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NO REST FOR YACTING PROFESSIONALS THIS SUMMER
Many yachting professionals were expecting to have a “relaxed” summer season. It seems that France has decided differently.
THE END OF THE FRENCH COMMERCIAL EXEMPTION
The long-awaited decision has now been published.
The French Fiscal Authorities have indeed finally published on 25 June, after several months of rumours and indecision, a “Bulletin Officiel des Finances Publiques” which puts an end to so called “French Commercial Exemption”. With the view to comply with the ECJ Bacino ruling, and with effect from 15 July, all Charters starting in French waters will be subject to VAT at the full rate of 19.6%. All Charters signed before shall still benefit though from the prior exemption regime.
Nevertheless and on the basis of art 59 of EC Directive 2006/112 - which governs the use and enjoyment rules for yachts capable of travelling in international waters and which applied so far to French Leasing Schemes - and on the basis of art 259 A 1 of the French Tax Code and art I-A-2 & 90 of the « Bulletin Officiel des Finances Publiques » published on 12 September 2012 - Charter Companies that make international voyages could either opt for the prorata temporis basis regime, if they can determine the time they spend inside and outside of internal waters or otherwise from an allowance of 50% on the taxable basis, leaving an effective VAT rate of 9.8%. This rate could be soon increased to 10% if the predicted increase in the standard VAT rate from 19.6 to 20% takes place.
Following this announcement, it now becomes urgent for all Charter Companies with yachts commencing charters in France and/or Monaco to register for VAT or to appoint a fiscal representative in either country.
What remains unclear is how the new rule will be applied in practice. It will be necessary to wait for clarification on a few aspects; in particular how the French Authorities will interpret “International voyages” and “high seas”, how long the yachts shall stay in International waters, will the allowance be granted on an annual basis if the majority of the charters pass through International waters, and if so what will be the proportion required or for each charter? We still have a long path in front of us…
What seems clear is that French Authorities do not wish to amend for the time being the VAT exemption applicable on supply of goods and services provided to commercially registered and operated yachts. APA shall not be affected as well as they will fall under the disbursement regime on the condition that all invoices are issued in the name of the Charterer.
ITALIAN VAT ON CHARTERS STARTING IN ITALY
Italy is also expected to increase its VAT rate from 21% to 22%. This is due to happen on 1 July but might be delayed until October 2013 or beyond due to political disagreements.
GREAT NEWS FOR THE SPANISH YACHTING INDUSTRY
The end of the Spanish Yacht Matriculation Tax is in sight. “Patience is a virtue”: this could be the slogan of the Spanish Yachting Professionals.
On Tuesday 28 June 2013 the Spanish Ministry of Finance, announced that a new Law will be enacted soon that will abolish the Matriculation Tax (“IEDMT”) for all yachts over 15m in commercial use.
Established by the Special Tax Act in 1992, the tax applied to all pleasure yachts over 8m in length registered under Spanish flag and all yachts over 15m chartering in Spanish waters (including foreign flagged yachts having a base in Spain or used temporarily by Spanish residents in territorial waters).
Spain is the only country levying such kind of tax on commercial yachts which was seen as a huge loss of competitiveness by the Spanish Yacht Charter Industry. It seems that the study and report commissioned in July 2012 by the Mediterranean Yacht Broker Association (MYBA), Asociación Nacional de Empresas Náuticas (ANEN), Asociación Española de Grandes Yates (AEGY) and the Asociaión de Empresas Náuticas de Baleares (AENB), which revealed the damaging knock-on effects of Spain’s tax system on the yachting sector and on its economy in general coupled with the lobbying activities led by the professionals of the sector and Patricia Bullock finally produced a successful result after so many years of effort.
As highlighted by the Government this good news will certainly encourage more yachts to visit and cruise Spanish waters.
Matriculation tax will be over but VAT at 21% will still be charged on all charters starting in Spanish waters and a Charter Licence will be required to be able to start and/or terminate a Charter in Spain. Owners will still need to be very attentive as using commercial yachts in Spain for private use, or beneficial owner’s use - even if paying for the charter - could create some VAT / Tax liabilities.
