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The CJEU’s BUPA Case rules that prepayments without specific identified goods or services, like the Advance Provisioning Allowance (APA) in yacht chartering, are not considered payments on account and thus not subject to VAT.
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VAT on APA becomes chargeable only when goods or services are clearly identified; input VAT on costs can be recovered if recharged to the charterer with proper VAT documentation and identification.
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VAT treatment of APA costs varies by Member State; some exemptions apply to vessel operations, but recovery rights and recharge rules differ, requiring careful, jurisdiction-specific consideration.
Source: Zampa Partners
