Value added tax (VAT) is a tax on the amount of goods during their production and distribution. Since it is a tax on purchased goods, ultimately on consumption, and not on the income of an individual or a business, VAT is usually charged using the tax credit method; meaning that each business applies a tax rate to its taxable sales but is allowed a credit for value added tax paid on purchases of goods and services for business use. Since the sum of added values at all stages of production and distribution of goods is equal to the retail price of goods, the revenue base of retail sales tax and value added tax with the same scope is theoretically identical, and a given tax rate will bring the same amount of tax revenue under any access and under equal conditions of implementation, in other words, without exceptions or exemptions. The aim of this paper is to analyze the application of VAT in the charter rental sector using the example of the company Sinata Yachts d.o.o. as a company representative in the yacht charter industry. Charter includes renting a vessel or providing accommodation services on a vessel in internal sea waters and territorial sea. Different tax rates are applied in the case when accommodation is provided on the vessel, compared to renting a vessel without accommodation. The application of tax rules is also affected by the time period of service performance, because different rules for determining the place of taxation are applied in the case of short-term boat rental compared to long-term boat rental. Which tax rules will be applied also depends on whether the recipient of the charter is a taxpayer or an end user, i.e. whether he is domiciled in the Republic of Croatia or in another member state of the European Union, i.e. a third country.