By Thibault Hermant, operations manager of SOS Yachting France and Penny Hammond-Smith, marketing and communications manager of SOS Yachting France.
SOS Yachting France has created guidelines to help commercial yachts navigate new French regulations. “Complying with French regulations in 2016” details how to calculate charter trips to determine if commercial yachts can continue to benefit from VAT exemption on the purchase of supplies and services in France.
According to the document, the new French regulations governing VAT exemption (BOFIP 12.05.15) impact commercial yachts engaged in navigation in high seas. To maintain VAT-exempt status in France in 2016 (which is granted to all commercial yachts until Dec. 31, 2015) commercial yachts must continue to comply with the following:
The new regulations state that:
(Any yacht that does not fulfil these requirements is classified as a coastal vessel and is not eligible for VAT exemption. However, it might reclaim the VAT paid against VAT accrued on charter fees, just like any other business.)
A “trip” is a segment of the charter identified by a guest or guests permanently embarking or disembarking. If no guests permanently disembark/embark during the charter, it includes only one trip.
For example, according to SOS Yachting, a five-day charter from Monaco to St. Tropez starts with all five guests embarking on day one. On day two, two guests disembark in Cannes. The yacht continues to St. Tropez where two other guests embark on day three. The yacht then sails to Corsica and comes back to St. Tropez on day five, where all guests disembark.
The charter includes three trips: two national (Monaco to Cannes, and Cannes to St. Tropez) and one international (from St. Tropez to Corsica with navigation in international waters).
A “national” trip is one that starts and ends within French territorial waters worldwide with a cruising itinerary in French waters within 12nm. (French territorial waters include mainland France and islands and French Overseas Territories. In this context, Monaco is deemed part of French territorial waters.)
A trip qualifies as international if it either takes place entirely outside of French territorial waters (both EU and non-EU), or starts or ends in French territorial waters and includes a cruising itinerary in international waters or in non-French territorial waters, for instance, Italian waters.
By Dec. 31, 2015, charter captains will need to compute the number of trips in 2015 to see if the yacht qualifies for VAT exemption in 2016. To do so, divide the number of international trips by the total number of trips (national plus international). If the result equals 0.7 or over (i.e. 70 percent) the yacht will continue to benefit from VAT exemption in France in 2016.
For example, in 2015, a yacht completed eight charters that included 20 trips. Of these, 15 are international. So 20 divided by 15 equals 0.75. This is 75 percent, so the yacht qualifies.
The results in 2015 determine whether a yacht can benefit from the VAT exemption in 2016. The results in 2016 will determine compliance for 2017 and so on.
The final step in the new process to retain VAT exemption in France entails presenting a self-certification to the authorities stating that the yacht complies with the new regulations. To provide proof of compliance, all trips in 2015 must be tracked and the number of international trips be over the 0.7 threshold. All charters worldwide must be tracked but charters at the dock are excluded from the calculation.
Captains and crew can do this calculation onboard, or a management or charter company may be able to do it for the yacht, as well as financial support companies such as SOS Yachting France.
SOS Yachting also has two forms available — a trip report form and the self-certification — to help commercial vessels comply. The self-certification has to be submitted in January 2016. Find those forms at sosyachting.com or e-mail email@example.com for more details.
SOS Yachting is hosting a VAT workshop on Nov. 4, the day before the start of the Fort Lauderdale International Boat Show, at the Embassy Suites Hotel on 17th Street from 8:45 a.m. to 12:30 p.m. Register for that by e-mailing firstname.lastname@example.org.