Yacht VAT Compliance for Commercial Operations

The activity is measured by the time spent in commercial activity. The VAT payable will be calculated only on the proportion of time spent in EU waters. FLYN-YACHTING will therefore calculate, using AIS points, the time spent in the various national waters (EU / non-EU) and international waters, determine the amount of the VAT base (value of charter less time passed in EU waters over the total period) and therefore the amount of VAT itself.

The applicable VAT rate is that of the country of departure for charter services, in this case 20% for France. Outside the rather exceptional cases of itineraries with the majority of time spent outside of EU waters or a final destination outside of the EU, the resulting VAT rate is not generally much below 20%.

Example: Departure from Côte d’Azur – Ibiza – Côte d’Azur. Charter from 10 to 17 August. Cruising speed 14 knots. Stopover of 3 days and 18 hours in the Spanish waters around Ibiza. Time spent in French waters: 8 hours. Time spent in Spanish waters: 118 hours. Time spent in international waters: 43 hours. Proportion of VAT 20%: (8+118) / (8+118+43) = 74.5% i.e., a resulting VAT of 14.9% on this charter agreement.

The activity is measured by the time spent in commercial activity. The VAT payable will be calculated only on the proportion of time spent in EU waters. FLYN-YACHTING will therefore calculate, using AIS points, the time spent in the various national waters (EU / non-EU) and international waters, determine the amount of the VAT base (value of the charter less the time spent in EU waters on the total time) and therefore the amount of VAT itself.

The applicable rate of VAT is that of the country of departure for charter services, in this case 22% in Italy.

Example: departure from Italy (Naples to Sardinia, Southern Corsica, Tuscany and returned to Naples). Charter from 10 to 15 August. Cruising speed 12 knots. Various stopovers in Italy and in France. Time spent in Italian waters: 81 hours. Time spent in French waters: 17 hours. Time spent in international waters: 32 hours. Pro rata of VAT 22%: (81+17) / (81+17+32) = 75.6% i.e., a resulting VAT of 16.6% on this charter agreement.

The activity as measured by the distance covered during the transport service. VAT is only applied on the activity i.e., the distance covered in the territorial waters of the country of departure. Outside of the territorial waters of this country, VAT does not apply.

The applicable rate of VAT is that of the country of departure for transport services (10% for navigation in French continental waters, 0% for international navigation). The trip is classed as “international”, if:

The final port of the cruise in question, qualified by disembarkation and/or embarkation of passengers, is in a different country from the country of departure.

A commercial stopover without disembarkation of passengers, but with purchase of goods and services on board and/or by the passengers has taken place in a country other than the country of departure.

The principle applied is that cruises classed as “international” are totally exempt from transport VAT on departure from all European Union countries.

Reduced transport VAT rates may apply: this is the case for maritime transport in the French territorial waters of Corsica: rate reduced to 2.1% instead of 10%. There may also be total VAT exemptions for certain types of transport: this is the case for the transport of passengers between mainland France and Corsica under certain conditions.

In the case of a voyage which is not international, the applicable VAT will only apply to the proportion of distances covered in the waters of the country of departure, at the applicable rate. Thus, for example, for a Cannes-Cannes itinerary passing through Bonifacio (without any other stopover in Corsica), the VAT base will be calculated on the basis of the amount of the reduced transport of the distances in non-French waters, and will be distributed, at the rate of 10% (basic transport VAT in France) for the part in continental waters, and at the rate of 2.1% (reduced transport VAT in Corsican waters).

Applying this to the same itinerary as the previous “charter” example:

Example: Departure Côte d’Azur – Ibiza – Côte d’Azur

Charter from 10 to 17 August. Any cruising speed. Various stopovers in the Spanish waters around Ibiza. Distance covered in French waters: 110.5 NM. Distance covered in Spanish waters: 55.7 NM. Distance covered in international waters: 598.6 NM.

The VAT calculation gives, for the same itinerary as in the previous charter example, a rate of VAT of 1.4% instead of 14.9% [1].

[1] Advantage on VAT alone, independently of additional fiscal advantages on the cost of fuel.