The 1.7 Million Euro Yacht: A Worked Example of Malta’s Leasing Structure

Most explanations of Malta’s yacht leasing framework stay abstract. Here is the same thing with numbers on it.

Take a yacht worth 1.7 million euros before VAT. Buy it and import it, and VAT at 18% comes to about 306,000 euros, due at once. For a private owner, none of that comes back.

Put the same yacht through a lease instead.

A Malta company buys the yacht and leases it out over 60 months. Over those five years the yacht is expected to lose 340,000 euros in value, leaving it worth 1,360,000 euros at the end. That works out at 68,000 euros of depreciation a year.

The lessor has costs of its own. Insurance runs to about 15,000 euros a year and company administration to about the same. Add a yearly profit for the lessor of 4,900 euros.

Put those together and the annual lease instalments come to 102,900 euros. That is 8,575 euros a month.

Then the VAT.

If the yacht never leaves EU waters, VAT applies to the whole instalment. That is 18,522 euros a year, or 1,544 euros a month. Across five years, about 92,610 euros.

If the yacht spends 40% of its time outside EU waters, VAT applies to 60% of each instalment. That is 11,113 euros a year, or 926 euros a month. Across five years, about 55,566 euros.

Set that beside the 306,000 euros of import VAT due at once and the cash flow point is obvious. The money stays with the owner at the moment it is needed most.

Be careful how you read the two totals, though. They are not the same thing. The lease figures are the VAT on five years of lease instalments. At the end of those five years the Malta company still owns the yacht, worth about 1,360,000 euros in this example, and the lessee does not. If the lessee then buys it, that purchase is a separate transaction with its own VAT. So the honest comparison is cash flow during the lease, not a like-for-like saving. We model the end position for a specific vessel rather than leaving it out.

It is worth seeing how sensitive that second number is. The saving tracks the sailing pattern directly. A yacht outside EU waters 40% of the time pays VAT on 60% of the instalment. At 30% outside, VAT applies to 70%, which is about 12,965 euros a year. At 20% outside, it applies to 80%, or about 14,818 euros. Every week the yacht spends where it says it spends it moves the number.

Ending the lease early has an effect too. Stop at year three and the last two years of instalments are never invoiced, so on this example the lease VAT is about 33,340 euros rather than 55,566. What happens next to the yacht is a separate question with its own VAT treatment, and that has to be modelled rather than assumed.

Two warnings sit alongside those numbers.

The first is that the 60% is not a setting you choose. It is a claim about where the yacht actually was, and it has to be evidenced with AIS data, logs and voyage records. Get it wrong and the reduction goes.

The second is that these figures are an illustration, not a quote. The values, the lease term, the operating costs and the sailing pattern all change the answer.

For how the framework works in full, read our guide: Malta’s Yacht Leasing Framework: From Principle to Practice.

Zenco Partners builds and runs Malta yacht leasing structures. To talk through a specific vessel, email info@zencopartners.com or message us on WhatsApp at +356 7921 2598.