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French, Italian taxes clarified

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Representatives with the Mediterranean Yacht Brokers Association (MYBA) and the Europe Committee for Professional Yachting (ECPY) have obtained a favorable ruling from French tax authorities that “the Stakeholder is not liable to pay the withholding tax provided for under Article 182 B of the General Tax Code”. The stakeholder is the charter client.

This decision was reached on appeal after tax authorities originally ruled that charter clients owed a 33 percent tax on charters on boats in France where the owner did not have a French business.

“We have dealt with the first stage and now have to work toward ensuring that this national decision is implemented at local level for the ongoing cases,” said Thierry Voisin, president of ECPY in Nice.

In related news, Italian tax authorities have decided to follow France’s lead on tax exemptions for commercial yachts operating in Italy.

In January, the Italian tax agency clarified the conditions that commercial yachts must meet to benefit from tax exemption. Resolution 2/E states that yachts must be “designed to navigate in high seas”, i.e. beyond 12 nautical miles from the coast. Regardless of length or beam, 70 percent of its trips on an annual basis must be in high seas and must be corroborated by official documentation.

However, Resolution 2/E does not define what constitutes a “trip”.

Resolution 2/E also deals with new builds. During construction the owning company must inform the administration that the yacht is designed to operate in high seas. Following the launch, yachts may benefit from the exemption for the first year of navigation. In subsequent years, navigation must comply with the 70 percent rule.

“The clarification is a step forward, a step toward harmonization, Voisin said. “The fact that Italy has chosen to align itself with France is an added bonus, especially for professionals who battle to get their heads around the wave of new, discordant regulations across the EU.”

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