For Captain Kelly, the tax authorities are missing the point. Rather than clamping down on all commercial yacht owners, he suggests, they should instead be focusing their efforts on those commercial yacht owners who in actuality refuse to charter their yacht, solely wanting commercial status for the tax relief. “I have first hand experience of being subject to a customs’ control on a boat I ran where the owner simply did not want to charter his pride and joy, yet wanted tax free fuel, alcohol, berthing and so on. This isn’t really playing the game and countries would make far more revenue from clobbering these boats with tax than they will from taxing every legitimate boat [as they do] now.
“The reason I say this is because boats are leaving the South of France; boats that charter hard are now running to the bolt holes such as Montenegro where they will be welcomed with open arms. This doesn’t just have an impact on customs’ revenue but has a huge impact on the local economy where companies are relying on these boats’ business. It seems that Spain, France and Italy, among others, have lost sight of the bigger picture. I don’t believe they are going to make any increased tax revenue from taxing the charter agreements compared to what they are going to lose in taxes that the local companies pay. Less business means lower income resulting in less business tax being paid. This is going to have far wider impact than these governments have previously thought. It seems to be a knee-jerk reaction to our European financial woes and it is naïve to think that boats and owners will just take these taxes on the chin. France has already slapped the 75 per cent tax on the rich and they certainly wont’ be hanging around to suffer more."
"It is naïve to think that boats and owners will just take these taxes on the chin. France has already slapped the 75 per cent tax on the rich and they certainly wont’ be hanging around to suffer more."
With stronger focus on the tax regime, Captain Kelly has also experienced lengthy and over-stringent customs inspections, to the point where this was the tipping point for his old owners who, after 25 years in yachting, felt this was just a step too far. “We were boarded by customs on a number of occasions and instead of accessing a database to see if our paperwork was in order we were subject to scrutiny on each occasion by customs officials hungry to justify their existence and find a bad egg. Fortunately for us, our paperwork is meticulously filed but this didn’t stop me having to spend an entire afternoon, mid-charter, in a customs office providing them with financials from the previous two years.”
Unfortunately, speaking with Captain Kelly is not the first time The Crew Report has been made aware of the problems caused by charter tax for both owners and captains alike, and with regulations only becoming more strict the future of the tax regime and its effects on our industry is unstable and concerning.
Make sure any owners you know read the charter tax feature in issue 12 of The Superyacht Owner.