Under the Scheme, a Cypriot company can purchase a pleasure yacht and enter into a lease-sale agreement for the yacht with a third-party lessee - an individual or company irrespective of their location. Since this is a service deemed to be supplied in Cyprus, VAT is due on the lease at the normal rates of VAT in Cyprus - currently 17% - but is payable only on that portion of the lease which the yacht spends in EU waters.
To avoid the difficulty of establishing the exact length of stays in EU waters, the VAT Service has issued its own percentage scales based upon "presumed" lengths of stay for different types and lengths of yacht. Motor and sailing boats over 24-metres in length are deemed to spend only 20% of their time in EU waters (compared to 30% under the Malta equivalent scheme) to give an effective VAT rate of 3.4%, while motor boats below 8-metres and sailing boats below 10-metres are deemed to spend 60%, giving an effective VAT rate of 10.2%.
The yacht, which can be registered anywhere within the EU, must arrive in Cyprus within one month of the date of inception of the lease agreement and the initial lease payment must amount to at least 40% of the value of the yacht. Further lease payments are payable on a monthly basis, and the lease period must under no circumstances exceed the period of 48 months (36 months in Malta).
The lessee may purchase the yacht at the end of the lease period, for a final consideration of not less than 5% of the initial value of the yacht. The VAT authorities will then issue a certificate to the lessee confirming full payment of the total VAT liability. The lessor is expected to make a total profit from the leasing agreement of at least 10% on the initial value of the yacht.
Prior approval from the VAT Commissioner is required for every application of the Yacht Leasing Guidelines.
Friday, April 27, 2012
Thursday, April 12, 2012
Getting into the time Zone
For as long as I can remember I have always been fascinated by the quirks of geography and in particular, different time zones and unusual facts relating to dates. I am always looking out for the oddities around the world that make unusual exceptions. For example, did you know that not only are some time zones measured in ½ hours from CET – India is actually four and a half hours ahead, while neighbouring Nepal goes one better and is four and three-quarters hours in advance. Try explaining that to your gap year teenager when they are trying to ring home from Kathmandu!
Another example is brought home every New Year’s Eve when half way through our day we see news coverage of the fireworks in Auckland, then Sydney and Hong Kong before we even think about going out to begin our nochevieja celebrations. And of course even the longest lasting parties in Europe will be over before Honolulu finally gets to greet the same New Year.
And it doesn’t end simply with one day at a time. Readers may recall the publicity generated when the western-most islands of the Samoan chain skipped Friday 30 December 2011 altogether. The population went to bed on a Thursday and woke up on Saturday morning – but why? Read on.
Further back in history the change from the Julian calendar to the Gregorian version began in the 16th Century – although some countries took several decades to catch up. As a result, to this day, the Orthodox church celebrates festivals a full fortnight after the rest of us. In Britain, the change wasn’t implemented until 1752. By then, unfortunate Britons missed out on 11 whole days – they went to sleep on Wednesday, 2 September, and woke up on Thursday, 14 September.
Except, that is, in Pembrokeshire’s Gwaun Valley where they ignored this decree and carried on ringing in the Julian New Year regardless. To this day children in the valley still walk from house to house on 13 January and sing traditional songs in Welsh that have not altered for centuries. In return, householders shower them with sweets and money – or "calennig", literally "New Year gift or celebration".
I could go on to cite many other examples of such international oddities and eccentricities that survive to this day. That’s all very interesting, I hear you say, but other than helping one show off at Trivial Pursuit why does all this matter?
Let us consider time zones first. As the globalisation of international business becomes ever more important, it is vital that we work to take advantage of the opportunities offered and minimise any disruption caused by the fact that many of us work on a daily basis with people all over the world. For international groups such as the one for which I work, active steps are taken to ensure that someone is available throughout the working day – wherever that may be.
Some of the larger institutions, such as global banks, seek to avoid any such difficulties by offering clients online services 24-hours a day. Some even allow you to speak to a human being at all hours of the day and night – heaven forfend! – although you can be sure extra fees are involved for that kind of attention.
But despite all this, markets are still open only for limited periods. By the time the European bourses start their daily trading – typically at 9 a.m. CET, the Far East is already closing and the Americas are nowhere near awake. In these days of 24-hour non-stop news it can take these markets quite a while to catch up. Readers may have noticed how very common it now is for important corporate announcements to be made on Friday evening – the “Friday Night Drop” in PR parlance. This means that everyone has the weekend to digest the story before relevant stock markets open again on Monday morning. For the same reason, much of the work relating to the bailout of the British banking system was conducted over several weekends; there are many more such examples in recent years.
