The acquisition cost of pleasure craft (private yachts or other vessels used exclusively for pleasure) is subject to VAT if the vessel is brought into the EU and used in EU waters. If the vessel is used partially outside EU waters the percentage of the cost subject to VAT may be reduced to reflect this. In order to avoid the need for detailed record-keeping regarding the whereabouts of the vessel Cyprus has introduced a scheme allowing for the percentage of the cost subject to VAT to be determined according to the type and the length of the vessel, allowing savings of up to 80% in the VAT payable. The scheme, which involves a lease of the boat of up to four years with a possible option to purchase at an agreed price, is similar in nature to schemes in Italy and Malta. For most vessels the use of the Cyprus scheme will give considerable savings compared with Italy and Malta.

Read the full article by clicking the link below.