Croatian Yacht Charter Tax to change after joining the EU?

Initially there was concern amongst many in the yachting industry that the some 10,000 yachts registered with Croatian customs would be forced into free circulation. In order to do this, owners would have to pay the customs duties as well as VAT as defined by the EU Customs Union – set at a rate of 25%. In response to the changes and in order to encourage yacht owners and charter clients to stay in Croatia, it was reported in January that the Croatian government had approved the introduction of a reduced rate of local VAT of 5% on the importation of foreign flagged vessels for a limited time that expired on 31st May 2013.

Branimir Mader of the Croatian Chamber of Commerce commented: “By June we are expecting adoption of the new Croatian VAT law which foresees that charter contracts will be charged with 10% VAT”. Technically, for luxury charter yachts in Croatia, that represents no actual change from the law as it has been before Croatia joined the EU, however with the economic climate struggling to recover throughout Europe, many are keen to help promote and protect the charter market.

For some, particularly luxury charter yachts, countries outside of the EU pose attractive benefits in terms of tax and import regulations. Montenegro’s yacht-friendly legislation for example offers particularly favourable import regulations, lower fixed tax rates on purchases and income, as well as tax and duty free fuel. These cost advantages suggest the second half of 2013 will likely see an increase in luxury yacht charter vacations outside of EU waters.

In recent years Croatia has become an increasingly popular charter destination with charter clients attracted to over 5,000km of unspoilt coastline sheltered by chains of over 1,185 islands, only 66 of which are inhabited. Laced with untouched beauty and glittering azure waters of the Adriatic Sea, Croatia is a perfect destination for exciting luxury charter vacations, with an increasing number heading to the beautiful Dalmatian coast each summer.

Technically, for luxury charter yachts in Croatia, that represents no actual change from the law as it has been before Croatia joined the EU...