“The European Union is its own worst enemy,” Neil Moore, director of charter management at Burgess, told SuperyachtNews during the MYBA Charter Show in Barcelona, offering a critique of the charter market, in what has emerged as a powerful debate in the first half of 2017.
“It’s absolutely right that people should pay VAT on a charter. If I go on holiday, I’m paying VAT on my holiday because I’m having a service in the EU, but it’s so detrimental to our industry not to have a common agreement between all countries,” continues Moore. “There should be a VAT of 10 per cent on every charter, regardless of where you embark or disembark, or your itinerary.”
Moore is very concerned about the bureaucracy being heaped on owners year after year, making it less attractive to operate yachts commercially. “It’s the owners who want to use the boat a reasonable amount themselves, but do a few charters here and there to offset the running costs – those are the guys it’s getting very difficult for.
“One of our owners, the owner of an amazing 65m+ motoryacht, approached us this year about putting his yacht on the charter market. When we told him the A to Z of what it entailed, straight away he said he wasn’t interested. We can’t afford to kill the golden goose and have owners think that it’s not worth doing. Everyone needs to generate revenue from charters and with a flat rate of 10 per cent, I think everyone would win.”
Burgess has noticed a significant shift in charter business from Greece and Turkey, which are very popular cruising grounds historically, to the Western Mediterranean. In years gone by, the Aegean has accounted for approximately 15 per cent of Burgess’ charter activity, but last year it dropped to around three per cent due to the proximity of political instability.
However, this does not appear to affect the ascendency of the charter market as it might the brokerage market, and there tends to be a redistribution of business as opposed to a decrease in business.
“All in all, we’re seeing an increase in our charter business year upon year,” Moore continues. “Americans are our number one clientele now. For years it was the Russians, but last year I think they were down to number five on our list, although I expect them to creep up now as they are returning.”
As the yachting industry becomes progressively commercialised, trying to find loopholes in fiscal structures is not a solution that is simple, practical and workable. The industry must continue to press for unilateral regulation of taxation to balance out the increasing complexities of commercial operation.