Commercial yachts and VAT exemption

Under the EU 6th Directive supplies of goods and services to commercial vessels are exempt from VAT. The interpretation of what is a commercial vessel from a VAT perspective varies from country to country within the EU. As discussed earlier, in the south of France a yacht with a “commercial” registration was regarded as “exempt” from VAT. As discussed below this is an approach the Dutch now appear to endorse with their new commercial yacht classification. The majority of other EU member states regard the classification of a Commercial vessel for VAT purposes to be a matter of design. In other words irrespective of its registration status – private or commercial, a vessel which is designed for pleasure or recreational purposes is subject to VAT. From this definition it is clear that yachts which are accepted by the Dutch and French as being exempt from VAT because of their commercial registration status, may not be regarded as being exempt from VAT in many other member states.  With this huge variation in the acceptance or otherwise of a commercial yachts VAT exempt status, the effectiveness of any one countries “commercial” status to avoid an exposure to VAT is very geographically limited. Whilst some countries will accept this status it is most likely that others will robustly challenge it.