Yacht Ownership: Cyprus Leasing Update
Following uncertainty and controversy over the Malta and Cyprus leasing schemes, the tax authorities in Cyprus recently set out the guidelines for the leasing of pleasure yachts which are summarised as follows:
*The Lessor must be a Cyprus company, registered for VAT purposes in Cyprus
*The Leasing agreement must be between the Lessor and a Lessee which is a physical person, regardless of the Lessee's place of residence
*The Lessor must remain VAT registered in Cyprus for a minimum of 6six years. Should deregistration happen prior to the six years, the tax department may request the payment of output VAT on the full value of the yacht at 19%
*A guarantee payment equal to 3% of the yacht's value must be made to the tax department
*The voyage records of the yacht must be available to the tax department
*If the yacht is not registered under the Cyprus flag at the start of the lease, stamp duty will apply
There are feasibility advantages to this new lease over the continued uncertainty of the Maltese lease, however, the duration of the VAT registration along with the 3% guarantee are very clear disadvantages and will concern many in the yachting industry.
There is no 'one size fits all' solution for yacht owners in today’s market, and all the alternatives such as registering the yacht as commercial, paying the VAT in full, taking advantage of paying the VAT at a reduced rate in Cyprus or deferring payment through Monaco or Cyprus Rental have advantages and disadvantages. Everything depends on the client’s particular requirements.
Founded by Chris Allix (pictured), Dominion Marine Corporate Services Limited (DMCS) have been providing professional services to superyacht owners since 1984. If you are purchasing a superyacht you will be seeking the very best advisors to steer you through the potential implications of owning such a high value asset.
Regulated by the Isle of Man Financial Services Authority, DMCS can provide the full range of corporate services from company setup and yacht registration to crew employment, importations and VAT planning, and technical services.
We offer highly competitive rates and work closely with you and your advisors to provide the very best solutions. If you would like to know more please get in touch.
Isle of Man: +44 (0) 1624 682400
Jersey: +44 (0) 1534 833460
Monaco: +377 93 10 54 55
Malta: +356 27 03 04 22
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