“In Lauderdale I was talking to some of the American brokers and lawyers, and they were saying that people weren’t taking their boats over to Europe this year because they’re too worried about breaking one of the rules of the VAT laws and that’s concerning,” explains Allix, who adds that this opinion is also shared by Dominion Marine’s clients and some of their representatives.
“The MLC came in in August, around the same time as the VAT on owners’ charters, and owners are saying, ‘Look, we’ve got the crew and MLC rules, we’ve got to be compliant because the regulations are becoming more and more confusing and now we’ve got pay VAT when we use our boats. It’s all too much. We’re in a situation where we don’t need all this hassle.’ It’s a simple case of, ‘The chartering part was nice, but it’s not essential. I can afford the boat without it.’” And this isn’t something owners should be thinking in this luxury industry. “They’ll throw the toy out of the pram and find something else to play with. They don’t have to have a yacht.”
An additional seeming result of this new wave of regulations is the switching of registries, adds Allix. “I was talking to the Marshall Islands [registry] and they were saying they’re taking quite a lot of boats from Cayman because of this issue of charter. They’re saying you can be a pleasure boat, charter ten weeks a year and you’re not part of the MLC, but they do admit you can’t charter in Europe; because if you’re arguing that it’s not part of the MLC because it’s not a commercial activity, you can’t argue on the other hand it’s a commercial activity and you should be VAT-registered.”
- Chris Allix, director, Dominion Marine
One of the biggest frustrations for existing owners, adds Allix, is that this hasn’t always been the state of the industry. “When I started, everyone paid full VAT. It was simple. But then as an industry we got complicated. The industry brought in the commercial code for very good reasons – it was nothing to do with tax. No one was looking at the bigger picture. The UK took over the whole thing and put shipping people in charge of yachts. The rest is history. The French had the best scenario for commercial charter yachts in the whole of Europe, but they weren’t enforcing it and therefore the EU eventually jumped in on them as well.”
Whilst regulations have their place in what has for such a long time been an under-regulated industry, it is paramount to remember that this is a luxury industry and one that owners choose to be a part of and invest in. If it gets too complicated, we run the risk of running ourselves into the ground.