VAT on Yachting

VAT ON CHARTERS & FRENCH
COMMERCIAL EXEMPTION
CONTACT
Christopher POUSSE
Commercial Director –Yachting Department
Mobile : +33(0)6 25 65 63 70
Email : cpousse@easytax.fr
cpousse@customs4yachts.com
GUIDELINES 2018 FRENCH RULES

Customs4Yachts is a premium Customs
service dedicated to Yacht Owners,
Yacht Managers, Boat Dealers, Suppliers,
Shipyards and Subcontractors.
With over 150 represented
companies EASYTAX is the
specialist in fiscal representation
and VAT management for yachts in
the Mediterranean.
EASYTAX covers France &
Monaco, as well as Italy, Spain,
Croatia through its network.
CUSTOMS VAT
WHOWE ARE SECTORSWE SPECIALISE IN

PART 1 –VAT ON CHARTERS DEPARTING FROM FRANCE & MONACO
Rules in place since July 2013
How to draft the MYBA contract
Proofs of sailing into International waters
International vs territorial waters
Monaco
APA report
PART 2 – FRENCH COMMERCIAL EXEMPTION
Rules in place since January 1st 2016
How to purchaseVAT excluded in 2018?
How to calculate the 70% ratio ?
How does the F.C.E. impact the purchase of fuel
E.U. Importation & Exportation requirement
ANNEXES
VAT attestation
Trip report
Customs4Yachts services
SUMMARY

VAT ON CHARTERS
DEPARTING FROM
FRANCE & MONACO
PART 1 VAT ON CHARTERS

RULES SINCE MAY 2013
If a vessel charters from the French territory (mainland France including Monaco,
& Corsica), the VAT on charter fees and delivery/redelivery fees are subject to
20% French VAT. VAT also applies to Martinique, Guadeloupe and Reunion Island
but at the rate of 8,5%.
It is possible for the French VAT to be applied only on 50% of the charter fee and
delivery/redelivery fees if part of the voyage takes place in International waters
(outside EU waters) and that the itinerary was not determined ahead of time.
Take note :
The charter contract is the
first point of control during
fiscal audits. It must be
properly drafted and
completed.
When applying 20% FR VAT on
50%, proofs of sailing outside
the E.U. waters must be
provided.
A copy of the APA report
(Advance Provisioning
Allowance) is required for
all charters.
VAT ON CHARTERS

When the VAT is calculated at 20% on 50% of the charter fee amount (and D.
Fees if any), please use the following wording:
Cruising Area : West Mediterranean including International waters
Charter Fee : € __ Excluding VAT
VAT : € __ (FrenchVAT at 20% on 50% of the charter fee amount)
Delivery Fees : € __ Excluding VAT + € __ (FrenchVAT at 20% on 50% of the
charter fee amount) = € __
Special conditions to be added:
“The Charterer declares that the vessel will cruise in International waters (outside the
E.U. 12 nm from baseline water limit) permitting to apply the French VAT at the rate of
20% on 50% of the charter fee (BOFIP BOI-TVA-CHAMP-30-30-30-10), delivery fees
and any extraordinary expenses invoiced by the owner to the Charterer”.
“In case the vessel did not cruise in International waters at all, the owner will issue a
rectified invoice with additionalVAT which the Charterer will be responsible for paying”.
HOWTO DRAFT THE CONTRACT
VAT ON CHARTERS

Picture of the GPS (while in
Int. waters) with the vessel COR
for identification purposes.
Picture of the Logbook : Vessel’s name, date &
“international waters” GPS coordinates clearly
visible :
To justify that VAT at 20% applies only on 50% of the charter fees (and Delivery
Fees if any) we require the captain to provide us with :
INTERNATIONALWATERS SAILING PROOFS
VAT ON CHARTERS

