By Emma Batchelder
Members of the yachting community have gained some clarification on French social security tax responsibilities. Although the decree was suspended, it is possible that crew members may still be liable to pay taxes for now, particularly crew members who reside and work in France. Crew may wish to seek legal advice for their specific scenario.
Seafarers and nonresident employers of seafarers who spend more than 90 consecutive days in France or French waters are required to make contributions to ENIM, the French mariners’ social security agency, since the passing of a decree in March 2017. This has had a major impact on tourism and the yachting industries, but relief seems imminent with the laws potentially being overturned in early 2018. As of Sept. 13, the decree was suspended by the prime minister of France following reports of drastic 40-50 percent drops in revenue during tourist season.
Paying taxes is enough to give anyone a headache, let alone yacht crew, who have likely joined the world of yachting from a foreign country. Earning a salary in one currency, while living and traveling the world, and acquiring global investments along the way – it’s likely that heads are spinning. For many of these yacht crew, a lot of time is spent in the south of France, namely Antibes, the yachting hub of the Mediterranean.
On March 11, 2017, at a meeting in France, a decree was added and published in the Official Journal of the French Republic. Decree No. 2017-307 sets out obligations for both yacht owners and yacht crew in respect of MLC 2006. Affected seafarers who spend a 90-day-plus rolling period in France or French waters should be paying social security taxes. Leaving France or French waters would reset the count.
Foreign employers were directed to an ENIM agent registered and based in France. The agent acts on the behalf of the employer and obtains all necessary information regarding the crew list: their positions, salary and the cruising itinerary. ENIM receives this information and calculate everyone’s fee. It is likely that the employer will be asked to pay a security deposit equal to six months of employer and employee contributions.
An example of the contribution costs was shared from ENIM:
Please note these numbers are directly from the French authorities, and without declaring the rate of pay, have limited value. But, these costs are significant, and the decree was disputed by many industry professionals.
Seafarers already contributing social security to an official agency of another country that is an EU or EEA member state, or any state that has a bilateral social security treaty – such as the United States and Canada – are exempt from contributing. However, you must be making social security payments in those territories; simply carrying a passport is not sufficient to be exempted. Our Australian and New Zealand colleagues should note that there is no bilateral treaty for those countries, therefore exemption does not apply. The contribution amounts due are identical to those paid by, and on behalf of, French seafarers (7.5 percent on earned income), and carry a 0.5 percent-per-day interest rate on late payment.
Benefits of this plan are meant to be:
How this new law currently impacts yacht owners is:
In conclusion, the changes being made to tax situations for seafarers are even more reason to keep good track of all travel that you undertake, and any money that you earn:
As a seafarer, knowing who to pay taxes to has been a rather gray area for quite some time. Yacht crew spend significant amounts of time in multiple countries every year, and generally make very desirable salaries. Knowing whether you are following the laws and abiding by the rules can be daunting, which is why it is important to stay up to date with any changes.
France will not be the only country who tries to claim taxes on seafarers’ earnings. While this first attempt has been poorly executed, we anticipate other countries will make similar attempts in the future.
This article is for information purposes only. The information and opinion expressed in this document does not constitute legal advice and should not be regarded as a substitute for legal advice.
Former chief stewardess Emma Batchelder is PR manager at Luxury Yacht Group in Fort Lauderdale. For more information, visit luxyachts.com.