Implementation of VAT (TVA) on Yacht Charters in France

Yacht owners chartering in France have in recent years benefited from the French Commercial Exemption (FCE) rules applied to the charter of commercially registered yachts.

These rules were laid down by a customs administrative note (“Bulletin Officiel des Douanes” n°6603, dated 24th June, 2004)  which in turn enabled commercially operated yachts to be imported into France at a zero rate of VAT and for subsequent charter activities originating in French ports to be supplied without VAT being charged. Further advantages included the ability for commercial yachts  to take on duty free fuel and benefit from tax free supplies.

Unfortunately for the commercial yacht charter market the FCE regime has been under threat as a result of France being taken to task at EU level in the form of infringement proceedings requiring them to take steps to end what is seen as a form of relief that conflicts with wider EU convention.

A notice posted by the EU commission on 21st November, 2012 formally confirmed to France that their VAT exemption on charter yachts in France was not compliant with EU VAT rules and required France to take steps to remove the exemption from its tax legislation. A further letter was issued in early January requiring France to comply within two months.

Tom Becker of Oceanskies who is a native French speaker spoke with our contacts at the Direction des Services Fiscaux (Alpes Maritimes) and the Direction Regionale des Douanes (Nice) this morning in an effort to ascertain whether there is yet any formal guidance available on how France will be amending its regulations in view of the EU commission notice.

Although formal guidance is yet to be published the message received from both officials was that France will certainly be complying with the commission notice but in a way that where possible will hopefully retain some sympathy to the commercial charter industry possibly in the form of a reduced rate of VAT being applied.

We therefore suggest that it would be prudent for the owners of yachts that are intending to charter commercially in French waters to consider their present arrangements and prepare potentially for the need to become VAT registered in France.

We here at Oceanskies will continue to liaise with the French authorities and will endeavour to keep our clients updated on developments.

For further information please do not hesitate to contact us.

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