AIS screenshot tracing the route made (if vessel is equipped with AIS) :
Map of the Mediterranean Sea showing some of the limits
(in blue) between territorial waters and International
waters.
VAT ON CHARTERS
VAT ON CHARTERS

Example of areas where
two nations’ territorial
waters are contiguous.
'International waters'
start 12 nautical miles
from the baseline and
are waters that do not
belong to one nation’s
territorial waters.
Where do territorial waters start & end ?
Territorial waters consist of Internal waters (certain bays,
rivers, etc) and the territorial sea, which extends to 12 miles
from the baseline.
INTERNATIONAL WATERS
INTERNATIONAL WATERS
Where do International waters start ?
INTERNATIONALVSTERRITORIALWATERS
VAT ON CHARTERS

Even though Monaco has it owns Tax
office, the principality is part of the
French territory for VAT & Customs.
The same rules apply to a charter
starting from Monaco as one starting
from France.
VAT due on charters starting from
either jurisdictions can be declared
with a FR VAT number obtained either
with the French Tax office or the
Monegasque Tax office.
We are able to assist companies to VAT
register in Monaco if this should be
preferred.
MONACO VAT ON CHARTERS

For all charters, an APA report (Advance Provisioning Allowance) is required. These
expenses may be for fuel, food and beverage, flowers, etc.
We will require the following information :
Vessel name  Captain’s name  Charterer’s name  Charter dates
 APA amount (at the
beginning of the charter)
 Expenses made during
the charter (with invoice
date & supplier’s name)
 Charterer’s signature
 APA amount at the end of the charter Balance
due OR the difference to be paid by the charterer
SUBMITTINGTHE APA REPORT
VAT ON CHARTERS

FRENCH COMMERCIAL
EXEMPTION
(F.C.E.)
PART II
FRENCH COMMERCIAL EXEMPTION

The French Commercial Exemption (F.C.E) is a tax regime allowing some specific
VAT exemptions to apply on goods & services provided to commercial high sea
vessels.
A vessel has to comply with the below requirements in order to be entitled to VAT
exemptions :
1. To be registered as a commercial vessel
2. To have a permanent crew on board
3. To be used exclusively for a commercial activity
4. To have an overall length of 15 meters minimum
5. To have exited French territorial waters for at least 70% of the
previous year “trips”.
6. Have less than 50% of static charters over one year period.The overall
number of static charters must be inferior to the number of dynamic charters.
Static charters (i.e. MIPIM, Cannes Festival, Monaco GP, etc.) are not accounted for
the 70% rule as there is no navigation involved.
7. Once a vessel benefits from the F.C.E., navigation at all time under commercial
registry is mandatory while in the French territorial waters: neither switching nor
cruising under pleasure registry in French waters is then allowed.
RULES SINCE JANUARY 1st 2016

An F.C.E. attestation (click) will have to
be provided to French suppliers in order for
the vessel to benefit from any possible VAT
exempted services / goods.
A NEW VESSEL or a NEWLY COMMERCIALIZED VESSEL can benefit from the
French VAT exemption from the first year of operation. The exoneration will be received on
the base of a PROVISIONARYVAT ATTESTATION.
If the F.C.E. requirements are not complied with by end of the calendar year, any goods or
services obtained in exoneration ofVAT shall be regularized (including the Importation).
FRENCH SUPPLIER
i.e. bunkering station, ship
chandler, shipyard, etc …
HOWTOPURCHASEVATEXCLUDEDIN2018?
VAT EXEMPT

Such calculation is made by dividing the total number of “qualifying trips” by the
total number of trips operated during the previous calendar year.
Embarkation is when a
passenger joins the vessel
as a member of the
charter party (not
someone visiting for few
hours).
Disembarkation is when
a passenger leaves the
vessel and does not return
(not someone going ashore
for a few hours).