Turning to dates in the calendar, these can be even more critical. For example, every company will have a “year end” and it’s very common, particularly in those countries whose systems are based on English law, for such dates to be spread out across the year. Indeed using alternative year-end dates can be a real boon for anyone working in financial services who, like me, has toiled until late on several New Year’s Eves so that important transactions be completed – and when most of the world is already out partying,
But such niceties are not limited to the corporate world. For most individuals too, year-ends – and in particular fiscal or tax year dates – can throw up both real challenges and useful opportunities. Consider this simple example. Suppose Mr Brown of England decides that the climate, austerity and Sky News has become too much for him. He decides to move to Spain for a year or two. Then, having read some of these fascinating finance columns in the Gibraltar Magazine, he decides to move again – to Gibraltar. Depending on the dates chosen for all this gallivanting, he may be in for an unpleasant shock. But with some careful planning and help from his professional adviser, the result could be the opposite. Why? It’s all to do with tax years.
In the UK, the tax year for individuals starts on 6 April. This is because while the British moved to the Gregorian calendar (as mentioned above), the tax year remained tied to the Julian version. So the date for the tax year jumped from 25 March to 5 April. The tax year then moved to its current 6 April after a Julian leap year in 1800 – but didn’t change to the 7th after the 1900 Julian leap year. Easy isn’t it? You can see why tax planners charge fees?
Spain, in common with many civil law jurisdictions, works to the altogether more convenient and readily understandable calendar year – ending on 31 December. Here in Gibraltar, as in so many things, we like to be a little different. Our tax year starts on 1 July. Readers can readily see how with careful thought, one’s personal tax affairs, at least during the year or two following an initial move away from home could be managed using periods of residence across these jurisdictions.
You should not however make the mistake of believing that the oft-used phrase “I don’t pay tax anywhere” – what we might refer to as attempting to become a long-term “fiscal nomad” – is going to work. It won’t. Someone somewhere is going to want to tie you down to at least one domestic taxation system. But there is certainly no harm in exploiting the intricacies of the different tax years to your benefit from the outset. As with anything involving tax, get advice as soon as possible once you have decided to take the plunge.And to finish, let’s go back to the unfortunate burghers in Samoa and Tokelau who missed out on 30 December last year. What was all that about? Put simply, it was to do with the commercial realities of world trade in the 21st Century. By remaining east of the International Date Line – around the same time as Hawaii – when Sydney and Auckland woke up on Monday morning, Samoans were still enjoying Sunday breakfast. And of course the same thing happened at the end of the working week – while Samoans downed tools on Friday evening, New Zealanders were already playing rugby (or whatever it is they do on Saturday nights). This may have made commercial sense at the end of the 19th Century when the overwhelming majority of Samoan trade was with the US – but it did not make sense today. The decision was therefore taken that the Date Line should simply be re-drawn such that Samoa moved to the same day as Australia and New Zealand.
Sadly such options are not open to individuals – but, with careful thought and advance planning, it is possible to exploit the opportunities that arise from such differences. And not just in time zones, but in dates themselves. As for whether the UK should adopt Central European Time, that’s all about milking times for Scottish farmers. Don’t get me started!
Another example is brought home every New Year’s Eve when half way through our day we see news coverage of the fireworks in Auckland, then Sydney and Hong Kong before we even think about going out to begin our nochevieja celebrations. And of course even the longest lasting parties in Europe will be over before Honolulu finally gets to greet the same New Year.
And it doesn’t end simply with one day at a time. Readers may recall the publicity generated when the western-most islands of the Samoan chain skipped Friday 30 December 2011 altogether. The population went to bed on a Thursday and woke up on Saturday morning – but why? Read on.
Further back in history the change from the Julian calendar to the Gregorian version began in the 16th Century – although some countries took several decades to catch up. As a result, to this day, the Orthodox church celebrates festivals a full fortnight after the rest of us. In Britain, the change wasn’t implemented until 1752. By then, unfortunate Britons missed out on 11 whole days – they went to sleep on Wednesday, 2 September, and woke up on Thursday, 14 September.
Except, that is, in Pembrokeshire’s Gwaun Valley where they ignored this decree and carried on ringing in the Julian New Year regardless. To this day children in the valley still walk from house to house on 13 January and sing traditional songs in Welsh that have not altered for centuries. In return, householders shower them with sweets and money – or "calennig", literally "New Year gift or celebration".
