The 70% rule is a regulation that applies to superyachts cruising in the EU waters, which requires them to spend at least 70% of their time outside of their home country if they want to qualify for VAT exemption. For yacht managers, ensuring that their yachts comply with this rule is essential to avoid penalties and maintain good standing with tax authorities. Here are some steps that yacht managers can take to ensure that their yachts respect the 70% rule:
Keep accurate records: Yacht managers should keep accurate records of the yacht’s movements and activities, including the dates and locations of all charters, refits, maintenance periods, and crew changes. These records can help demonstrate compliance with the 70% rule and provide evidence in case of a tax audit.
Plan the itinerary carefully: Planning the yacht’s itinerary carefully is essential to ensure compliance with the 70% rule. Yacht managers should consider cruising through multiple countries with lower VAT rates to maximize the time spent outside of the home country. They should also avoid returning to the home country unnecessarily or spending too much time in one country.
Monitor the yacht’s movements: Yacht managers should monitor the yacht’s movements closely to ensure that it complies with the 70% rule. They can use GPS tracking and other monitoring tools to track the yacht’s location and movement history. They should also stay up to date with the latest VAT regulations and ensure that the yacht crew is aware of these rules.
Hire a VAT representative: Yacht managers can hire a VAT representative to help them navigate the complex VAT regulations and ensure compliance with the 70% rule. These representatives can help yacht managers register for VAT in the countries where they are cruising, file VAT returns, and ensure compliance with local VAT regulations.
Train the yacht crew: Yacht managers should train the yacht crew on the 70% rule and the importance of complying with VAT regulations. The crew should be aware of the yacht’s itinerary and be able to provide accurate information to tax authorities if needed.
In conclusion, yacht managers can ensure that their yachts respect the 70% rule by keeping accurate records, planning the itinerary carefully, monitoring the yacht’s movements, hiring a VAT representative, and training the yacht crew. By following these steps, yacht managers can avoid penalties and maintain good standing with tax authorities, ensuring a smooth and successful operation of the yacht.