The Villa Vie Odyssey ("VVO") cruise ship, stuck in Belfast for five months, might give long-term and permanent cruise passengers some tax issues.
Passengers on the VVO have had a rather bizarre experience with their cruise ship berthed in Belfast for five months due to engineering problems. It set sail last week but had to return to settle a paperwork problem. It finally left and headed down the Atlantic coast of Europe to start of a three and a half year cruise.
Perhaps the last thing passengers want to hear are questions about tax jurisdictions. However, there are currently no agreed rules on how long-term cruise passengers should be taxed. For this is no ordinary cruise, some passengers have booked two and three-year cruises, effectively leaving any permanent tax jurisdiction for extended periods.
The ship's promotional material describes it as the 'first perpetual world cruise', offering a 'new cruise lifestyle'. Passengers buying the best ticket could be on board for three and a half years and have the option to purchase a permanent 'villa' on board. This is available for the owner for a minimum of 15 years - four trips around the world!
It seems some passengers now plan to stay on the VVO for the rest of their lives and have purchased cabins to live in. It's likely that some may rely on sources of income to fund their lifestyle and so the question of tax.
Some tax rules exist for certain scenarios like oil rig workers, airline pilots and mariners, but not for long-stay or permanent cruisers. The changing travel patterns of the affluent could cause tax authorities around the globe to look at how to tax these people.
Given the general complexity of cross border tax laws it's difficult to see any future tax legislation for long term or permanent cruisers being straightforward. There will clearly be tax responsibilities for the passengers, and it is recommended that they keep records of all their travel movements in case any tax authority should open an investigation.
Should taxpayers would have to keep a close eye on what waters they are in, for how long and what the relevant tax filing rules are.? Would ythey need reliable internet or the ability to post their paper tax return depending on the territory they are in? What if different tax authorities have different policies for long-term cruisers? Will tax authorities who pursue permanent cruisers for unpaid taxes wait until they docked? The questions are are endless.
For those who are interested, check out the Villa Vie Residences website - villavieresidences.com
Peter Nichols
Tax Director BFN Accounts & Tax limited