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  • VAT as low as 2.42%:Cyprus Yacht Leasing Scheme

The new Circular No. 191 issued by the Cyprus Tax Department has reduced the VAT payable on pleasure crafts even further, to as low as 2.42% , making Cyprus an even more favourable jurisdiction especially for the super yacht category.

Table A: Motor boats

Boat Length % use within EU VAT charge
Longer than 65 meters 10% 2.42%
Between 45,01 and 65 meters 15% 3.40%
Between 24,01 and 45 meters 20% 4.37%
Between 14,01 and 24 meters 30% 6.31%
Between 8,01 and 14 meters 50% 10,21%
Up to 8 meters 60% 12,16%
Yachts only allowed to be used within protected waters 100% 19%

 

 

 

Table B: Sailing boats

 

Boat Length % use within EU VAT charge
Longer than 65 meters 10% 2.42%
Between 45,01 and 65 meters 15% 3.40%
Between 24,01 and 45 meters 20% 4.37%
Between 20,01 and 24 meters 30% 6.31%
Between 10,01 and 20 meters 50% 10,21%
Up to 10 meters 60% 12,16%

 

The Conditions for the Yacht Leasing Scheme to apply still remain the same.

  1. A lease agreement must exist between a Cyprus company and any legal or natural person, irrespective of origin.
  2. The yacht should sail in Cyprus waters within one month from the commencement of the lease agreement.
  3. The initial contribution from the lessee to the lessor must be at least 40% of the yacht’s value.
  4. Lease payments are required to be monthly and the lease period cannot exceed 48 months.
  5. The lessor is expected to make a total profit from the lease agreement of at least 5% of the yacht’s original value. In the year the lease agreement commences the total amount of lease payments on which VAT is calculated is increased by half of the calculated profit.
  6. The lessee may purchase the yacht at the end of the lease period and the final instalment which results to the transfer of the ownership of the yacht to the lessee cannot be less than 2.5% of the yacht’s value and is subject to the standard VAT rate (19%).
  7. In order for the above percentages to apply a prior written approval from the VAT Commissioner is required. Thus, an application must be filed to the VAT Authorities accompanied by the lease agreement and documentation supporting the purchase price/value of the yacht.

 

Click here for the full Article    yachts 2015 apr A4 YRC

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