MONACO  PORTOVECCHIO
A “trip” is defined by a navigation while under charter agreement, between ports where one or more
passenger(s) are either permanently embarked or disembarked.
TRIP
4
1
25%
7
6
86%
Year N-1
Number of Charters
Number of Trips
% of Static Charters
Number of Static Charters
Number of Trips Qualifying
% of vessel activity outside F.T.W
4
1
25%
7
4
57%
Year N-1
Number of Charters
Number of Trips
% of Static Charters
Number of Static Charters
Number of Trips Qualifying
% of vessel activity outside F.T.W
HOWTO CALCULATETHE 70% RATIO ?

A “qualifying trip” is a trip during which the vessel exits French territorial waters at one
stage , OR which is carried out in full outside of French territorial waters.
All trips carried out
over the year need to
be accounted for (i.e.
any trips of charters
starting from France,
Italy, Spain, or the
Caribbean, etc.)
The following movements
are not to be taken into
account : sea trial ; sailing
to and from shows/
exhibitions ; sailing to &
from shipyards ; photo
shoots, etc.
The percentage reached must be proved by all means in
case of control by the authorities.
Accepted proofs are :
Logbook
Information from any navigation systems
(AIS, plotter, etc.) ;
Passengers lists/manifests.
HOWTO CALCULATETHE 70% RATIO ?


BEAR IN MIND
For a “70% qualifying trip” a passage in
International waters OR any non-
French Territorial waters (i.e. Italian,
Spanish waters etc) is acceptable. For
the reduced VAT on charter fees only
International waters are acceptable!




To monitor the ratio of
qualifying and non qualifying
trips yearly, we request you to
fill in our Trip Report
spreadsheet.
Click to see
our “TRIP REPORT”
All charters and trips must be included, whether
they depart from France or not !
MONITORINGTHE 70% RATIO

In France, a commercial vessel complying with the F.C.E. can be supplied with VAT free fuel
up to 72 hours before and 96 hours after a charter contract.
Other than for a charter, should duty free fuel be required, an authorization from the
Customs will be required.
Generally speaking, fuel price in France is broken down into 3 parts: the actual price of
the fuel (which fluctuates), excise duty “TICPE” (a flat tax set yearly) and VAT (at 20 %).
HOW DOES F.C.E. IMPACT FUEL ?
The below table shows what would apply to which type of vessel (private or
commercial), commercial and F.C.E. compliant – or not.

We can assist with the required Customs
formalities via our in-house dedicated
Customs service : CUSTOMS4YACHTS (click)
Non-E.U. vessels have to have a clear Customs status when navigating in
the E.U. waters.
A vessel will need to be E.U. imported in order to be in free circulation.
When a vessel leaves the E.U., an export document needs to be issued.
Importation and exportation are materialized by a Customs document
called a “DAU” in France or “SAD” in the U.K.
Generally speaking, importation means payment of VAT and excise duty.
However, in some key E.U. jurisdictions, the importation of a commercial
vessel may be exempted or benefit from aVAT deferment.
Example of DAU
In France, the importation of commercial vessels is exempted under the French Commercial
Exemption – Article 262 II 2°. The requirements listed on page 13 are to be complied with
strictly. If not, theVAT on the importation shall have to be regularized.
IMPORTATION & EXPORTATION

