Finally, after many months of deliberation, the French Authorities have just announced how they intend to comply with the ECJ Bacino ruling with regard to VAT on Super Yacht Charters
VAT will be charged on all charters commencing in French waters where the charter contracts are signed after 15 July will be subject to TVA at 9.8%.
This reduction of 50% on the standard rate is based on Article 59a of the EU Directive, which governs the use and enjoyment rules for yachts capable of international travel
It is believed that the standard rate of TVA will soon increase to 20%, resulting in a tax rate of 10% on charters commencing in French waters
VAT will become applicable for all charter contracts signed from Monday 15th July 2013. To clarify the charter can start on any date after the Monday 15th July 2013, however the contract needs to be fully executed by this date.
Charter brokers are advising that those considering a charter in the South of France this summer should act now to ensure they do not fall foul of the tax
It is being widely assumed that the French and EU Authorities are still discussing how to define ‘for international travel’ and ‘high seas’, and clearly that will be a long and drawn out process.
In the meantime, the French will continue interpreting Article 262 as it stands and carry on with zero rating the supply of goods and services to commercial charter yachts.