Introduction
State laws are often designed to encourage certain behaviors and decisions. In Washington state, the legislature has created an incentive for people who are planning to purchase a new yacht. The state is willing to forgive the sales tax normally collected from a person purchasing a new yacht if the yacht qualifies as a vessel with an electric propulsion system.
Greenline Hybrid yachts can run exclusively on battery power and are therefore uniquely positioned among other vessels of comparable size and capabilities to take advantage of this incentive.
How Much Can Be Saved?
In April of 2024 the sales tax rate in King County, Washington is 10.35%. It’s possible to appreciate the magnitude of the savings by checking with pricing found on the website https://greenlinehybridnw.com
A new 39-foot Greenline is priced “from” $675,000. Avoiding a 10.35% sales tax on that amount reduces the total transaction cost by more than $69,000. Purchasing a new 40-foot Greenline Hybrid yacht (“from $765,000”) could result in sales tax savings of just under $80,000, or more depending on any optional equipment selected.
Larger Greenline Hybrid yachts realize corresponding larger savings. At the upper end of the ”from” range ($1,317,000) purchasers of a new Greenline 45 will save over $136,000 on sales tax. Greenline 48 (“from $1,347”) - over $139,000 in sales tax savings. The Greenline 58, (using a $2,667,000 vessel for an example)-well over a quarter million dollars in sales tax savings; ($276,034).
How Does the Law Read, Exactly?
The revised code of Washington (RCW) states contains the section RCW 82.08.996 addressing the collection of sales tax under the heading “Exemptions, Battery Powered Marine Propulsion Systems,” applies not only the propulsion systems but to vessels equipped with such systems Sections (3) (b) and (3) (d) clearly and specifically includes hybrid yachts in the list of exempted vessels.
From RCW 82.08.996
(3) For the purposes of this section:
(a) "Battery" means a secondary battery or storage cell that can be charged, discharged into a load, and recharged many times; and includes one of several different combinations of electrode materials and electrolytes.
(b) "Battery pack" means a group of any number of secondary or rechargeable batteries within a casing and used as a power source for battery-powered electric marine propulsion systems or hybrid electric marine propulsion systems.
(c) "Battery-powered electric marine propulsion system" means a fully electric outboard or inboard motor used by vessels, the sole source of propulsive power of which is the energy stored in the battery packs. The term includes required accessories, such as throttles, displays, and battery packs.
(d) "Hybrid electric marine propulsion system" means a propulsion system that includes two or more sources of propulsion in one design, one of which must be electric.
Claiming the Sales Tax Exemption
The Washington State Department of Revenue provides an extremely simple form to use when claiming the sales tax exemption on a new Greenline Hybrid yacht.
Form 27-0032, “Buyer’s Retail Sales Tax Exemption Certificate”, lists situations and conditions where a vessel is exempt from sales tax. Check the box next to item 2D, “vessels equipped with electric marine propulsion systems or the systems themselves with continuous power greater than 15kw”, fill out some basic information at the bottom of the page, sign your name, and the process is complete.
Other Considerations
Only a brand-new vessel qualifies for the sales tax exemption. Previously owned, titled or documented, and previously registered Greenline Hybrid yachts do not qualify for the exemption and normal sales tax rules apply to those purchases.
An easily overlooked aspect of the sales tax exemption would be the effect of the purchase of a new Greenline Hybrid yacht by an LLC. In this unique case, not only would the LLC making the original purchase be exempt from sales tax, but when the LLC resells the vessel the next buyer in line is exempt as well. That sales tax exemption for the first subsequent buyer from an LLC could easily improve the resale value of a Greenline Hybrid yacht.
Obviously, the savings do not apply to special situations where there would ordinarily be no sales tax collected. Example: an out-of-state purchaser buys a Greenline Hybrid and agrees to remove the vessel from Washington state waters within 45 days.
The current law exempting hybrid yachts from state sales tax expires July 1, 2030.
Further Reading
Phone 360-705-6705 with questions pertaining to the sales tax exemption program or specific details.
For expert legal advice on matters relating to the tax aspects of purchasing a vessel, Ocean Pacific Yachts recommends the Wenthur Law Group, LLP. According to Andrew Trueblood, owner of Ocean Pacific Yachts: “Their focus extends to all aspects of sales, use, VAT, and property taxes related to purchasing, owning, and selling yachts, jets, and vintage automobiles.The senior partner at Wenthur Law Group, Cris Wenthur, leads the team. Chris specializes in the acquisition of yachts, jets, and vintage cars as well as income, partnership, corporate, and estate tax planning.”
Links to State of Washington resources on this topic include:
