Tariff Wars – American Superyachts
The trade war between the US and EU requires US-built superyachts to pay an additional 25 per cent customs duty…
David Prescott, VAT Consultant, Equiom, explores the trade dispute between the EU and US
As European waters continue to be a popular destination area for yacht charter activity, it is important to note that for US built yachts, a trade dispute between the US and the European Union (EU) that commenced in 2018 is still affecting yachts that wish to charter in the EU. This means that US built yachts wishing to charter in EU waters and needing to be imported into the EU will be affected by this trade dispute and potentially find themselves subject to punitive EU duty tariffs.
The trade war between the Trump Administration in the US and the European Union has been going on for much of 2018 and 2019. The start of these ‘tit for tat’ actions happened as a consequence of changes made to America’s trade policy, mainly applying to US imports of steel and aluminium. America’s new trade policy announced that it intended to limit importations into the US through increased tariffs for the sole purpose of protecting its industries; these increases became effective from 23 March 2018, and for an unlimited duration.
The European Union (EU) responded with a range of increased tariffs on US produced goods implemented under Regulation (EU) 2018/724, amended with (EU) 2018/886 and effective from 26 June 2018.
The range of goods on which increased tariffs were to apply included US built sailing yachts and motor yachts. Consequently, US built superyachts that were to be imported into the EU, either for chartering purposes or for private ownership by an EU resident, are required to pay an additional 25 per cent customs duty in addition to the VAT payable in the Member State of importation. US yachts that had been imported into the EU before 22 June 2018 remain unaffected.
It must be stressed that these additional EU tariffs only apply to yachts that were not deemed to be in free circulation in the EU after 22 June 2018 and yachts that have been previously imported up to and including 22 June 2018 remain unaffected by these changes.
It does mean however that yachts that have previously been exported from the European Union, or yachts that are arriving to the European Union for the first time are required to pay these additional duties. As a consequence, even yachts that are being imported into the EU under the existing French Commercial Exemption, where the VAT is exempted on the importation, will still be subject to the specified additional 25% duty tariff.
It has been established however that US built yachts can still visit the EU while under the Temporary Admission without the requirement to pay the additional tariffs. To qualify for Temporary Admission the ultimate owner of the yacht must be resident outside of the EU and while the yacht is located in the EU, the yacht cannot trade, meaning that the yacht can only be in EU waters as a private pleasure vessel.
Equiom continues to monitor this situation and will issue appropriate advice if these circumstances change.
To discuss this and other topics impacting the US maritime industry, come and meet our Yachting Development Director, Chris Stokes at the upcoming Fort Lauderdale International Boat Show (FLIBS) or The Superyacht Forum.
This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.
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