Charter vs transport: which contract should you choose?

In commercial yachting, the choice of contract type does not simply change the legal form of the service. It also changes the way the voyage is conceived, the itinerary is structured, VAT is calculated, operating costs are anticipated, and the file is secured in the event of an inspection.

In practice, two main frameworks coexist: the charter contract and the transport contract. For a client, the difference may seem limited. In reality, these two models are based on very different logics, with concrete consequences for taxation, operational flexibility, and cruise organization.

Charter corresponds to a yacht made available to the client (rental service). Transport corresponds to a cruise organized according to an itinerary defined in advance (transport and accommodation service).

This distinction is central, because it determines the proper contractual framework, the proper method for calculating VAT, and, in some cases, the possibilities for optimizing the voyage.

Under a charter contract, the owner makes the yacht and its crew available to the client. The client has a certain degree of freedom in the use of the vessel, within the limits set by the contract.

This framework is particularly suited when the program must remain flexible: a fully flexible itinerary, stopovers not entirely fixed, or situations where the yacht remains dockside for a commercial event.

The client therefore retains real flexibility in the running of the cruise, as long as the main obligations are respected, in particular the return of the yacht to the agreed place and on the agreed date, as well as compliance with the number of navigation hours per day.

Under a transport contract, the logic is different. The operator undertakes to transport and accommodate passengers according to a program contractually defined.

The client no longer has free use of the yacht as in a charter. They become a passenger in a service organized in advance, with an itinerary, stopovers, and a schedule fixed before departure.

It is this difference in nature that explains the differences in VAT, voyage organization, and tax justification. To simplify, it is the same difference as between renting a car and taking a taxi.

In market practice, the transport contract is now mainly used in the context of a departure from France or Monaco. Conversely, charter remains the standard format most widely accepted in the other Mediterranean countries.

This distinction is important, because from the outset it determines the contractual, tax, and commercial strategy of the file.

Under a charter contract, the country of departure determines the VAT rate applicable to the service. In all European Union countries, VAT is calculated according to the time spent in territorial waters, applying the standard rate of the country of departure. For example:

The taxable base is reduced pro rata to the time spent outside Community waters. The reasoning therefore follows a time-based logic.

Under a transport contract, the reasoning changes completely. The activity is no longer measured by the time spent on board, but by the distance covered in the national waters of the country of departure. VAT is analyzed according to the trips made in the relevant territorial waters.

This shift from a time-based logic to a distance-based logic explains why the same itinerary may generate very different VAT outcomes depending on the contract used.

When departing from France, the regime is cheaper than that of a charter:

These rates may create very significant differences compared with charter. However, the transport contract may only be used if it genuinely corresponds to an effective transport service.

Charter is suitable when the navigation cannot be precisely planned in advance, or when the yacht remains dockside (events). The client retains a great deal of freedom in organizing the program.

In return, they will pay around 20% VAT (for a departure from France), whereas in transport they will pay a maximum of 10%, or even 0% in the case of an international voyage.

The transport contract requires an itinerary defined before departure. The stopovers and the program must be written into the contract. Adjustments remain possible, but only with an explicit modification of the contract by correction or amendment.

This rigor is essential to ensure consistency between the nature of the contract, the reality of the service, and the tax treatment.

Under a transport contract, fuel benefits from a more favorable regime, in particular with an exemption from TICPE. For the carrier (owner), this represents additional savings on top of the tax advantage linked to VAT.

The issue is not to oppose charter and transport as two interchangeable options. The real issue is to choose the contract suited:

If the client wants a flexible cruise, charter is generally the best choice. If the operation is based on a cruise organized in advance, with a defined itinerary and a departure from France, the transport contract may become the most relevant tool.