Understanding the Yacht Engaged in Trade (YET) Scheme

Have you ever wondered how yacht owners can balance personal leisure with the opportunity to offset operational costs through chartering? The Yacht Engaged in Trade (YET) scheme offers a solution that allows private yachts to engage in limited commercial activities without fully transitioning to commercial status.

This article delves into the intricacies of the YET scheme, providing a comprehensive overview for yacht owners and enthusiasts.

What is the Yacht Engaged in Trade (YET) Scheme?

The YET scheme is a dual-use program that permits privately registered yachts to undertake limited charter activities while retaining their private status. Designed specifically for yachts over 24 meters in length, this scheme allows owners to use their vessels personally and generate income through charters for up to 84 days per calendar year.

Eligibility Criteria for the YET Scheme

To participate in the YET scheme, yachts must meet several requirements:

• Size and Registration: The yacht must be at least 24 meters long and registered as a private vessel under a flag state supporting the YET scheme, such as the Cayman Islands or the Marshall Islands.
• Compliance Standards: The vessel must comply with all applicable commercial standards and regulations, including holding a valid Certificate of Class and adhering to the Large Yacht Code (LYC).
• Customs and Tax Status: The yacht should either be VAT-paid or operate under the Temporary Admission (TA) regime, allowing non-EU-flagged yachts to enter EU waters for up to 18 months without paying VAT on the hull.

Operational Scope and Limitations

While the YET scheme offers flexibility, it also comes with specific limitations:

• Geographical Restrictions: Currently, charter activities under the YET scheme are primarily permitted in French and Monegasque waters. Efforts to expand the scheme to other regions, such as Italy, are ongoing but have not yet been realized.
• Charter Duration: The scheme limits charter operations to 84 days per calendar year.
• Passenger Capacity: Charters are typically restricted to carrying no more than 12 passengers. However, recent expansions have allowed certain yachts to carry up to 36 passengers, subject to compliance with additional regulations.

Pros of Operating Under the YET Scheme

1. Flexibility in Use: Owners can enjoy private use of their yachts without switching to complete commercial registration, offering a seamless blend of personal leisure and commercial opportunity.
2. Cost Offset: Limited chartering can help offset annual operational costs, making yacht ownership more financially sustainable.
3. Simplified Compliance: The scheme eliminates the need for frequent import/export formalities and avoids the need to leave EU waters to switch between private and commercial use.

Cons of Operating Under the YET Scheme

1. Continuous Compliance Requirements: Yachts must maintain full commercial compliance at all times, even when not engaged in charter activities, which can lead to increased operational costs and regulatory burdens.
2. Limited Geographical Scope: The scheme’s applicability is currently confined to specific regions, restricting the areas where charters can commence.
3. Tax Implications: While the scheme offers certain VAT advantages, it does not provide exemptions on fuel or supplies, and owners must remain vigilant to ensure compliance with all tax obligations.

Key Considerations for Yacht Owners

Before opting into the YET scheme, owners should consider the following:

• Flag State Policies: Ensure that the yacht’s flag state supports the YET scheme and understands the specific regulations and requirements.
• Operational Costs: Evaluate whether the potential income from limited chartering justifies the costs of maintaining continuous commercial compliance.
• Legal and Tax Advice: Consult with maritime legal and tax professionals to fully understand the implications and ensure compliance with all relevant laws and regulations.

Conclusion

The Yacht Engaged in Trade (YET) scheme presents a viable option for yacht owners seeking to balance private enjoyment with the benefits of occasional chartering. By understanding the scheme’s requirements, benefits, and limitations, owners can make informed decisions that align with their operational goals and compliance obligations.

As the maritime industry evolves, staying abreast of regulatory changes and seeking professional advice will be key to successfully navigating the opportunities presented by the YET scheme.

FAQs about the Yacht Engaged in Trade (YET) Scheme

What is the Yacht Engaged in Trade (YET) scheme?
The YET scheme allows privately registered yachts to engage in limited commercial charter activities without converting to full commercial status. It’s primarily available to yachts over 24 meters and is supported by certain flag states, such as the Cayman Islands and the Marshall Islands.

Can a yacht operate freely under the YET scheme in all countries?
No, the YET scheme is only recognized in specific jurisdictions, notably France and Monaco. It is not accepted in other Mediterranean countries, such as Italy, which restricts its operational flexibility across regions.

Is there a limit to how many days a yacht can be chartered under the YET scheme?
Yes, yachts under the YET scheme are generally restricted to 84 charter days per calendar year. This ensures the vessel remains predominantly for private use while allowing limited commercial operation.

Does the yacht need to meet commercial standards even when not chartering?
Yes, one key requirement of the YET scheme is that the yacht always comply with commercial regulations, including safety and technical standards, even during periods of private use.

Are there VAT or tax benefits under the YET scheme?
Depending on the yacht’s customs and VAT status, the YET scheme can offer certain benefits, such as operating under Temporary Admission without VAT on the hull. However, it does not exempt fuel or supply purchases from VAT, and owners should still seek professional tax guidance.

What are the main risks or drawbacks of using the YET scheme?
The main downsides include the administrative burden of maintaining continuous commercial compliance, limited regional acceptance, and possible tax complexity. Owners also cannot use VAT exemptions typically available to full commercial yachts.

Contact YBH Charter Brokers:

You can contact us by email at ask@yourboatholiday.com or at +39 33436 00997; we are also available on WhatsApp for calls and texts. 

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