Taxing times
A number of captains have recently bemoaned the agency sector's lack of understanding of the tax regimes of different countries. We look at the substance behind these accusations and how to reach an improved understanding.…
The past 12 months has seen a dramatic addition to the work-load of yachting agents, with their pool of knowledge now necessitating the inclusion of new tax and legislative regimes. In the regimes’ wake, however, there has been a backlash from captains who have accused yachting agents of lacking a sufficient understanding of the tax regime.
“Neither agents, nor management companies are sufficiently aware of the tax issues relating to the industry,” explains Captain Clive Carrington-Wood. “This is no one's fault as the laws change frequently, are often preceded by broad speculation in the media and are introduced by governments who, perhaps deliberately, do not issue sufficiently clear guidance on how the taxes are to be applied. Combine this with the ridiculous debates that then rage in Brussels over individual countries’ tax laws and the international law suits that follow and it leaves owners, captains, management companies and agents with a minefield of information and disinformation to navigate through. The result has often been to play safe and avoid the country concerned.”
However, there is a clear-cut line between a yachting agent’s role when it comes to understanding a government’s tax and legislative regimes and their own fees and service charges as agents, highlights Julian Madsen, commercial manager at BWA Yachting. “Agents are faced with a growing body of new national tax and legislative regimes in, particularly, the Mediterranean and Adriatic seas. Examples include new charter taxes, new EU member states, exemptions restraining duty-free bunker and various new port duties and tariffs. All of the examples represent recent developments, of which we are still waiting to see not only the effect but also the degree of enforcement and varying interpretations by governments and local officials. Needless to say, this causes uncertainty with all parties and sometimes also unpleasant surprises.
“I found it truly amazing that our vessel, a 45m-plus Italian build, Malta-flagged, VAT-paid yacht had to pay import and export on life rafts, lifejackets and indeed any other item removed from the vessel for service work. It has meant that I have spent the winter in Spain instead of Italy, as being taxed three times on the same items was not something anyone in their right mind would allow if they could avoid it,” Captain David Evans of Clan VIII tells The Crew Report. “The agent involved with our vessel did not explain why the excessive tax was needed or cite the law referring to this. Instead, they insisted that it was so and told the captain that they had done this for years and we should not question them – ours was only a small vessel and they had worked with far larger and more important clients. Perhaps a unified approach is needed with explanations of why these actions are necessary, under which laws and under whose authority.”
Meanwhile, Captain Carlo De Amicis believes the agency sector has established itself as a self-serving one, with the captains bearing the burden. “The majority of them don’t – or act as [if they don’t] – understand the full importance of the many aspects. Their main aim seems to find the best option for them and, sometimes, their clients, to avoid the amount of duties and taxes on the yacht. At the same time, in connection with management, have the contradiction to impose to the crew all the governments’ restrictions, regulations, duties, courses and so forth with the reason, ‘We have to be safe.’”
“Agency fees and service charges represent a different animal," adds Madsen. "A big part of the industry is used to dealing with different local agents in each port, say, one time every other year. Transparency in billing is immediately reduced and the workload of captains and managers often increases.”
It appears that the relationship between captains and agents is fraught with misunderstanding which is causing frustrations. However, perhaps a better understanding of the desires of both parties – their needs and expectations of the other – and the resultant transparency will pave the way for smoother seas in the agency waters. This is certainly the case, for Madsen, who concludes: “I am convinced we will see more ongoing relationships improving all aspects of fiscal transparency and operational planning in yachting going forward.”
Superyacht Managment Meeting: Fiscal will be exploring some of the topics mentioned in this news story, join us for this insightful event in Monaco; 15th April. For more information or to register to attend please contact Suzie Hine by emailing suzie@thesuperyachtgroup.com or calling +44 (0)207 801 1014.
“Neither agents, nor management companies are sufficiently aware of the tax issues relating to the industry,” explains Captain Clive Carrington-Wood. “This is no one's fault as the laws change frequently, are often preceded by broad speculation in the media and are introduced by governments who, perhaps deliberately, do not issue sufficiently clear guidance on how the taxes are to be applied. Combine this with the ridiculous debates that then rage in Brussels over individual countries’ tax laws and the international law suits that follow and it leaves owners, captains, management companies and agents with a minefield of information and disinformation to navigate through. The result has often been to play safe and avoid the country concerned.”
"It leaves owners, captains, management companies and agents with a minefield of information and disinformation to navigate through. The result has often been to play safe and avoid the country concerned."
However, there is a clear-cut line between a yachting agent’s role when it comes to understanding a government’s tax and legislative regimes and their own fees and service charges as agents, highlights Julian Madsen, commercial manager at BWA Yachting. “Agents are faced with a growing body of new national tax and legislative regimes in, particularly, the Mediterranean and Adriatic seas. Examples include new charter taxes, new EU member states, exemptions restraining duty-free bunker and various new port duties and tariffs. All of the examples represent recent developments, of which we are still waiting to see not only the effect but also the degree of enforcement and varying interpretations by governments and local officials. Needless to say, this causes uncertainty with all parties and sometimes also unpleasant surprises.
“I found it truly amazing that our vessel, a 45m-plus Italian build, Malta-flagged, VAT-paid yacht had to pay import and export on life rafts, lifejackets and indeed any other item removed from the vessel for service work. It has meant that I have spent the winter in Spain instead of Italy, as being taxed three times on the same items was not something anyone in their right mind would allow if they could avoid it,” Captain David Evans of Clan VIII tells The Crew Report. “The agent involved with our vessel did not explain why the excessive tax was needed or cite the law referring to this. Instead, they insisted that it was so and told the captain that they had done this for years and we should not question them – ours was only a small vessel and they had worked with far larger and more important clients. Perhaps a unified approach is needed with explanations of why these actions are necessary, under which laws and under whose authority.”
Meanwhile, Captain Carlo De Amicis believes the agency sector has established itself as a self-serving one, with the captains bearing the burden. “The majority of them don’t – or act as [if they don’t] – understand the full importance of the many aspects. Their main aim seems to find the best option for them and, sometimes, their clients, to avoid the amount of duties and taxes on the yacht. At the same time, in connection with management, have the contradiction to impose to the crew all the governments’ restrictions, regulations, duties, courses and so forth with the reason, ‘We have to be safe.’”
"I am convinced we will see more ongoing relationships improving all aspects of fiscal transparency and operational planning in yachting going forward."
“Agency fees and service charges represent a different animal," adds Madsen. "A big part of the industry is used to dealing with different local agents in each port, say, one time every other year. Transparency in billing is immediately reduced and the workload of captains and managers often increases.”
It appears that the relationship between captains and agents is fraught with misunderstanding which is causing frustrations. However, perhaps a better understanding of the desires of both parties – their needs and expectations of the other – and the resultant transparency will pave the way for smoother seas in the agency waters. This is certainly the case, for Madsen, who concludes: “I am convinced we will see more ongoing relationships improving all aspects of fiscal transparency and operational planning in yachting going forward.”
Superyacht Managment Meeting: Fiscal will be exploring some of the topics mentioned in this news story, join us for this insightful event in Monaco; 15th April. For more information or to register to attend please contact Suzie Hine by emailing suzie@thesuperyachtgroup.com or calling +44 (0)207 801 1014.
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