The summer season is soon to get underway and many yachts are now moving across to the cruising grounds of the Mediterranean to enjoy the waters of Spain, France, Italy, Croatia or Greece.
It is also a popular time of year for yacht owners – and would-be yacht owners – to be scouring the yacht market for suitable vessels to buy or to be eagerly awaiting delivery of their new sail or power boat.

While yachting should be a pleasurable and exhilarating experience, that does not mean that it is exempt from the need to have all the paperwork complete, up-to-date and correct for the purpose if you don’t want to run foul of undesirable regulatory or tax issues. This is particularly relevant if you are planning to enter the European Union custom territory for the first time.

The EU’s new Union Customs Code (UCC) came into force on 1 May 2016. Its impact covers a wide range of customs topics but if you are a private or commercial yacht operator registered in a third-country outside the customs territory, you will need to give the UCC special attention.

Non-EU resident yacht owners who are enjoying their yacht privately – i.e. no charter – can qualify under the temporary importation rules. These enable them to bring their yachts into Europe for a limited time, such as a holiday, and under certain conditions without having to pay VAT on the value of their yachts.

Under this mechanism the yacht can only be used within the EU for a maximum of 18 months after its first arrival. If the yacht is already in the Customs Union and the 18-month period has expired, the yacht will need to exit and make a Temporary Export Declaration with any customs authority in the EU or customs duty and VAT will become due.

You are not limited to a single period of temporary import. You can sail the yacht out of the EU and when you came back again for another holiday a new period of temporary importation can begin. Just crossing the frontier of the EU customs territory is in general sufficient for the vessel to be placed under the ‘temporary importation procedure’ (TI) with Customs, but you may be required to use a route specified by customs and they may require you to make an oral or written customs declaration. Countries like Gibraltar or Montenegro simplify this process significantly because they enable the yacht owner to comply with these two formalities within a few nautical miles.

For anyone who is considering buying a yacht, it is essential to make sure that clear title is obtained and that strict due diligence is performed on both the yacht and the vendor. It is also crucial to obtain all the necessary documentation from the vendor in order to ensure the swift and smooth registration of the yacht. The flag state registration will give the owner a ‘passport’ to sail anywhere in the world.

If the intention is to operate the yacht commercially, further regulations will apply and especial attention will need to be paid to the importation of yacht into the EU. Each member state may apply different administrative rules and requirements, so a thorough analysis and assessment is required before commencing any charter activity.

Whatever your plans are, it is always advisable to obtain guidance from an experienced firm that is able to assist with insurance, ownership, flag registration, safety on board and any other financial or legal issues that may apply. RegisterAYacht (RAY), the marine division of Sovereign Group, offers marine corporate and administration services to yacht owners.