Changes in the VAT rate for the maritime shipping and offshore industry

19 September 2019 - In 2019, a number of changes took place in the application of the VAT rate to the maritime shipping and offshore industry. In some situations, the customs rate may change as well.

Change VAT zero rate

Since 1 January 2019, the application of the VAT zero rate to supplies and services to and from seagoing vessels has been tightened up. This means that the Tax and Customs Administration is less likely to accept the application of the zero rate, resulting in the risk of VAT being subsequently levied if the requirements are not met. The conditions for the application of the VAT zero rate were published in a decree issued by the state secretary. At the beginning of this year, we published an article in which we list the changes for you.

Customs duty - are hulls suitable for sailing on the high seas?

The classification in the customs rate is also subject to requirements for seagoing vessels. European customs law provides for a separate classification for seagoing vessels designed and built for navigation on the high seas. But what is to be understood by ‘navigation on the high seas’ in this context? A dispute was put before the Amsterdam Court of Appeal as to whether so-called hulls should be classified for the purposes of customs duty as seagoing vessels or non-seagoing vessels as, in that case, a different rate applies. The Court of Appeal has asked questions to the Court of Justice in this respect. Depending on the response of the Court of Justice, this may lead to some situations requiring a different customs classification to be applied.

VAT zero rate not applicable to the supply of jackable offshore drilling rigs

In another case, the European Court of Justice recently ruled that so-called ‘jackable offshore drilling rigs’ are not considered to be vessels for navigation on the high seas. The Court of Justice supports this judgement with the explanation that offshore rigs may be mobile and able to sail on the open sea, but are predominantly used in a stationary position. As a result of the judgement, such rigs are not subject to the VAT zero rate, neither for the supply of the rigs themselves nor for supplies and services relating to such installations. It is expected that local tax authorities will narrowly explain the Court's position, resulting in other floating installations no longer being subject to the VAT zero rate.

Advice

If you are active in the maritime shipping and offshore industry or are a supplier to it, Mazars' VAT and customs experts will be happy to advise you on the possibilities of revising contracts, invoicing, and ERP tax and VAT codes, so that you apply the correct rate and do not run any risks in this area.

Want to know more?

Would you like to know more about the consequences of the various developments in the VAT zero rate and customs law for maritime shipping and offshore drilling rigs? If so, please contact Raimo Kool by e-mail  or by telephone +31 (0)88 277 15 05 or Eline Polak by e-mail  or by phone: +31 (0)88 277 23 25. They will be happy to be of assistance!

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