With 10,000 miles of coastline, Greece is a favourite superyacht playground. While you are enjoying it, there are a few rules and regulations to remember.
Last summer we observed a significant increase in yachts that weren’t Greek flagged, cruising in Greek waters. Measures to boost tourism have clearly had a positive effect on the chartering market, with the volume of tourism being the key factor shaping the demand for charter services.
The government managed to attract a large number of non-EU visitors this year from fast growing economies such as Russia, Turkey and China by relaxing visa requirements.
Tourism is the engine of the Greek economy, accounting for one in five jobs and over 16 per cent of the country’s GDP. More specifically, nautical tourism employs 3,000 Greek seamen, chartering brokers and employees in yachting related activities. During the summer months, direct and indirect employment created by the industry is much greater. Considering Greece produces little else, it is unsurprising that the government promised to take further measures to reinvigorate the sectors of tourism and yachting.
There is a serious need for new and upgraded marina facilities throughout Greece. The Greek government identified tourism infrastructure development as a priority target and is trying hard to attract foreigners to invest in new marinas, along with supporting the upgrading of existing marinas, to accommodate increasing demand in the yachting sector.
There are a large number of marinas under construction in Greece. It is crucial for the Greek yachting industry that these projects are completed in the near future; beyond the obvious economic benefits, Greece is beginning to lag behind the rapidly evolving Turkish yachting industry, with its significant growth in tourism, booming economy and flexible legal framework for the establishment of marinas.
Rules and regulations apply to yachts wishing to cruise in Greece, depending on whether the yacht is registered under an EU or non-EU flag and whether it’s a commercial or private vessel.
For owners wishing to moor their commercial yachts permanently in Greece, the most straightforward route is to register under the Greek commercial flag. Under this flag the yacht will also be able to operate within and outside Europe, subject to local laws. To register with the Greek commercial registry the yacht must be owned either by an EPE (limited liability company), a Société Anonyme, or a NEPA (maritime company for pleasure yachts). The most commonly used is the NEPA as it was created for this purpose.
The Greek commercial flag confers benefits including exemption from VAT when buying the yacht, discounted marina fees, duty-free fuel and reduced VAT on the charter fee at the rate of 6.5 per cent, payable by the charters.
A license to charter, valid for five years, must be obtained and documentary evidence must be kept showing that the yacht was engaged in chartering for at least 200 days (or 300 days where the yacht is below 20 meters) during the five-year period of the licence.
It is important that all owners keep meticulous records as the Greek authorities are keen to clamp down on artificial chartering and are investigating a large number of commercial yachts with the intention of collecting much needed revenue.
Greece also allows for the chartering of non-Greek registered yachts in Greek waters as long as they are EU flagged. This could be an option for an owner wishing to charter in Greece regularly without registering the yacht with the Greek registry. As it is a complicated and bureaucratic affair it is not work doing if the yacht will not be chartering in Greece on a regular basis.
As with the Greek commercial flag, a charter license will need to be obtained with the same rules applying in relation to the number of days the yacht must operate commercially during the five-year period. The European owning company of the yacht will also have to establish a branch office in Greece with a local VAT number paying tax to the Greek authorities on all income derived in Greece.
In general it is simpler to register under the Greek flag where the intention is to charter on a fairly permanent basis in Greece. The only reason a non-Greek flag may be preferable is in relation to crewing; where a yacht is over 650 tonnes it does not have to comply with Greek crewing regulations (often limiting) and should adhere to its flag state regulations.
Registering under Greek commercial flag or setting up a Greek branch office and obtaining a Greek charter licence are not sensible options for yachts chartering in Greece sporadically. In such circumstances a yacht can charter in Greek waters if the charter starts or ends at a port outside Greece.
EU flagged private vessels can cruise freely in Greek waters as long as there is evidence that the VAT has been settled and not reimbursed in full in an EU country. There is a grace period of one month where the VAT has not been paid, but following the expiry of this period the yacht must pay the VAT due if she is to stay in Greece.
Temporary importation is adopted differently in Greece, allowing for non-EU flagged vessels with non-EU resident registered users (rather than beneficial owners) to remain in Greek waters for up to six months. After this period the yacht must leave Greek waters for at least six months before re-entering.
With artificial chartering at its peak, aggressive measures have been taken to tackle abusers of the commercial flag. A law was introduced that gave owners of Greek commercially flagged vessels incentives to convert their yachts to the private registry and settle the VAT due, but it ceased to apply on 20 January 2012. It remains to be seen whether similar measures will be taken in future.
For the latest legal updates and alerts, follow us on twitter:
Hill Dickinson out of hours helpline: +44 (0)20 7280 9300
Hill Dickinson has a wealth of experience in dealing with the full range of marine, trade and energy issues. If you have any queries relating to the above, or any other legal matter, please do not hesitate to contact us for advice.