The new guidelines issued by the Cypriot VAT authorities with regards to the registration of yachts, simple to comprehend
and apply, make Cyprus one of the most attractive jurisdictions in the EU in this area, reducing the effective
VAT rate for yacht registration to as low as 4.37%, through the use of the Yacht Leasing scheme.
This special regime applies to yachts owned by a Cyprus company which are leased to physical or legal persons.
The purpose of this scheme is to determine the percentage of time a yacht spends within the EU based on the yacht
size and type and apply VAT according to this percentage.
Interpretation of the term “leasing a yacht” and VAT treatment
For the purpose of this scheme a yacht lease agreement is an agreement under which the lessor, being the owner
of the yacht, for a certain consideration, contracts the use of the yacht (leases the yacht) to the lessee.
For Cypriot VAT purposes the lease of a yacht is subject to the standard VAT Rate (19%) to the extent that the leased
yacht is used within EU waters.
However, further to the Yacht leasing scheme, there is no longer need to keep records (log books) as to the time the
yacht is used within the EU. Instead, the relevant percentage will be calculated based on the yacht’s size and type
(motor or sailing boats), in the manner indicated below: