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    French & Italian Yacht Leasing

French & Italian Yacht Leasing

The yacht leasing arrangements offered by banks and financial institutions in both France and Italy remain an extremely popular method of yacht purchase and ownership.

The leasing arrangements were originally introduced by the French government as long ago as 1976 and a similar system was introduced by the Italian government in 2000.

The arrangements were introduced by the French and Italian governments to encourage the development their yachting industries by enabling the purchasers of vessels to gain a reduction in the amount of VAT payable whilst at the same time being able to finance their acquisition over a number of years.

Typically the leasing arrangement requires the prospective purchaser to contribute a deposit towards the purchase of the yacht with the remaining purchase amount being provided by a leasing company which is a subsidiary of a bank or other financial institution.

The yacht is then purchased by the leasing company and it is registered in the name of the leasing company.

The yacht can be registered under either the French or Italian registration systems but many clients prefer to take advantage of the British Register of Ships and for this reason many yachts entered into the French and Italian leasing systems are registered in the United Kingdom, for example at London.

The leasing company then leases the yacht to either the client in their own personal name or alternatively to a limited liability company established on behalf of the client.

The nature of the lease is always ‘bareboat’ or ‘demise’ in nature which means that the party leasing the yacht from the leasing company are made responsible for all aspects of its day to day management and operation.

The length of the  lease period varies depending on the arrangements made between the owner and the leasing company but are typically between three and five years.

An innovation of the French and Italian leasing systems was the introduction of an automatic presumption of the time that a yacht might operate outside EU territorial waters during the course of the lease.

The automatic presumption means that the respective prevailing rate of VAT in France and Italy is applied to an established percentage of the lease deemed to correspond to the estimated use of the yacht in EU territorial waters based on its size and capability.

In France this means that VAT is charged on 50% of the lease resulting in an effective VAT rate of 9.8%.

In Italy the following tables illustrate the established percentage of lease and effective VAT rate according to the type (i.e. motor or sail) and length of yacht:

Motor

Length % of lease subject to VAT Effective rate of VAT
Over 24 metres in length 30% 6.6%
Between 16.01 and 24 metres in length 40% 8.8%
Between 12.01 and 16 metres in length 50% 11%

Sail

Length % of lease subject to VAT Effective rate of VAT
Over 24 metres in length 30% 6.6%
Between 20.01 and 24 metres in length 40% 8.8%
Between 10.01 and 20 metres in length 50% 11%

At the end of the lease period the lessee may opt to purchase the yacht from the leasing company.

The final purchase is not mandatory but an option which may be exercised at the end of the lease for a separate consideration.

If the option is exercised the yacht is sold from the leasing company to the party who has been leasing the yacht for a percentage of the original price.

During the lease the yacht the VAT on the yacht is considered to be accounted for by the leasing company and only at the end of the lease following the final payment and resultant sale to the lessee does the vessel become VAT paid.

Oceanskies works closely with leasing companies in both France and Italy to facilitate the set up of arrangements on behalf of its clients.

Oceanskies also acts on behalf of the leasing companies to register yachts in their name under Part I of the British Register of Ships in the United Kingdom, most usually at London.

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For further information please do not hesitate to contact us.

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