It has been over two years since the EU stepped up its efforts to bring France into line with fellow European neighbours who charge VAT on commercial yacht charters whilst in territorial waters. VAT in France is charged at 19.6% but so far the country has ignored repeated requests to implement this charge on charter fees.
As a result, Brussels issued its latest formal statement on 21 November 2012 requesting France to respond “in a satisfactory manner” as to why the charge is still not being levied and to report within a 2-month time frame.
Numerous questions remain over definitions for a number of terms and expressions within the EU Directive that introduced the charges in particular the meaning of the line: “used for navigation on the high seas” however it seems Brussels is clearly not going to let up.
“Industry representatives have been working with French Ministers and legal specialists to find a solution to this issue for months,” explains Senior YPI Charter Broker, Annemarie Gathercole.
“Following on from the solutions and compromises we found earlier this summer to the Italian VAT issue, a number of alternatives are being considered to at least reduce the level of VAT that might be applied.”
For the moment, whilst it is still business as usual, it would seem prudent for charterers to be aware that a charge to VAT whilst in French waters is probably imminent.
However issues such as what the rate might be, whether it would apply to fuel as well as the value of the charter, what exceptions there may be and indeed how feasible it is to even imagine such a charge being properly implemented in time for the summer of 2013 all remains in the air.