As you may know, the rules regarding the exemption of the excise on fuel differ whether you are using a transport contract or a charter contract.

When you are using a transport contract you benefit from a complete tax relief on the fuel (VAT + excise).

In contrast, when you are using a normal charter contract, you only benefit from an exemption on VAT if you respect the conditions of the French Commercial Exemption (Articles 262 and 291 of the French tax code).

At the end of the fiscal year, if you have used more duty-free fuel than authorized, you have to keep a summary table including the periods in which you were under a transport contract (and thus eligible to an excise exemption) and the periods in which you were under a normal charter contract (non-eligible for an excise exemption).

This summary table will also state whether you have used taxed or duty-free fuel.

If you have used more duty-free fuel than authorized, this summary table will be sent to French customs who will determine the tax due to them.

YMCA can help you with this process by summarizing all your fuel purchases, filling in the summary table and sending it to customs for you.

If this summary table is not kept and if you have used more duty-free fuel than authorized, customs will be able, in case of investigation, to readjust the excise on the fuel you illegally purchased duty-free. Customs are also able to inflict penalties that may severely increase the total due amount.

It is not too late to send this summary table concerning the year 2018.

 

 

 

 

According to article 234 of the delegated regulation issued by the European commission on July 28th 2015, a non-EU vessel under temporary admission can benefit from the complete exemption of both VAT and customs tariffs when the vessel is intended to
be exhibited or used in a show opened to the public (for example: boat shows).

Two declarations must be established: a declaration upon the entry into the regime and another upon the exit of that same regime.

Tenders which are registered in the list of equipment of the main vessel they follow the regime of the latter.

The chase boats having their own registration can benefit from the Temporary Admission Relief if they fulfill the conditions of that scheme (non-EU flag, non-EU owning company, non-EU resident UBO).

 

The tender having her own registration cannot be used by EU residents unless the following conditions are fulfilled:

• The main vessel has been formally imported into the European Union
• The tender is mentioned in all the charter contracts
• The tender is exclusively used with the main vessel
• The tender is only used for specific purposes (shuttles to the shore, inaccessibility…)
• A verbal declaration document is filed for the tender after the main vessel is imported.

 

The Commercial Importation

Before January 1^st, 2022, the main way to import a yacht in France was to do so under the “French Commercial Exemption”.

Since January 1^st, 2022, owners have to import their commercial yacht under the reverse charge mechanism (it is now a requirement).

With the French reverse charge, no VAT is disbursed upon importation. The owning company only needs to write the tax amount on their declaration and deduct it instantly through their tax representative or tax agent.

The process of importation

In order to import a commercial yacht under the reverse charge procedure, it is necessary to obtain a French VAT number beforehand.

This procedure can take some time (anywhere between 1 and 3 months).

It is also necessary to be registered under a commercial certificate of registry and to carry out a real commercial activity (charter or transport contracts).

The importation document (SAD or DAU type) must be sent to your tax representative or tax agent who will declare and deduct the VAT so that the yacht can be considered as “VAT accounted for”.

With this system, the only way the VAT on the value of the yacht could be readjusted is because of a complete lack of commercial activity (a yacht not doing any charters or transport contracts cannot benefit from the VAT deduction anymore). It is therefore crucial to maintain a commercial activity year after year.

What has become the French Commercial Exemption (FCE) ?

 Conditions of the FCE

Prior to January 1^st, 2022, the FCE was a way to import a commercial yacht under VAT exemption provided the following conditions were respected:

• The overall length must be over 15 meters.
• The yacht must be registered as commercial.
• The yacht owning company must employ a permanent crew.
• The yacht must be used exclusively for commercial purposes (for example, under a charter agreement).
• 70% of the trips must be done outside the French waters.
• Static charters must represent less than 50% of the total charter contracts.

These conditions are now still enforced but only for the VAT exemption on eligible goods and services purchased in France.

In other words, it means that the FCE is now an optional requirement. If you decide to respect the conditions above, you will benefit from a VAT exemption on goods and services that your purchase within the scope of your commercial activity.

The VAT exempted services are limited by law and only include services that are directly linked to the yacht’s commercial activity such as piloting, towing, mooring…

In any case, please note that if you, for example, do not respect the 70% rule during a calendar year, you do not risk the VAT readjustment on the value of the yacht anymore. The only risk would be the readjustment of the exempted VAT on goods and services as described above.

Provisional and permanent commercial activity statement

Provisional Commercial Activity Statement

The first year that the owning company claims the benefit of the FCE, they will need a provisional commercial activity certificate to ensure, among others, that the yacht will comply with the 70% rule during the current year (N). If the rule is not respected, VAT will be readjusted by the French tax authorities on the goods and services purchased without VAT.

Permanent commercial activity statement

If the yacht complied with the 70% rule, she will automatically be granted a permanent certificate of commercial activity for the next year. If during this “next year” (N+1) the 70% rule is not respected, the VAT will not be readjusted for that same year. The only consequence will be that the yacht will not benefit from the VAT exemption for the year after (N+1).

Note that even if you are not eligible to the FCE anymore, the VAT can be claimed back through your tax representative or tax agent.

The client can ask us to obtain a special authorization from French customs in some particular cases (For example: an authorization for the boat’s owner to sleep onboard during a show where the boat is exhibited).

According to the article 3 (1) of the regulation (CE) n°1889/2005 concerning the relations with the third countries and according to the article 464 of the French customs code concerning the intracommunity relations, there is a declaration obligation when 10 000 euros in cash or more are carried onboard.
This mandatory declaration generally concerns the vessel carrying out a commercial activity and doing charter. These vessels tend to travel with large amounts of cash to pay the Advance provisioning allowance-APA (Fuel, food, drinks).

We can make this declaration and forward it to the customs authorities.

Note that this cash declaration can also be established for a vessel in the Monegasque waters. However, in this case, the declaration must be filed directly by the Monegasque authorities.

Vessels recently launched can benefit from an exemption when they are still owned by the shipyard and want to attend an event in order to be sold. A validation from customs is necessary.

We can assist you with intracommunity supplies (for example when a yacht is launched in the European Union and intended to be directly delivered in another EU country without prior exportation).