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Current VAT Developments in France

France to comply with EU legislation for chartering commercial yachts
Since 2010, the EU rules for chartering yachts have changed. In principle, chartering a yacht for less than 90 days requires VAT to be paid in the country where the chartered trip departs. The new regulations have put more pressure on the VAT exemptions France applied for the chartering of commercial yachts; chartering a commercially registered yacht with permanent crew and a commercial purpose was exempted from French VAT.

Momentarily response: extra condition for French VAT exemption
The European Commission urged France to change the rules for yacht chartering to bring it more in line with the European VAT legislation. Consequently a condition was added to their original VAT exemption: the VAT exemption now only applies to yachts, fulfilling all mentioned conditions and navigating the high seas. High seas can be defined as those waters outside the territorial borders. For full reference, view our VAT matrix for France.

More EU pressure on France to follow through on legislation
For the moment, France does not have a system in place to check whether the new rules are being followed. However, the pressure on France to conform to the EU legislation is increasing. Even more so, since the ruling of the European Court of Justice in the case of Bacino Charter Company in December 2010, in principle no VAT exemption applies when the charter trip is undertaken by a private person for leisure purposes. This is followed by the recent announcement (September 29, 2011) of the European Commission, stating they are taking the case on the French VAT exemption for chartering activities to court.  The EC wants France to apply and check the legislation in practice.

Highly increased risk of VAT claims
Yachts now being chartered in France, without VAT being accounted for, are already operating out of line with European legislation. It is only a matter of time before French authorities will follow through and check the yachts and their use at high seas. Consequences for non-compliance may go from large penalties to even seizing the yacht.

All VAT and VAT exemptions to be accounted for
For ease of mind and a carefree yachting experience, all VAT and/or VAT exemptions should be accounted for correctly - even in France. For this reason we have developed the YVAT portal. Wherever in Europe (incl. France) you are chartering, with YVAT you can arrange the necessary VAT formalities with a few mouse clicks. Find out more about our VAT solution here.

Find out more about the YVAT portal, click here

For an overview of the French VAT situation for yachts, view our VAT matrix here
Information on the situation in other EU countries is available on request

Read about the before-mentioned ECJ case on chartering, click here

For the reference of legal yacht advisors, we have composed a detailed document describing the current situation for yachts in the EU, click here