Earlier this year we reported on changes being introduced by the French Government following pressure from the European Commission to bring its regulations with regards to VAT exemption for yachts more in line with other states (see “French VAT on yacht charters and fuel – exempt or not?” in the March edition of enewsletter –click here)
In summary, the new legislation introduced a fourth condition that needed to be satisfied before yachts could benefit from VAT exemption on charter fees as well as fuel, provisioning, shipyard work, etc. That condition is that the vessels be used for “navigation on the high seas”. Initially, the yachting industry was thrown into turmoil, not knowing how this new legislation would be applied and what impact it would have on business. However, the French authorities then published an “administrative interpretation”, authorising the criteria previously applied to be maintained despite the legislative amendment and it was business as usual.
Not satisfied with France’s failure to implement the terms of the new legislation, the European Commission took steps to bring the French authorities back in line and on 29th September issued a press release announcing its decision to bring an action against France in the European Court of Justice.
“There will be much made of this over the next few weeks,” explains YPI Head of Charter, Fiona Maureso. “Clearly there are some who have a vested interest in raising levels of concern amongst yacht owners and charterers. Our advice to clients is simple and clear: until France repeals the administrative interpretation, yacht charters starting in French waters will continue to benefit from the French Commercial Exemption. There is no immediate cause for concern following the European Commission’s latest press release.”
YPI CEO, Bertrand Vogèle agrees that change is not imminent. “Together with MYBA and other organisations,” he explains, “we will be lobbying very hard to ensure that the interests of our clients, and the yachting industry as a whole, are protected. This industry generates a wealth of business and employment in the Mediterranean and disputed taxation issues are not the way to grow business in times of need.”