Papier à en-tête de la société propriétaire/exploitante du navire
On the yacht’s Owning Company letterhead
ATTESTATION D’ACTIVITE COMMERCIALE POUR L’ANNEE 2018
Pour exonération de TVA sur les services et marchandises
fournis aux navires enregistrés au commerce
COMMERCIAL ACTIVITY STATEMENT FOR 2018
For VAT exemption on services and equipment supplied to commercially registered yachts
Je soussigné _______________________________________________________
I, the undersigned (nom, prénom) (name, surname)
En ma qualité de
As
Propriétaire/Owner
Capitaine/Captain
Représentant dûment mandaté /Legal Representative
Du yacht (M/Y) (S/Y) ______________________________________________
Of the yacht
Enregistré sous le numéro______________________________________
IMO number
Au registre_________________________________________________
Flag State
Certifie que, le navire remplit cumulativement les conditions d’application de l’exonération de
TVA prévue aux 2°,3°, 6° et 7° de l’article 262 II du code général des impôts et aux
paragraphes 10 à 30 et 140 du BOFIP du 13/05/2015 (Ref : BOI-TVA-CHAMP-30-30-30-10-
20150512), à savoir :
Hereby declare that the aforementioned yacht fulfils all and every condition for the application of VAT
exemption pursuant to para 2, 3, 6 and 7 of article 262 II of the French General Tax Code and to
paragraphs 10 to 30 and 140 of the BOFIP issued on the 13/05/2015 (Ref: BOI-TVA-CHAMP-30-30-30-
10-20150512), and specifically that :
• Le navire est inscrit sur un registre commercial
The yacht is commercially registered
• Le navire est doté d’un équipage permanent
The yacht has a permanent crew
• Le navire est affecté aux besoins d’une activité commerciale
The yacht is engaged in commercial activity
• Le navire mesure au moins 15m de longueur
The yacht is at least 15 meter long
• Le navire est sorti des eaux territoriales françaises pour, au moins
70% de ses trajets réalisés au cours de l’année 2017
The yacht left French territorial waters for at least 70% of the trips carried out
during the calendar year 2017.
Le non-respect de l’une des conditions mentionnées ci-dessus est constitutif d’un changement
d’affectation au 2° du III de l’article 257 du CGI justifiant un rappel de TVA auprès du
bénéficiaire.
Failure to comply with any one of the above conditions constitutes a change of usage pursuant to the
article 257 – III – 2° of the General Tax Code and shall result in VAT being due on all supplies of
equipment and services.
Fait à _________________ le________________________________________
(At) (date)
Signature + cachet du navire (précédé de la mention « lu et approuvé ») :
Signature + Yacht’s stamp (preceded by the mention “read and approved”)

EASYTAX - Nice la Plaine 1 – Bat C2 – Avenue Emmanuel Pontremoli – CS 33098 - 06202 Nice Cedex 3 - FRANCE
Tel.: +33(0)4 93 72 50 40 • email: charter@easytax.fr • WEB SITE: www.easytax.fr
STEP BY STEP EXPLANATION FORM
The XL spreadsheet enables you to record all the trips made in each of your 2017 charters.
All the charters have to be recorded (France, Monaco, Italy, Spain, Caribbean Islands, etc)…
How to complete the form step by step:
Page 1:
Please complete the vessels information such as requested in the light blue fields.
Recap Table: no data needs to be entered here.
This section is updated automatically. It provides:
- the % of static charter: It has to be less than 50% to benefit of the VAT exemption.
- the % of qualifying “trips”: It has to be higher than 70% to benefit of the VAT exemption.
Page 2 and following:
The light blue cells need to be completed as per the charter agreement details.
The yellow cells have a dropdown menu: click on the cell and select YES or NO.
Cell “STATIC CHARTER”:
Select YES only if it is a static charter. Then, this charter will be counted as a static charter in the
general counter, but not as a trip taken into account for the 70% ratio.
Cell “SEVERAL TRIPS?”:
Select YES only if passengers definitively embarked/disembarked in between the delivery and re-
delivery ports.
Cell “LEG”:
Enter the details of each trip:
Cell “OUT OF FRENCH TERRITORIAL WATERS?”
Make sure to answer YES or NO to indicate if the vessel sailed out of French territorial waters or not.
The disclaimer provided after each charter, has to be dated, signed and stamped by the captain.
EASYTAX - Nice la Plaine 1 – Bat C2 – Avenue Emmanuel Pontremoli – CS 33098 - 06202 Nice Cedex 3 - FRANCE
Tel.: +33(0)4 93 72 50 40 • email: charter@easytax.fr • WEB SITE: www.easytax.fr

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