France cancels VAT rate increase for charter yachts

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An increase in the rate of VAT on charter yachts, which was due to come into force on 31 March, has been postponed. The relevant decree has been published on the website of the French Tax Service.

The bill cancelling the preferential taxation regime for charter yachts in France was passed at the end of January this year. The authorities were forced to change the decision by the coronavirus pandemic and accompanying economic crisis. At least until April 15, an isolation regime is in force in France. All marinas of Cote d'Azur are closed and it is possible to travel only with special permission. The charter season starts in the country in May.

The delay should help to attract charter yachts to France during the season.

However, the current measures will only be temporary. An increase in the VAT rate will occur when the economic situation stabilizes.

As a reminder, the VAT rate for charter yachts in France has a 50% discount on the total tax. Under the pressure of the European Union France decided to bring the tax legislation in line with that of the EU. The new law abolishes the 50% exemption and introduces a tax rate of 20% for all charter yachts operating in EU waters. No tax will be levied for as long as the yacht is out of European waters. For yachts over 15 meters long the time spent outside EU waters is calculated according to AIS. If the boat is not equipped with an automatic identification system, GPS readings are used for this purpose.

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