The Cyprus VAT Service has launched new guidelines on VAT
payments applicable under the Yacht Leasing Scheme. As a result,
effective VAT rates can be reduced to as little as 3.4% of the
initial value of a yacht - less than the equivalent in other
favoured jurisdictions, including Malta.
Under the Scheme, a Cypriot company can purchase a pleasure
yacht and enter into a lease-sale agreement for the yacht with a
third-party lessee – an individual or company
irrespective of their location. Since this is a service deemed to
be supplied in Cyprus, VAT is due on the lease at the normal rates
of VAT in Cyprus – currently 17% – but is
payable only on that portion of the lease which the yacht spends in
To avoid the difficulty of establishing the exact length of
stays in EU waters, the VAT Service has issued its own percentage
scales based upon "presumed" lengths of stay for
different types and lengths of yacht. Motor and sailing boats over
24-metres in length are deemed to spend only 20% of their time in
EU waters (compared to 30% under the Malta equivalent scheme) to
give an effective VAT rate of 3.4%, while motor boats below
8-metres and sailing boats below 10-metres are deemed to spend 60%,
giving an effective VAT rate of 10.2%.
The yacht, which can be registered anywhere within the EU, must
arrive in Cyprus within one month of the date of inception of the
lease agreement and the initial lease payment must amount to at
least 40% of the value of the yacht. Further lease payments are
payable on a monthly basis, and the lease period must under no
circumstances exceed the period of 48 months (36 months in
The lessee may purchase the yacht at the end of the lease
period, for a final consideration of not less than 5% of the
initial value of the yacht. The VAT authorities will then issue a
certificate to the lessee confirming full payment of the total VAT
liability. The lessor is expected to make a total profit from the
leasing agreement of at least 10% on the initial value of the
Prior approval from the VAT Commissioner is required for every
application of the Yacht Leasing Guidelines.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Brazilian Federal Government decided to reduce from 20% to 17% the percentage of the maximum income tax rate required from the low-tax countries classified as "favored taxation country or dependency" (país ou dependência com tributação favorecida) or "privileged fiscal regime" (regime fiscal privilegiado).
On November 19th, the Federation Council, the upper house of Russia's parliament, approved a new tax law as part of President Vladimir Putin's "deoffshorization" initiative created to return Russian capital and assets from foreign offshore jurisdictions.
There are two possible ways to own or control an assets.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”