Legal Status of Greek Charter Activity
A few points on the existing legal status of the general charter activity in Greece and the alternatives to use a yacht as commercial within Greek waters under Greek or EU Flag.
Commercial registration at the Greek Registry
Yachts owned by Greek or EU individuals or legal entities are eligible to register commercially at the Greek Registry of Shipping. The purchase of a yacht for commercial use is VAT–exempt, i.e. a potential buyer does not pay VAT (currently at 24% in Greece) on the value of the yacht. In light of this VAT relief and the liberalization of the charter and cruise operations, the Greek Registry has attracted many new yachts of all sizes during the last couple of years. The yacht maintains the VAT-exempt status (and may operate within and outside Europe subject to the local laws) for as long as she is registered commercially at the Greek Registry.
However, the procedure to register a yacht commercially could be time consuming due to the Greek bureaucratic burden (although the procedure is similar to the British registry’s). In summary, the owner and/or his representative should file with the Ministry of Shipping the Certificate of Survey, the Greek Registry Compliance Certificate (the equivalent MCA Compliance Certificate), Customs Import Declaration (exempt VAT Certificate), proof of title and Radio Licence. These are also the documents filed with the registry and ministry when applying for the Charter Licence.
With effect from the 14th of April 2014, the Law 4256/2014 has introduced several amendments on chartering. More specifically, the charter licence shall be renewed every 3 years (previously 5 years). The prerequisite to renew and/or maintain the licence is the submission of documentary evidence proving that the yacht was engaged in charter for at least 75 days (previously 200 days) within the 3-year period (or 105 days -previously 300- if entitled to bareboat charter). It is possible to carry over “charter days” from the previous 3-year period, had the yacht completed more than 75 days of charter (or 105 if applicable). It should be noted that all Greek-flagged commercial yachts of up to 24 meters may be bareboat chartered.
The most important benefits accrued from registering a Greek-owned commercial yacht at the Greek Registry are as follows:
1 All profits/income are taxed at 0%.
2 Yacht is VAT-exempt.
3 Discounted marina/mooring fees.
4 Charter Licence is renewed every 3 years.
5 All Greek- flagged yachts up to 24 meters may be bareboat chartered.
6 Fuel is purchased net of VAT/local taxes.
7 VAT on charter fees is only 12% or 24% if the charter lasts less than 48 hours (payable by the charterers).
A Greek-flagged commercial yacht may be owned/operated by the already known legal entities as an EPE (limited liability company), a Societe Anonyme or the recently introduced Greek company called NEPA (Maritime Companies for Pleasure Yachts). NEPAs in light of the new regulations are a “single purpose vehicle” to own, manage or operate a yacht. All limited companies may be converted into NEPAs but not vice versa. Of course all Greek companies may be owned by other EU companies or individuals (or non EU up to 49%) who must obtain a Greek Tax Registration number and also appoint a Greek person as legal representative in Greece against tax, port and/or other competent authorities.
NEPA (Maritime Companies for Pleasure Yachts)
The procedure for setting up a NEPA is straightforward . There are no formalities (unlike the other types of companies) and therefore the incorporation of a NEPA is less costly although it involves complicating accounting rules. The shareholders of NEPA could be Greek or EU nationals and may also be appointed as the directors of the company (min. 3 directors). Minimum authorised share capital is 10,000 (or in any event equivalent to the value of the yacht) and the nominal value of each share is 1.00. A non-EU national may also be a shareholder of the company as long as he/she owns less than 50% of the total shareholding. Share capital is free of taxation.
Operating a commercial yacht via a NEPA accrues significant tax and financial advantages. Two very important advantages are that there is no income tax payable on the profits/income of the company and the transfer of shares carries no tax liabilities.
The underlying objective of the new rules, inter alia, is to simplify all procedures/paperwork and bureaucratic formalities. Prior to the new regime all yachts had to submit details of departures and arrivals at every port of call. In pursuant with the new regulations, these details are now submitted only once, at the first port of arrival (or departure if the yacht is moored permanently in Greece).
ΕU Charter Yachts
A yacht registered under EU (non Greek) Flag is also entitled to execute chartering in Greek waters (meaning clients both to depart and arrive in Greek harbors) under the following provisions of the Greek Law :
1. The yacht must be registered in a Ship's Registry of any country of E.U.
2. The yacht must obtain a licence to execute chartering in Greek waters such license to be issued by the Greek Ministry of maritime Affairs.
3. The owning company of the yacht to be a company incorporated in one country of E.U.
4. If the owning company is not Greek but a European one, then the latter company is obliged to open a branch office in Greece as per article 50 of the Greek Law 2190. The branch office shall obtain a local VAT number and will pay taxes to Greek Tax Office for all income to be obtained in Greece, as provided by the Greek Tax Law. The company must appoint a legal and tax representative in Greece.
5. All income deriving from the chartering of a Greek maritime company is completely tax free. On the other hand, there are two opinions regarding the taxation of the branch office i.e. the first one (correct in our point of view) is that since the EU flagged yachts have the same position as per EU legislation with the Greek Flag yachts they should also be tax free as the Greek ones. However, it is also claimed that given the fact that the law excluding the maritime companies in Greece from taxation is an old one (it was first granted back in 1975), therefore it only refers to “Greek” maritime companies and not to EU ones, thus these EU companies should be taxed.
6. If the yacht is under 650 G.T. crew and social security regulations of the Greek legislation apply whilst Flag’s regulations apply in case the yacht is over 650 G.T. although it is possible with a foreign Flag to have a Foreign (non Greek) crew.
It is noteworthy that, up until today, it is not legal to charter a private vessel in Greece. However, the new legislation provides the formation of a Ship’s Register, where all vessels (private or commercial) sailing, being chartered and lying in Greek Waters shall be recorded. Such Register has not been formed so far. Once it is organised, all vessels, even the private ones, will be able to be chartered. However, only the commercial ones will keep the privilege of tax exemptions.