CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Brussels Challenges British Yacht Fuel Tax Breaks

Brussels Challenges British Yacht Fuel Tax Breaks

by Ulrika Lomas, Tax-News.com, Brussels

04 June 2013


The European Commission has formally requested that the United Kingdom amend its legislation to ensure that owners of private pleasure boats, such as luxury yachts, can no longer buy lower taxed fuel intended for fishing boats, known in the UK as "red diesel."

Under European Union rules on fiscal marking for fuels, fuel benefiting from a reduced tax rate has to be marked by colored dye. In the United Kingdom, red diesel – so-called as it is marked with red dye – attracts a duty rate up to 40 percent lower and may be used only in the farming, fishing and forestry industries.

EU rules stipulate however that while fishing vessels may benefit from fuel subject to a lower tax rate, private boats must use fuel subject to the standard rate. The UK was allowed to offer the concession to pleasure boating until 2006 when a transitional period ended.

In an effort to retain the concession, the UK developed a regime whereby pleasure boat owners could continue to use "red diesel" provided they acknowledge that its use is only permitted within UK waters, i.e. not in the rest of the EU.

However, the European Commission has pointed out that UK law does not require fuel distributors to have two separate fuel tanks, i.e. one marked for red diesel and one for fuel subject to the standard tax rate. As a consequence, private leisure boat owners often do not have access to fuel subject to full duty, placing these vessels at risk of heavy penalties if they travel to another member state's waters.

The Commission has now formally requested that the United Kingdom should change the regime to ensure that the use of red diesel is restricted to fishing vessels only. The UK has been given two months to comply with the request or the matter may be forwarded to the European Court of Justice.

TAGS: tax | marine | European Commission | law | United Kingdom | legislation | penalties | Europe

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »