Charter License in Greece: a brief introduction – Part 1

In order the yacht’s charters/voyages commence and end in Greece, and also be able to embark and disembark passengers while in Greece, the yacht and its owning company (if no Greek) will have to comply with the following requirements:

1. The vessel must “ideally” be registered to an EU Ship’s Registry and hold a valid Certificate of Compliance stating her main particulars as a commercial vessel. The yacht’s commercial registry may also be a non-European one, as this yacht fulfills the requirements of Greek Law but in this case all profits of the yacht’s commercial operation will be taxed at the current general company rate;
2. To obtain Greek Tax Identification Number from the competent tax authority;
3. To obtain a Greek Charter License with a 3-year validity or less under certain circumstances;

In order to obtain a Greek Tax ID number as per (b) above, the vessel’s owning company must establish a branch office in Greece OR incorporate a Greek Private Company.

Yacht registration in Greece provides various benefits including all profits/income are being taxed at zero (0%) tax levy, competitively-priced and discounted applicable mooring fees, fuel could be purchased transit i.e. net of local taxes & VAT and Greek-owned & flagged yachts of up to 24 meters could be bareboat chartered. After the approval of the aforementioned application and the issuance of the yacht’s charter license, the branch Office or the Greek Company Greek accountant will have to start filing periodical/quarterly V.A.T. returns. The yacht will enjoy all benefits that Greek Commercial Yacht-owning Companies enjoy, provided that it can be proved that she was chartered in the High Seas, for example:

• provision of transit fuel when performing a charter voyage
• V.A.T. exemption (0%) on specific supplies
• V.A.T. exemption (0%) on spare parts and labour, etc.

And all the obligations as well: from the time of issuance if its Greek charter license, it is imperative to execute proportionally (pro rata) a minimum number of charter days every three (3) years, as follows:

105 days (minimum), for the non-crewed commercial yachts;

75 days (minimum), for the crewed commercial yachts;

The above minimum number of charter days are reduced for Yachts of:

• 5 years of age by 5%
• 10 years of age by 10%
• 15 years of age by 15%
• 20 years of age by 20%
• 25 years of age by 25% etc.

Any charter days that are performed abroad can be calculated for the purpose of completing the minimum “Greek” charter days by following a certain procedure and this is more easily achievable and straightforward in the branch office structure.

It is important to note that in order the yacht to enjoy the aforementioned VAT benefits and exemptions it will have to comply with the Chartering on the Greek High Seas rule according to which the 60% of the yacht’s charter voyages must be performed on the Greek High Seas as these are defined by Greek Law. For such purpose the yacht must be equipped with AIS Class A’.

All income deriving from the chartering of the company’s Branch Office is free from any income  tax, while the income of the branch office of the Yacht’s owning company is subject to the respective bilateral agreement for the avoidance of Double Taxation, if any. The branch office or the Greek company have to declare the charter agreements and to collect V.A.T. on the charter hire. Such V.A.T. amounts are declared/accounted for to the branch office’s periodical/quarterly V.A.T. Returns.

If the yacht is over 650 GT it must comply only with the manning and social security regulations of its registration authority. If there is Greek crew (seamen) employed onboard and the yacht issues a Greek Charter License then such crew of Greek nationality must be insured with the Greek Seamen’s Pension Fund.

Please note that all commercial yachts with a Greek charter license, are strictly not allowed to be chartered by their UBOs, but it is completely legal and allowed to be used by their UBOs without any restriction for an unlimited amount of time without a charter party agreement if the branch’s legal representative is on-board the yacht as one of its declared passengers on the passenger list OR one of the declared passengers is one of the yacht’s owners (a shareholder of the yacht’s owning company) (private use). In such case, however, fuel VAT exemptions – and the other allowances – shall not apply.

Finally, just to mention also that Greek-flagged commercial yachts are being mostly owned/operated by a special purpose Greek company called NEPA (Maritime Company for Pleasure Yachts). NEPAs are “single purpose corporate vehicles” to own, manage and operate pleasure boats. These companies may be owned up to 100% by European Union Members. Members from Third Countries (outside EU) may own NEPAs up to 49%. The NEPA is managed and represented by a board of directors, composed of at least 3 members, either natural persons or legal entities, who need not be shareholders. The members of the board of directors are elected by the general meeting of shareholders, with the exception of the first members, stated in the Articles of Association. The representatives of the NEPA are required to pay social insurance and pension contributions, subject to obtaining an exemption in case of similar insurance in another member- state of the EU. The existing legal framework in relation to NEPAs accrues significant tax advantages.

In any case, crucial points for the assessment of the matters mentioned above include also: the length of the yacht, its gross tonnage, where the yacht’s owning initially company is incorporated, whether the yacht is imported into the European Union or not and consequently her VAT status (if professional, if paid).