I could go on to cite many other examples of such international oddities and eccentricities that survive to this day. That’s all very interesting, I hear you say, but other than helping one show off at Trivial Pursuit why does all this matter?
Let us consider time zones first. As the globalisation of international business becomes ever more important, it is vital that we work to take advantage of the opportunities offered and minimise any disruption caused by the fact that many of us work on a daily basis with people all over the world. For international groups such as the one for which I work, active steps are taken to ensure that someone is available throughout the working day – wherever that may be.
Some of the larger institutions, such as global banks, seek to avoid any such difficulties by offering clients online services 24-hours a day. Some even allow you to speak to a human being at all hours of the day and night – heaven forfend! – although you can be sure extra fees are involved for that kind of attention.
But despite all this, markets are still open only for limited periods. By the time the European bourses start their daily trading – typically at 9 a.m. CET, the Far East is already closing and the Americas are nowhere near awake. In these days of 24-hour non-stop news it can take these markets quite a while to catch up. Readers may have noticed how very common it now is for important corporate announcements to be made on Friday evening – the “Friday Night Drop” in PR parlance. This means that everyone has the weekend to digest the story before relevant stock markets open again on Monday morning. For the same reason, much of the work relating to the bailout of the British banking system was conducted over several weekends; there are many more such examples in recent years.
Turning to dates in the calendar, these can be even more critical. For example, every company will have a “year end” and it’s very common, particularly in those countries whose systems are based on English law, for such dates to be spread out across the year. Indeed using alternative year-end dates can be a real boon for anyone working in financial services who, like me, has toiled until late on several New Year’s Eves so that important transactions be completed – and when most of the world is already out partying,
But such niceties are not limited to the corporate world. For most individuals too, year-ends – and in particular fiscal or tax year dates – can throw up both real challenges and useful opportunities. Consider this simple example. Suppose Mr Brown of England decides that the climate, austerity and Sky News has become too much for him. He decides to move to Spain for a year or two. Then, having read some of these fascinating finance columns in the Gibraltar Magazine, he decides to move again – to Gibraltar. Depending on the dates chosen for all this gallivanting, he may be in for an unpleasant shock. But with some careful planning and help from his professional adviser, the result could be the opposite. Why? It’s all to do with tax years.
In the UK, the tax year for individuals starts on 6 April. This is because while the British moved to the Gregorian calendar (as mentioned above), the tax year remained tied to the Julian version. So the date for the tax year jumped from 25 March to 5 April. The tax year then moved to its current 6 April after a Julian leap year in 1800 – but didn’t change to the 7th after the 1900 Julian leap year. Easy isn’t it? You can see why tax planners charge fees?
Spain, in common with many civil law jurisdictions, works to the altogether more convenient and readily understandable calendar year – ending on 31 December. Here in Gibraltar, as in so many things, we like to be a little different. Our tax year starts on 1 July. Readers can readily see how with careful thought, one’s personal tax affairs, at least during the year or two following an initial move away from home could be managed using periods of residence across these jurisdictions.
You should not however make the mistake of believing that the oft-used phrase “I don’t pay tax anywhere” – what we might refer to as attempting to become a long-term “fiscal nomad” – is going to work. It won’t. Someone somewhere is going to want to tie you down to at least one domestic taxation system. But there is certainly no harm in exploiting the intricacies of the different tax years to your benefit from the outset. As with anything involving tax, get advice as soon as possible once you have decided to take the plunge.And to finish, let’s go back to the unfortunate burghers in Samoa and Tokelau who missed out on 30 December last year. What was all that about? Put simply, it was to do with the commercial realities of world trade in the 21st Century. By remaining east of the International Date Line – around the same time as Hawaii – when Sydney and Auckland woke up on Monday morning, Samoans were still enjoying Sunday breakfast. And of course the same thing happened at the end of the working week – while Samoans downed tools on Friday evening, New Zealanders were already playing rugby (or whatever it is they do on Saturday nights). This may have made commercial sense at the end of the 19th Century when the overwhelming majority of Samoan trade was with the US – but it did not make sense today. The decision was therefore taken that the Date Line should simply be re-drawn such that Samoa moved to the same day as Australia and New Zealand.
Sadly such options are not open to individuals – but, with careful thought and advance planning, it is possible to exploit the opportunities that arise from such differences. And not just in time zones, but in dates themselves. As for whether the UK should adopt Central European Time, that’s all about milking times for Scottish farmers. Don’t get me started!
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