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Yacht owners who are yet to pay European Union value-added tax (VAT) on the purchase of their yachts, and who wish to put their vessels into free circulation in the European Union, have been encouraged to temporarily register their vessels in Croatia to take advantage of a concessionary value-added tax rate being introduced ahead of the nation's entry into the European Union on July 1, 2013.
Under EU law, yachts that have been purchased in the European Union are subject to value-added tax, at varying rates permitted by the European Union. Once VAT has been paid on a yacht it may be transferred from one EU member state to another free from incurring any additional VAT, as with other goods that travel across EU frontiers.
Croatia is set to join the European Union from July 1, 2013, and Croatian yacht owners, under the rules, will be required to pay value-added tax on their vessels to establish them as EU goods. Croatian yacht owners may opt to instead relocate their vessels to another European Union member state ahead of the nation's accession and pay VAT there instead.
The Croatian Government has recognized that if it were to attempt to levy a 25% VAT on Croatia-based yachts it would lead many owners to pre-emptively relocate their vessels, either to member states with lower value-added tax rates, such as Italy and Malta, or to territories outside of the European Union to avoid the tax burden. Therefore, the Croatian Government has announced plans to allow a concessionary 5% value-added tax rate for those persons that register and relocate their vessel to Croatia before May 31, 2013, until after the nation has joined the EU at the earliest. Boatowners looking to avail themselves of the concession have been urged to act fast as the process of registering a vessel in Croatia can take several weeks, and the offer will be withdrawn on June 1, 2013.
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