On May 3, 2013, the Court of Magistrates in Malta gave judgment in favour of S&D Yachts Ltd of Malta following a dispute over the applicability of VAT charged by S&D Yachts on supplies made to a client vessel.
It was found by the court that S&D Yachts had been correct in charging VAT to the vessel and the vessel was ordered to pay the unpaid VAT amount plus interest and costs.
The vessel had refused to pay VAT on the grounds that they were a commercial yacht.
It was however found that the vessel’s commercial certification had lapsed and that there was no evidence of the vessel being engaged in charter activity.
On this basis the vessel effectively was not commercial enough in the eyes of the court to warrant VAT free supplies.
The result of the case provides further case law precedent within the EU and specifically in Malta that to benefit from VAT free supplies a yacht must be earnestly pursuing a genuine commercial business.