Foreign yachts fined in Europe for 'wrong' fuel

by Lucy Chabot Reed, The Triton/Sail-World Cruising on 14 Aug 2011 Admittedly they were megayachts, but the warning is clear for all cruising sailors headed for Europe after being in America, even for a short time. Two megayachts have been boarded and fined thousands of dollars by German customs officers in Kiel for having red-tinted fuel in their tanks.

The first yacht was ending a summer-long Baltic cruise when it was boarded in November. The most recent incident, which happened in July, came when the yacht was ending a springtime cruise. Neither captain wanted their names or yacht names mentioned since both have obtained lawyers to sort things out. We are honoring their requests.

'They’ve set up a maritime speed trap and captains need to be prepared for this,' said the captain fined in July, who was in New York last month talking to attorneys.

At issue is the red-dyed fuel both vessels took on in the United States before heading to the Baltic. Despite taking on numerous liters of clear, duty-paid fuel after leaving the U.S., some of the U.S. fuel remained to taint subsequent tanks.

Red-dyed fuel in the U.S. is reserved for off-road uses such as marine and farm equipment. It indicates that federal road taxes were not paid, but it is not duty-free. Some yachts will pay state sales tax on their fuel, though yachts leaving the country can sign an affidavit to that effect and avoid state sales taxes. Whether sales taxes have been paid or not, all marine fuel sold in the United States is dyed red.

Red-dyed fuel in Germany is duty-free and also reserved for off-road uses but, as in all European Union countries, is only permitted for commercial vessels. Both megayachts fined are private vessels.

'We had taken a very small amount of fuel in the U.S. prior to our transport to Europe,' said the captain fined in November. The yacht cruised around the Baltic all summer last year, including Scandinavia and Russia, using about 38,000 litres of fuel, which was tax paid and clear.

'But our fuel still had a very light pink color,' he said. 'The chemical tests that customs use are extremely sensitive and will detect unseen quantities of dye. They told me it was illegal to mix tax free with tax paid.'

Customs officials immediately required a 10,000 euro bond to cover the fine that was yet to be determined. And the yacht was taxed 15,000 euros -- about .55 euros per liter of total capacity.

Then the captain had to pump out 8,000 liters of 'contaminated' fuel, clean the tanks, and refuel, he said.

'If you have had any red fuel in your tanks at any time, their tests will show the markers, even if you have used thousands of litres of clean fuel,' the November captain said. 'We are not allowed to fuel up to higher that 90 percent tank capacity, yet customs will tax you on 100 percent capacity, even if you have nearly empty tanks.'

After about seven months, the yacht’s agent was notified that the fine was 2,000 euros, and a month later 8,000 euros were returned to the yacht, the captain said.

Both captains retained all their paperwork showing where and when the fuel was bunkered and all their fuel samples. None of that seemed to deter the German customs officers. Communicating with the officers was difficult and stressful, the English-speaking captains said. The November captain was interviewed by four customs officers and three officers from the serious crime squad for about four hours, he said.

'Even if [Germany’s] duty-free fuel is also red, if the yacht has documentation that they bought the fuel somewhere else, there’s no basis for a fine,' said Marianne Vanstone, a fuel trader with Global Yacht Fuel in Ft. Lauderdale. 'How can they justify it? Looking at all his documentation, they can see he didn’t get the fuel there. That doesn’t make any sense to me.'

All of Europe offers duty-free fuel for commercial vessels, but many of them use different colors to mark it. In Italy and France, duty-free fuel is blue. In the UK, duty-paid fuel is red.

'The rules vary everywhere, but I have to go by what the local supplier tells us,' Vanstone said. 'I feel bad for captains. They’re supposed to magically know all these things, going into all these countries. How can they?'

In September 2008, the 43m M/Y Daydream was asked to leave Croatia over the blue-green fuel in its tanks. Though the charter yacht bought the fuel in France duty-free, Croatia reserved that color dye for its fishing fleet.

The yacht had receipts and paperwork that showed the dyed fuel was bought in France, but the yacht was initially detained (and lost a charter) and then asked to leave. The fines were eventually returned.

'For boats that travel all over the world, this is a disastrous situation,' said the captain of the November incident. 'If you fuel in the UK, Malta, U.S.A., you will get red fuel. Now that they [German authorities] are aware that they can get good income from any boat that has come across, they will always check. It’s easy money.'

'In my opinion, what happened is illegal,' said Silvio Rossi, president of the fuel trading and yacht agent company Rossmare International in Savona, Italy. 'The biggest mistake they [customs officers] make is they confuse supply and consumption.'

Rossi cited Article 4 of the Convention of Istanbul, a continent-wide agreement that says that fuel in the normal tanks as a means of transport shall be admitted into the European Union without payment of import duties and taxes.

'A private boat in Europe cannot be supplied duty-free fuel, but what’s in the tanks when they arrive is completely different,' Rossi said.

Considering how many thousands of yachts enter the EU every year and how many transit between EU countries every year, these sorts of incidents are rare.

'In this case, this is a customs officer who doesn’t know the law,' Rossi said. 'How many yachts arrive in the EU every year? They go everywhere in Europe and nobody declares the fuel they have in their tanks because of the Convention of Istanbul.

'Believe me, it’s illegal what they have done, completely illegal.'

In the July incident in Kiel, customs officers were onboard for 15 hours, that captain said. The resulting fines for fuel and other infractions reached tens of thousands of dollars and include a charge of fraud.

This vessel took red-dyed fuel in Norfolk, Va., before heading off on its voyage. It took on fuel in Newport and Newfoundland, then headed to northern Europe where it took on more fuel before traveling to Germany.

This captain suggested a few ways fellow captains can be prepared for questioning about their fuel.

1. Keep samples of each delivery of fuel. 'I keep ours for a year.'

2. Make sure the oil record book is up-to-date, and note everything, including where you pull the fuel from.

3. Keep a daily bunker report.

4. Save fuel receipts so you can prove you bought your fuel outside the European Union.

This yacht and captain did all those things 'and they still fined us,' but the captain said he is confident the matter will be resolved in their favor.

'All governments are bankrupt,' this captain said. 'Everybody is trying to raise tax money. Germany is bailing out Greece, Florida is looking for more tax revenue. They hope you’ll give in and say it’s not worthwhile and just pay it. But this is a lot of money.'

Despite the hassles, the captain said the owner would like to return to the Baltic.

'It beats the Med. It’s stunningly beautiful with great infrastructure. You have cell service everywhere. and it’s just pristine. If things don’t work out, we’ll just skip Kiel.'

For more interesting articles about superyachts and their captains, check out www.thetriton.com!The_Triton.