The French Tax Authority has defined new VAT rules applicable to yacht charters beginning in French waters.
Today the Official French Tax Announcement published new information regarding VAT on yacht charters in France.
The French Tax Authority has clarified that the lump sum reduction rule which formerly applied has now been cancelled, and a new rule will now be applied.
The new rule states that VAT is charged at the full rate of 20% while the yacht is in EU waters, and no VAT is applicable while in international or non-EU waters.
The rule is time-based, rather than distance-based, meaning that yacht charters will now have to spend more time in international or non-EU waters to benefit from VAT reductions.
Charter contracts beginning in France signed before 30th March 2020 will not be subject to the new rule, and the lump sum reduction will still be applicable to these contracts.
Means of proving the time spent in French and international waters will be based on automatic identification system (AIS) data. This will be considered conclusive proof unless there is a fraud involving the AIS itself.
Charter contracts beginning in France signed before 30th March 2020 will not be subject to the new rule, and the lump sum reduction will still be applicable to those contracts, as was the case in 2019.
The new rules are still in public consultation, meaning they are subject to change up until March 1.
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