European Commission “discriminating against smaller countries” with yacht lease letter
Anthony Galea, managing director at Vistra Marine & Aviation, questions whether the European Commission really understands the Maltese leasing scheme and remains confident that yacht leases will continue.
Superyacht Investor: Are you surprised that the European Commission is targeting yacht leases?
Anthony Galea: It does not come as a surprise in the wake of Paradise Papers. Indeed the Malta yachting community took heed and during last year a number of initiatives commenced to improve the practices adopted in Malta in the light of the fact that the practice related to yacht leases had started in 2005 and needed some brushing up, whilst a number of recent judgements of the European Court of Justice also affected such practice. As many are surely aware changes were also introduced to the Guidelines issued by the Malta VAT Department in November 2017.
What is surprising to most local members of the yachting industry is the discrimination evidenced by the press release of the Commission, wherein the EU Commissioner took action against Malta and the little countries Cyprus and Greece, but left out France and Italy.
Superyacht Investor: Do you agree with the letter?
Anthony Galea: The action commenced involves a letter from the EU Commission informing Malta that it believes that its interpretation of the VAT rules in respect of yachts might not be in line with the EU treaties primarily on two grounds. The first ground is that Malta is not measuring the actual use of yachts outside the EU. Possibly the EU Commission was not aware of the new practices introduced last year.
The second ground questions the interpretation of Malta that the lease structure involves a lease and purchase, and this should be considered as a supply of a good. In fact Malta has always maintained that the leases administered in Malta are operational leases and constitute a supply of a service. Malta had adopted the practice following practices introduced earlier by France and later by Italy, which practices continue today, and are an important option for potential yacht owners.
Superyacht Investor: What will happen next?
Anthony Galea: The procedure commenced will next follow a normal flow of events which will see the Maltese Government defend its position and thereafter we hope negotiations will follow so that the matter may be concluded with a solution acceptable to the EU Commission.
Superyacht Investor: Is this the end of yacht leases?
Anthony Galea: I believe that leasing solutions are important options in the yachting industry which facilitate ownership at a time when we need to convince owners, especially new entrants to the industry, to commit to their new yacht. Leasing structures are common and widespread in all transport industries, including luxury transport such as business jets and supercars, and I sincerely believe these will continue to constitute an option in the future.”
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