Chartering in Croatia: Is your yacht compliant?

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Welcome to Yacht Charter Market, the weekly newsletter dedicated to the world of yacht charter.

In today’s newsletter:

• Top story: Is your yacht compliant? Cruising Croatian waters

• Top charter updates: Black Pearl: IYC’s biggest charter, float through the French Riviera with Plan B, Aegean Yachts introduces their hottest new yacht: Carmen, explore the South of France aboard Hyperion, rate reduction for the refurbished yet historic Marala 

• Zairos: FX & Cross-Currency Solutions for Charter & Asset Payments

• Charter photo: No need for motivation with a view like Magic Johnson’s

TOP STORY

Chartering in Croatia: Is your yacht compliant?

With a stunning Adriatic coastline, modern marinas and cultural richness, Croatia has drawn an increasing number of new and returning visitors. But, operating in one of  Europe’s hottest cruising destinations comes with a catch: strict compliance with local fiscal requirements. Sanja Dujmic, Managing Director of SOS Yachting Croatia shares an insight into what you need to ensure your commercial yacht remains compliant:

Requirements for EU-flagged commercial yachts

For EU-flagged vessels engaged in chartering in Croatian waters, the following conditions must be met:

1. VAT compliance
   The yacht must be VAT paid or accounted for, substantiated by a commercial invoice or VAT certificate.

2. Technical eligibility
   The vessel must meet Croatian standards for technical suitability for charter operations.

3. Insurance requirements
   Insurance policies must explicitly exclude liability for third-party damages and cover incidents within Croatia’s internal and territorial waters.

4. Crew qualifications
   Crew must be appropriately qualified per the flag state's maritime regulations, ensuring safe operation.

5. Charter activity registration (e-Crew / Charter License)
   All charters beginning in Croatia or entering with guests who boarded in a non-EU country require e-Crew registration, completed via a licensed ship agent.

Requirements for non-EU flagged commercial yachts

Non-EU flagged yachts face additional obligations:

1. VAT compliance
   Yachts must be either VAT paid or legally imported into the EU and in free circulation.

2. Technical eligibility
   Must meet Croatian standards for technical compliance.

3. Insurance requirements
   Same as for EU-flagged yachts, coverage for damages and events in Croatian waters is required.

4. Crew qualifications
   Crew must be properly certified under the yacht's flag state.

5. Croatian cabotage license
   A must for any yacht cruising with guests in Croatian waters regardless of charter origin. Valid for one calendar year, obtainable through a ship agent.

Charter activity registration (e-Crew / Charter License)
Required under the same conditions as EU-flagged yachts.

Owning company compliance

Prior commencing charter activity in Croatia, the owning company must obtain a Croatian VAT number, which requires assistance from a local VAT representative. The process should begin at least two weeks before the first charter. Once granted, the VAT representative will handle compliance tasks, including VAT returns, payments, and issuing invoices to charterers.

VAT on charter activity

Under the Croatian VAT Act:

• The standard rate is 25%, but charters benefit from a reduced 13% VAT rate.

• No further VAT reductions apply for international itineraries.

Application of 13% VAT:

• Charters starting in Croatia, cruising within EU waters: Full 13% VAT applies.

• Charters entering from outside the EU: VAT applies only to days spent in Croatian waters.

• Charters starting in Croatia and ending outside the EU: VAT applies only to the portion spent within EU waters.

Two key points on the UBO use of the yacht

The Ultimate Beneficial Owner (UBO) may use the yacht provided:

• A legitimate charter contract is in place.

• The charter fee includes VAT and may reflect standard brokerage commission reductions.

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