French VAT on yacht charters and fuel – exempt or not?11 March 2011
Up until the end of last year yachts chartered in the Mediterranean were exempt from paying French VAT (TVA) both on the value of the charter and on any fuel and provisioning. Pressure from other European states to bring French Law more into line with the rest of Europe resulted in the European Commission forcing the French Government to review and amend its rules on exemptions.
“Up until the end of last year,” explains Head of YPI Charter, Fiona Maureso, “there were just three conditions a yacht needed to satisfy to be exempt from paying French TVA. Firstly, that it was registered as a commercial vessel. Secondly, that it had a permanent crew, and thirdly that it was used solely for a commercial activity. As of the 1st January this year the French Government has added a fourth condition: that the vessels must be used for navigation on the high seas. And this is where the problems have arisen.”
The problem for the yachting industry today is in understanding what is meant by the term: “used for navigation on the high seas.”
“At what point does ‘high seas’ come into play?” asks Franc Jansen, Head of YPI Management. “Twelve miles off shore? Sixty miles? And does the yacht have to actually navigate on the ‘high seas’ during the charter or is it just a question of having the capability to do so?”
“Our top priority,” explains YPI Group CEO, Bertrand Vogèle, “is to protect our yacht owners and our charter clients. We have met with our international and French lawyers, we have attended a number of industry conferences on the topic and we are working alongside the MYBA Association with a view to seeking rather more information and clarity from the French authorities. Certainly for the moment, we are not charging VAT to any of our Charter clients.”
More industry meetings are planned in London and Monaco over the next few weeks and all developments will be communicated by YPI to its charter and management clients as and when it is received.
“As a Group,” adds Bertrand, “we are committed to understanding the potential impact of any changes that may affect our clients and yacht owners. Our objective, as always, is to ensure accurate and responsible information (with the appropriate advice) is passed on to clients in the most timely way possible.”
For information or advice on this topic please call:
Fiona Maureso on: +33 (0) 493 340 100 or email: firstname.lastname@example.org
For the moment the French Government remains silent on any detailed definition of the term.
“As far as we are aware,” says Fiona, “and this is a situation that is developing day by day, no attempt has as yet been made by Customs and Excise to enforce this new condition.”
Neither, it seems, does there appear to have been any directive issued to Customs and Excise on how to implement the latest addition to the Code.
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