Brass Tacks On Taxing Yachts - Yachts International

Brass Tacks On Taxing Yachts

When traveling internationally, or even if you're staying close to home, it can be a chore to keep track of the ever-changing laws and taxes surrounding recreational boating. Here are some recent developments you may need to know about before making your next purchase or planning your next cruise.
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When traveling internationally, or even if you're staying close to home, it can be a chore to keep track of the ever-changing laws and taxes surrounding recreational boating. Here are some recent developments you may need to know about before making your next purchase or planning your next cruise.

LegalIssues

Italy Revisits “Berthing Tax”

After heavy lobbying by maritime interests, the Italian Senate earlier this month approved an amendment to a new law that would have taxed yachts staying in that country’s ports.

The law, as passed in late December, would have taxed yachts up to 703 euros per day based on a scale taking into account the vessel’s size and age. Fees for sailing yachts would have been half that of motor yachts, but the tax would have applied to all vessels, private or commercial, regardless of flag, chartering or cruising in Italian waters. It was to take effect May 1 of this year. If the amendment is approved by the lower chamber of Italy’s Parliament as expected, the so-called “berthing tax” will apply only to Italian owners and will leave most visiting charter yachts free of the levy.

“We are pleased that foreign pleasure boaters can now organize their holidays in our seas without having to pay any additional charges,” said Anton Francesco Albertoni, president of Italian yacht industry association UCINA.

As amended, the tax will be applied only to Italian-owned vessels and will be an annual fee based on the number of days a yacht is in Italian waters. Foreign yachts on charter that have Italian guests aboard will be subject to the tax unless they can prove the foreign owner is on board.

Maryland, Connecticut Mull “Luxury” Taxes

The yachting community certainly remembers the effects of the national luxury tax imposed in 1990. It had a devastating impact on the U.S. boatbuilding industry. Yet, with coffers suffering as the economy struggles to rebound, a few states are again pondering taxing luxury items, including yachts.

A bill making its way through the Maryland legislature would place a one-percent “luxury surcharge” on boats costing more than $35,000. It would require an additional 2-percent tax on the sale amount above $90,000. If passed, it would take effect July 1, 2012.

Connecticut, which has a history of aggressive enforcement of its use tax, is considering a 3 percent tax on the amount of a boat purchase price above $100,000, beyond the existing 6.25 percent sales tax already in place.

Meanwhile, Good News In Florida…

Florida, owing no doubt to its unique position as a boating haven, two years ago took the other route, choosing to alleviate, rather than burden the boating industry, with excellent result. A recent sales tax cap of $18,000 on boat purchases in Florida has generated nearly 10 times as much revenue on tax-capped boats as the state projected in its first year of implementation, according to a study by the Florida Yacht Brokers Association and the Marine Industries Association of South Florida.

AIM Marine Group’s Soundings Trade Only, recently reported the following results:

•The average sales price for post-cap transactions in Florida was $907,002 – nearly double the pre-tax value of closings that took place in Florida prior to the cap.
•In the post-cap ear, transactions for which either no sales tax was paid or the closing was conducted out of state dropped from 21.5 percent in the pre-cap era to an estimated 12.8 percent after the cap was implemented.

Prior to the cap, a $400,000 boat purchase would have carried a sales tax of $24,000.

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