Almost 600 superyachts have taken advantage of the low VAT rate associated with the Malta flag, bringing an estimated €171.5 million in tax revenue over the past 10 years – not to mention income for ancillary service providers.
A superyacht registered in Malta needs to visit the island at least twice.
The yachts are worth a total of €3.2 billion, with the average value going up from around €2.5 million around 2010, to over €9.5 million last year.
On average, a superyacht owner spends $400,000 on fuel, $350,000 on docking, $24,000 on insurance, $1 million on maintenance and repairs and $1.4 million on crew salaries per year
The sector has been building up tremendous momentum: in 2006, only €500,000 was reported from superyacht “imports” but the numbers rose dramatically, reaching €752 million last year, and €624 million between January and October this year.
There has always been a problem determining how long a superyacht spends in EU waters – and therefore its VAT status. The VAT Department solved this by establishing the estimated percentage of time a boat would spend in EU waters, based on various factors such as its length and engine size. It was therefore able to set the VAT rate at 5.4 per cent, instead of 18 per cent, encouraging yachts to register here.
The registration is also having an impact on Malta’s trade figures. Anthony Portelli, the head of the International Trade Statistics Unit at the National Statistics Office, explained that goods such as vessels – yachts and ships – and aircraft are for trade statistics purposes considered as ‘specific goods’. Prior to 2010, these were taken as imports when they were registered on the Maltese flag. Since 2010 the criteria to include such imports changed to ‘economic ownership’.
“This in practice means that the vessel’s importer will have the asset on his accounting books and is responsible for its upkeep and ultimately any gains derived from it. “Most of the yachts are imported under a particular VAT scheme and are usually leased or chartered to other entities,” he explained.
The phenomenon has put a number of countries on the list of import markets that would otherwise hardly feature, such as the Cayman Islands, from where the largest value of yachts – €585 million – was registered over the past 10 years.
Superyacht building nations Italy and the Netherlands were next, with €374 million and €358 million respectively.
International Business Times reported that on average, a superyacht owner spends $400,000 on fuel, $350,000 on docking, $24,000 on insurance, $1 million on maintenance and repairs and $1.4 million on crew salaries per year. A superyacht that is 100 metres long, with 50 crew would cost about $275 million on average, according to Towergate Insurance.