There has been much discussion within the yachting industry lately of developments in relation to VAT and a possible anchorage tax in France. Marseille-based law firm, BMC Avocats, reports that the proposal for an anchorage tax was definitively abandoned by the French Parliament on 18 May 2015. This is positive news for the industry. With regard to VAT, BMC reports that as a result of France having been sanctioned twice by the European Court of Justice for the non-compliance of French VAT rules, the French tax authorities have committed to revise their national regulations to make them EU compliant. This task has been completed and the results can be summarised as follows:
VAT on yacht charters
When the charter yacht is delivered in French territorial waters, VAT must be paid on the charter fee for the period of time the yacht will spend in EU waters and the owners must provide evidence of time out of EU territorial waters by any means necessary. This is not straightforward and it has led to disputes about time spent in or out of EU waters. As such, to minimise such disputes, French customs have confirmed that, provided the yacht leaves EU waters in the course of the charter, 50% of the charter may considered as having been performed outside EU territorial waters. Additionally, BMC reports that French customs have confirmed that VAT should be paid on brokers’ commissions, with no 50% discount.
VAT exemption on delivery, maintenance operations, refit, supplies and bunkering of commercial yachts
BMC reports that the basic requirements are the same as before: to take advantage of the exemption, the yacht must be commercially registered, have a permanent crew and be used under charter. However, the French authorities have now added a new requirement, in that the yacht must sail at least 70% of the time outside EU waters. Non-commercial voyages are not taken into account for the calculation of the 70%. The average of voyages outside EU waters shall be calculated by reference to the past year from 1 January to 31 December. When the yacht is used under charter, the charter will be considered as a unique voyage if no new passengers have embarked or disembarked prior to its completion. If passengers have embarked or disembarked during the charter, then the number of voyages will be equal to the number of stops where embarkation and/or disembarkation occurs. The relevant declaration is made under owner’s liability and the evidence taken into consideration will include logbook, AIS and GPS, charter agreement and guest list. This method will begin for the 2015 cruising period, therefore it will be effective in 2016. It means that owners who wish to preserve their exemption will effectively have the current season to reach the score of 70%. These requirements will not affect yachts owned by non-EU companies that are under temporary exemption during the 18-month exemption period, provided that they are not used on charter.
Grateful thanks to our friends Marc Bernié and Chloé Montagnier of BMC Avocats in Marseille for their assistance with this update.