Ocean-going yachts under the Swiss flag – a pure gimmick?

1. Legal basis and competent authority

With Art. 35 para. 2 NA (Navigation Act, SR 747.30), the legislator has given the Federal Council the authority to provide for the registration of yachts in a Swiss register and to determine the conditions for registration and the legal status of the registered yachts. The Federal Council made use of this competence by issuing the Yachting Ordinance (SR 747.321.7).

The register of yachts is kept directly by the Swiss Maritime Navigation Authority in Basel (SSA; Art. 2 para. 1 Yachting Ordinance) and not, as for commercial maritime shipping, by the Land Registry Authority of Basel Stadt (Art. 2 para. 1 Navigation Ordinance). The only port of registration for ocean-going yachts in Switzerland is Basel.

The reason why the Swiss Maritime Navigation Office maintains the yacht register directly may be that no liens in favour of third parties can be entered in the register of ocean-going yachts.

2. The register requirements

Swiss ocean-going yachts must meet certain technical requirements, have an habitable cabin and a self-draining cockpit and be equipped in accordance with the guidelines of the Swiss Maritime Navigation Office. They may be ocean-going sailing or motor yachts. Yachts registered in Switzerland may only be used for sport and pleasure navigation. This means that commercial use, e.g. chartering the yacht to third parties for a fee, is prohibited in all cases. It also follows from this principle that no registered lien can be entered on a yacht registered in Switzerland. Thus, it must be confirmed in the registration application that the owner is financing the purchase and maintenance of the yacht from his personal funds.

The owner of a Swiss yacht must be a Swiss citizen. If the owner is a dual citizen, he cannot register his yacht if he resides in the country of his other nationality. Alternatively, only an association constituted under Swiss law with the purpose of promoting sports and pleasure boating may register as the owner of a yacht.

If the legal and technical registration requirements are met, the Maritime Navigation Office registers the owner and yacht in the Yacht Register and issues the flag certificate. The flag certificate entitles and obliges the yacht to sail under the Swiss flag.

Despite these strict conditions, there are currently around 1500 ocean-going yachts sailing under the Swiss flag.

3. Customs considerations

3.1 Use of the yacht registered in Switzerland in EU waters

From an EU point of view, a yacht registered in Switzerland is generally considered a non-EU good. There are therefore two basic options for using a yacht registered in Switzerland in EU waters.

  • The yacht is imported into the EU with payment of customs duty and import sales tax;
  • The yacht will be imported into the EU under a temporary duty free regime.

The first possibility is usually already fulfilled if the yacht is purchased in the EU or - in the case of a purchase of a second-hand yacht - has already been imported into the EU at an earlier date or the yacht is purchased by the shipyard after importation into the EU. If necessary, the owner must have the relevant documentation of the import and payment of import duties (customs, import turnover tax). If none of these circumstances apply, a definitive, orderly import of a yacht into the EU is associated with considerable additional costs, not least because of the high import VAT.

In corresponding cases, the regime of temporary, duty-free import into the EU is therefore applied in practice for yachts not imported into the EU under the Swiss flag. A yacht temporarily imported duty-free into the EU under the Swiss flag can remain in EU waters for 18 months without interruption. The temporary import of a yacht must be declared in the first EU country reached by land or sea. The customs procedure itself can be done at the border or where the boat is to be stationed.

The period can be extended by a maximum of 6 months, i.e. to a total of 24 months. A condition for an extension is, however, that the yacht is not used and not moved during this period. An extension is therefore only possible if the yacht is stationed in a harbour or shipyard during this period.

If the yacht leaves EU waters after 18 months (or 24 months if extended), the question arises as to how much time must elapse before the yacht can be temporarily reimported into the EU. The question cannot be answered uniformly and ultimately depends on the practice of the customs office where the yacht is reregistered for temporary importation. The use of the temporary importation exemption status is inadmissible if this institution is obviously used to circumvent the definitive regular importation of the yacht into the EU. A brief departure from EU waters in order to return immediately to the permanently rented berth in the EU is therefore likely to entail substantial risks. If an EU country's customs authorities assume that the yacht has been circumvented, the EU yacht owner will have to pay customs duties and import VAT, together with a fine. Imports under the exceptional status of duty-free temporary import into the EU must therefore be carefully clarified in advance.

 

3.2 Import of the yacht into Switzerland (Art. 47 Customs Act; SR 631.0, release for free circulation)

Since a ocean-going yacht registered in Switzerland is never physically imported into Switzerland, importing the yacht into Switzerland is not a prerequisite for registration in the yacht register or for the issue of the flag certificate. Under certain circumstances, however, it may make sense to formally import a yacht into Switzerland and to pay customs duties there (customs and import VAT, see section 3.3 below).

For final importation into the Swiss customs territory, a yacht must be declared for customs clearance at any Swiss customs office. In addition to the correctly completed import customs declaration, the accompanying documents must be presented.

The person who is obliged to make a declaration and simultaneously the debtor towards customs is the importer or principal. The customs duties depend on the weight of the yacht and range from CHF 30 to CHF 45 per 100 kg unladen weight. If certain conditions are met, the yacht can be imported duty-free or at reduced rates ("free trade agreement / customs preference").

In addition to the possible import duty, the yacht is subject to value added tax (VAT). This amounts to 7.7 %. As a rule, the basis of assessment is the fee paid for the yacht. The basis is the invoice or the purchase contract.

 

3.3 Moving from Switzerland to the EU

If the owner of a Swiss yacht, which has been formally imported into Switzerland and cleared through customs here, transfers his residence to an EU country, it is possible that the yacht he has registered in the Swiss Yacht Register can be imported into the corresponding EU country duty-free and VAT-free as removal or relocation goods. The prerequisite is that the yacht has been in the possession of the person moving for at least 6 months and that the person moving has lived in Switzerland for at least 1 year. In this case, the customs office issues a so-called customs clearance certificate as proof that the customs procedure has been completed. Again, it is not required that the yacht is physically imported into Switzerland or exported from Switzerland. However, the yacht must be physically imported into the corresponding new EU country of residence at the same time as the transfer of residence and must be declared as removal goods. Registration in an EU country other than the new country of residence is not possible.

4. Conclusion

The Swiss flag for yachts is reserved for Swiss citizens and cannot be used commercially. This is deliberately intended by the Federal Council and makes the Swiss flag at the stern of an ocean-going yacht all the more special. Caution is required, however, if yachts not imported into the EU are to be transferred from overseas into EU waters. This can be costly for Swiss yacht owners, both from an organisational point of view and financially.

MME Legal | Tax | Compliance will be happy to assist you in all matters relating to ocean-going yachts, their purchase (new builidings and used boats), registration and Operation.

August 2020 | Authors: Raphael Brunner, LL.M., Karl Fässler

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