✓ Our side (let’s nominate it as “ABC”) acquires the yacht via a wholly-owned subsidiary with a loan from the Beneficial Owner (UBO)
✓ The subsidiary grants a first legal mortgage to the owner, as well as a charge over the shares of the subsidiary, as 100% security of the loan
✓ As a bareboat rental company ABC is entitled to reclaim the entire VAT rate due on the acquisition
✓ The subsidiary then rents the yacht back to a company owned by the now ex-owner on a bareboat basis for an initial period of five years
✓ The payable rental is determined in accordance with the estimated depreciation rate of the yacht
✓ The rental is being levied VAT on the rental at the full rate under the specific country’s “use & enjoyment rules” (20% in Monaco; 19% in Cyprus; 18% in Malta) while the yacht is in the EU, and at 0% when outside of the EU.
✓ Invoices for the rental plus VAT are issued every quarter, and once paid, the yacht carries those paid VAT receipts on board to show that VAT has been paid and that the yacht is in compliance with its obligations to pay VAT.