Yacht 2020: New French VAT regulation / End of the lump sum reduction on charter hire.
On January 29, 2020, the tax bulletin (BOFIP) defining the new French VAT regulations applicable to commercial vessel charter hires departing from France was published for consultation by all.
The consultation is scheduled until March 1st, 2020. The objective of the public consultation is to allow associations and professionals in the sector to send any comments to the tax authorities for their consideration before the official publication of the text. This text is therefore not definitive and could still be slightly modified.
The tax bulletin highlights the following points:
- Any use of the vessel in Community waters is taxable at the full rate (20%).
- Any use outside Community waters is not subject to VAT.
- The calculation rule will be based on time and not distance. The calculation of the taxable base of the charter will therefore be calculated in proportion to the exact time spent in Community waters. The assessment of the time spent outside EU waters must be proven by all possible means. AIS data will be the main evidence accepted by the administration.
- The new regulation will apply to charter contracts signed from 30 March 2020 onwards. Charter contracts concluded before 30 March 2020 will still be eligible for the flat-rate reduction of 50%.