A vessel traveling on the open sea must pass the territorial seas closest to the port of departure or arrival. A ship cannot therefore travel in its entirety across the open sea. However, the ship must at least be used predominantly on the open sea for the exemption from tax liability in ch. 10. Section 69 1 or 2 of the Value Added Tax Act (2023:200), ML, must be applicable.
In the Tax Agency’s opinion, a vessel is predominantly used on the open sea if more than 50 percent of the total number of voyages the vessel makes during a calendar year is on the open sea. The same applies if more than 50 percent of the total number of nautical miles a ship travels during a year is actually on the open sea. It is sufficient that the ship predominantly travels on the open sea according to one of the calculation methods for exemption from tax liability to be applied.
According to the Tax Agency’s assessment, whoever hires out a manned vessel through a charter agreement may be considered to be using the vessel for commercial or industrial activities. This applies to agreements on time chartering, voyage chartering and various special forms of such chartering. The same applies when hiring a manned vessel for passenger transport. The person who rents out unmanned vessels, on the other hand, does not fulfill the requirement that the vessel must be used to transport passengers for payment or for commercial or industrial activities.
The Swedish Tax Agency considers that the hiring of personnel can be covered by exemption from tax liability, but only if it is a question of personnel who are necessary for the operation or performance of the ship, for the needs of maritime safety or for the needs of the ship’s cargo.
This statement replaces the statement Vessels operating on the open sea, VAT dated 21 December 2017, dnr 202 482304-17/111. The new position has been drawn up taking into account amended sections of the new Value Added Tax Act and the position must be applied from 1 July 2023, i.e. when the Value Added Tax Act (2023:200) enters into force. For time before 1 July 2023, the replaced position must still be applied. The position statement clarifies what is meant by a ship predominantly operating on the open sea, whether different charter agreements can mean that exemptions from tax liability can be applied and when the hiring of ship personnel can be covered by exemptions from tax liability. What is otherwise apparent from the replaced position can be seen as clarifications, mainly due to the VAT Committee’s guidelines. The information can therefore appear directly from the Legal Guidance.
Source: skatteverket.se
