A VDY procedure is based on EU case law and is effectively a long-term rental structure between a lessor and a lessee. A special purpose Maltese company (The lessor) will be incorporated as the legal owner of the yacht. The shareholding  structure of the lessor may be a myriad of options available to the customer. There will be a lease agreement between the lessor and the lessee, who will be paying VAT on the use of the yacht during the duration of the lease.

The VAT on the lease installments equates to an approximate 1.2% per annum on the value of the yacht. This is VAT that is paid on the use of the yacht. The only other costs are the administration costs of the lease structure. The main advantage of the VDY is Time Value of money. Money available at the present time is worth more than the identical sum in the future because of money’s potential to grow in value over a given period of time. When purchasing a yacht, rather than paying the full amount of VAT at the onset, it would make more financial sense to retain the full amount for re-investment and stagger the VAT payments over a period of time. In doing so the amount of capital is retained and may be invested and the interest earned may typically cover the VAT installments. It is important to note that the VAT on installments is not VAT paid on the vessel and at the end of any lease structure the vessel does not become VAT PAID neither can the VAT already paid be offset against any VAT that may become due on the value of the hull.

If the yacht is sold there are four scenarios according to below buyer types:

– A non EU Owner
– A company wishing to operate the yacht commercially for charter
– A private EU person to use the yacht for his private use
– A trade in for another larger yacht

In the case of 1 and 2 above, this yacht will be preferred to a more expensive yacht that is VAT PAID. If the yacht is sold to another EU national as in case 3 above, the new owner may opt to go for a VDY structure and invest the capital in a similar way to the above or he may wish to pay the full VAT on the residual market value of the yacht at the time. In the case of a trade in the yacht would be taken in by the dealer VAT unpaid. The payment of the VAT on the used yacht will be the responsibility of the person buying it from the dealer eventually and can be one of the cases 1, 2 or 3 above.

The yacht may be registered as a private or commercial yacht under the ownership of the lessor company. Our Flag department may assist with all formalities.

We look forward to discuss VDY in further detail in order to explain the case specific benefits. We will provide calculations that will clearly demonstrate the advantages of this structure. We will prepare a case specific plan according to the value of the yacht and once you have decided to go ahead, we will provide a legal opinion about the structure. The structure will be set up and we will organise for the importation (if applicable) of the yacht into Malta. In this regard S&D Yachts is a registered customs operator and will look after the complete process of importing the yacht into Malta. Our yacht Agency department will look after all the arrival formalities including berthing and all other logistical requirements whilst the yacht is in Malta. Our offices and yacht chandleries are located in the main yacht marinas to offer efficient service to our clients. We also operate a subsidiary company in Tunisia in case an Export is necessary prior to arrival into Malta. During the lifetime of the lease we will look after the complete management of both the operation as well as flagging if required. For this reason we are truly able to offer a one stop shop service hence our ability to honour our quality promise and deliver the high level of service that has become synonymous with S&D Yachts.