Fuente:
Monoeci Management SAM
A Rosemont Company
NO REST FOR YACTING PROFESSIONALS THIS SUMMER
Many yachting professionals were expecting to have a “relaxed” summer season. It seems that France has decided differently.
THE END OF THE FRENCH COMMERCIAL EXEMPTION
The long-awaited decision has now been published.
The French Fiscal Authorities have indeed finally published on 25 June, after several months of rumours and indecision, a “Bulletin Officiel des Finances Publiques” which puts an end to so called “French Commercial Exemption”. With the view to comply with the ECJ Bacino ruling, and with effect from 15 July, all Charters starting in French waters will be subject to VAT at the full rate of 19.6%. All Charters signed before shall still benefit though from the prior exemption regime.
Nevertheless and on the basis of art 59 of EC Directive 2006/112 - which governs the use and enjoyment rules for yachts capable of travelling in international waters and which applied so far to French Leasing Schemes - and on the basis of art 259 A 1 of the French Tax Code and art I-A-2 & 90 of the « Bulletin Officiel des Finances Publiques » published on 12 September 2012 - Charter Companies that make international voyages could either opt for the prorata temporis basis regime, if they can determine the time they spend inside and outside of internal waters or otherwise from an allowance of 50% on the taxable basis, leaving an effective VAT rate of 9.8%. This rate could be soon increased to 10% if the predicted increase in the standard VAT rate from 19.6 to 20% takes place.
Following this announcement, it now becomes urgent for all Charter Companies with yachts commencing charters in France and/or Monaco to register for VAT or to appoint a fiscal representative in either country.
What remains unclear is how the new rule will be applied in practice. It will be necessary to wait for clarification on a few aspects; in particular how the French Authorities will interpret “International voyages” and “high seas”, how long the yachts shall stay in International waters, will the allowance be granted on an annual basis if the majority of the charters pass through International waters, and if so what will be the proportion required or for each charter? We still have a long path in front of us…
What seems clear is that French Authorities do not wish to amend for the time being the VAT exemption applicable on supply of goods and services provided to commercially registered and operated yachts. APA shall not be affected as well as they will fall under the disbursement regime on the condition that all invoices are issued in the name of the Charterer.
ITALIAN VAT ON CHARTERS STARTING IN ITALY
Italy is also expected to increase its VAT rate from 21% to 22%. This is due to happen on 1 July but might be delayed until October 2013 or beyond due to political disagreements.
GREAT NEWS FOR THE SPANISH YACHTING INDUSTRY
The end of the Spanish Yacht Matriculation Tax is in sight. “Patience is a virtue”: this could be the slogan of the Spanish Yachting Professionals.
On Tuesday 28 June 2013 the Spanish Ministry of Finance, announced that a new Law will be enacted soon that will abolish the Matriculation Tax (“IEDMT”) for all yachts over 15m in commercial use.
Established by the Special Tax Act in 1992, the tax applied to all pleasure yachts over 8m in length registered under Spanish flag and all yachts over 15m chartering in Spanish waters (including foreign flagged yachts having a base in Spain or used temporarily by Spanish residents in territorial waters).
Spain is the only country levying such kind of tax on commercial yachts which was seen as a huge loss of competitiveness by the Spanish Yacht Charter Industry. It seems that the study and report commissioned in July 2012 by the Mediterranean Yacht Broker Association (MYBA), Asociación Nacional de Empresas Náuticas (ANEN), Asociación Española de Grandes Yates (AEGY) and the Asociaión de Empresas Náuticas de Baleares (AENB), which revealed the damaging knock-on effects of Spain’s tax system on the yachting sector and on its economy in general coupled with the lobbying activities led by the professionals of the sector and Patricia Bullock finally produced a successful result after so many years of effort.
As highlighted by the Government this good news will certainly encourage more yachts to visit and cruise Spanish waters.
Matriculation tax will be over but VAT at 21% will still be charged on all charters starting in Spanish waters and a Charter Licence will be required to be able to start and/or terminate a Charter in Spain. Owners will still need to be very attentive as using commercial yachts in Spain for private use, or beneficial owner’s use - even if paying for the charter - could create some VAT / Tax liabilities.
Fuente:
Monoeci Management SAM
A Rosemont Company
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