yOU leaSe out A boat from a french harbour for leisure purposes
SHOULD YOU CHARGE VAT ?
Delivery, repair, alteration, maintenance, chartering, hiring and fuelling of vessels used for navigation on the high seas and carrying passengers for reward, or used for the purpose of commercial, industrial or fishing activities, or for rescue and assistance at sea can be exempt from VAT under certain conditions.
However, since 15 July 2013, the exemption does no longer apply to lease operations and chartering which consist, for consideration, to put a ship with or without crew at the disposal of people for leisure travel purposes, including when trip takes place in high sea.
Lease and chartering services supplied for leisure travel needs are therefore subject to VAT according to the rules defined for the purposes of pleasure boats for private use.
Short-term chartering (less than 90 days) of yachts from French harbours (including from Martinique, Guadeloupe and Réunion) should be charged with French VAT.
The French Tax Authorities have published a new tax bulletin on 6 November 2020, with retroactive effect from 1st November, which affects the way VAT on short term charters is calculated, depending on time spent within/outside EU waters. For vessels equipped with Automatic Information Systems, AIS data shall be the main mean of proof accepted by the Administration. For vessels not equipped with AIS, a distinction must be made depending on the lenth overall of the vessel. This rule applies only to charter contract properly speaking and does not apply to passengers transport services whose VAT regime is different.
SHOULD YOU register for VAT ?
If your company is involved in such chartering activities, it must be registered for VAT in France to declare and pay the VAT collected.
If your company is established in a country outside the European Union which has not signed with France an administrative assistance agreement, it must also appoint a tax representative.
what are the merchant ships eLIGIBLE for VAT EXEMPTION ON PURCHASES ?
Vessels of overall length greater than or equal to 15 meters are eligible for the VAT exemption when they meet the following criteria for the previous calendar year.
- be registered as a commercial vessel in or outside France;
- be permanently crewed;
- be exclusively ised for business purpose (rental or chartering);
- perform at least 70% of all their navigation outside national territorial waters.
WHAT IS THIS PERCENTAGE OF 70% ?
This percentage results from the ratio between:
- the number of trips during which the ship sails out of French territorial waters during the calendar year preceding the year of application of the VAT exemption and
2. all trips performed during the same period.
HOW TO PROVE THAT the 70% CRITERION IS FULFILLED ?
The percentage should be proved by any means, such as the logbook or information from the navigation system and location-based instruments (GPS position fix, printing trajectory, track AIS) vessel.
Lastly, the exemption may be applied if boat trips are the main business of the ship in comparison with its dock activity
WHAT CAN WE DO FOR YOU ?
ASSESS THE VAT OBLIGATIONS resulting from the transactions you make in France.
APPLY FOR A VAT REGISTRATION NUMBER in France and possibly in other EU member States depending on the case (*).
PROVIDE TEMPLATES with a view to gathering the relevant information for the purpose of periodical VAT returns.
REVIEW the purchase and sales INVOICES in support of operations.
COMMUNICATE THE identified ERRORS and advise on how to handle possible issues.
LIAISE with suppliers and freight forwarders to track corrective actions
PREPARE THE VAT RETURNS
FOLLOW ANY PAYMENT of VAT due or receivable by you.
PREPARE AND SUBMIT VAT REFUND CLAIMS on expenses of goods and services used for the business purpose.
Act as a TAX REPRESENTATIVE on behalf of companies established outside the European Union that has not signed with France an administrative assistance agreement, and as a TAX AGENT for businesses established a EU member State.
Assistance in drafting REPLIES TO REQUESTS FOR INFORMATION FROM THE TAX AUTHORITIES, we are present during tax audits, we ensure liaison with attorneys on the occasion of tax litigations ….
ANNUAL MEETING on the follow- up of the file.
REGULATORY MONITORING and analysis of the consequences on your reporting requirements.
ADVICE or administrative service (issuing invoices, applicable VAT, VAT rates, etc.)
(*) In case of VAT registration in several countries of the European Union, our European correspondents from the Tax Representative Alliance TRA can help you by offering:
- assistance with VAT registration and VAT compliance,
- one single contact, the Client Relationship Manager, who will coordinate the VAT registration and compliance with our correspondents in the different countries,
- online access to TRA extranet that allows you to upload and download documentation and data.
Do not hesitate to contact us for any assistance or question !