VAT.

The above VAT treatment is based on the provisions of article 31 of L. 2960/2001 (Greek Customs Code) where it is provided that the State retains its claims against the owner of goods regarding taxes and customs duties not collected/imposed, if it derives, following a post-audit process, that the required conditions in relation to the applicable regime/exemptions etc. have not been met.

In case a VAT chargeability arises, for the determination of the taxable base for VAT purposes the following apply:

According to the provisions of article 7 of L. 4926/2022, when a commercial pleasure yacht does not fulfill its minimum chartering days requirements, or in cases the commercial activity ceases, any VAT exemptions that have been granted in the past either for the acquisition of the yacht or for supplies made to the yacht (e.g. fuel, provisioning, goods & services etc.) may be subject to a tax/customs audit following which VAT as well as customs duties and other charges may be charged if it is evidenced that the exemption conditions have not been met.

In such cases, the taxable value of the commercial pleasure yacht for VAT purposes is determined based on article 7 par.2 of L. 4926/2022 and is the higher between the following values:

a) the price of the sale to the first buyer following the construction of the yacht, reduced by the applicable percentages that are determined based on the yacht’s age, and

b) the insurance value that derives from the insurance contract for the yacht at the time of the chargeability of the VAT.

The above value is applied also in the case of a sale of the yacht, when the value determined based on the VAT Code (e.g. the consideration agreed for the sale) is lower than the value deriving from the above provisions.

 

 

*             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.

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