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Jelena Zivkovic |
Increased tax liabilities related to yachts in many countries in the Mediterranean region, because of the strong effects of financial turmoil, has meant many yacht owners are looking for alternative jurisdictions to register their yachts. Montenegro is situated in south east Europe and is positioned in a strategic location for the maritime world, having access to major maritime centres throughout the Mediterranean. Its shipping sector is constantly developing, offering wider opportunities to investors.
The registrations of yachts in Montenegro is increasing, and the advantages of displaying the Montenegrin flag are more and more revealed to the global arena.
In line with existing legislation, Montenegro provides for a series of favourable conditions and relief for the owners of Montenegrin registered yachts, which makes the country competitive to the world's favorite yacht registration jurisdictions.
The constant developments in the legislation of Montenegro to this direction aim to attract nautical tourism in the country, in anticipation of its establishment as the biggest marina for mega-yachts and an elite nautical center in the Mediterranean.
Adriatic marinas assumed as a nautical-tourism resort, will have favourable advantages to become one of the prestigious yachting centres on the Mediterranean sailing map. Furthermore, the new marina offers other benefits including tax free fuelling 50% to 70% less than in Italy and France, 75% discount of leasing the berths for the first three years for buyers who purchase property within the Porto Montenegro project.
A law on yachts that entered into force on January 1 2008 introduced a number of exemptions for owners of yachts who are using the Montenegrin flag, effectively equalising with the flag of convenience as, for example, the flags of Panama, or Cayman Islands which are used by most of the world's mega-yachts.
The main and largest propitiatory of the Montenegro registry is that foreign yachts can be registered in a very convenient and easy procedure (eight documents required), law tariffs for registration and renewal of certificates is €800 ($1,090) for boats of lengths 17 to 24 metres and €1,200 for yachts larger than 24 metres, even to get a certificate for one day.
Tax on the use of yachts needs to be paid on the registration of navigation of yachts and by extension of each regular navigational permit that is made in accordance with the regulations governing the register of yachts. Taxation is imposed on a legal and natural person on whose name the yacht or facility is enrolled in the official register.
Tax on the use of yachts is paid on the length of the yachts expressed in metres. The law recognised the possibility of reducing the tax by 5% for each year of age old yachts, provided that the total deduction cannot be 50% of the prescribed amount of tax.
Turnover tax is paid at the rate of 5% for used yachts and the taxpayer will be the buyer of that yacht.
There is no tonnage tax at the Montenegro level.
Yachts are possible to rent by the charter companies which can be owned by the foreign legal entities. Activity of chartering the yachts can be performed by the company or body registered in Montenegro for that activity. A leaser can charter yachts or a yacht of its own property or a yacht by other domestic or foreign company or natural person. Also, a leaser can charter yachts flying the domestic or foreign flag. Annual fees for chartering a foreign yacht flying a foreign flag shall be paid in the amount of €3,500 for a yacht about 17 metres long.
In line with this, if the leaser is a foreign natural person he/she needs to pay VAT at a 19% rate plus 7% tax provided on that service, but if the leaser is a foreign company no VAT will be imposed.
All profit on leasing the yachts of foreign charter companies registered in Montenegro will be taxed only 9% corporate tax which represents a big stimulation for the yachting community.
Jelena Zivkovic (jelena.zivkovic@eurofast.eu)
Eurofast Global, Podgorica Office
Tel: +382 20 228 490
Website: www.eurofast.eu
