As part of the yachting industry (whether you are a company director, charter manager, captain, broker, etc.), it is common knowledge that a yacht which complies with the French Commercial Exemption (FCE) conditions can benefit from VAT exemption on goods and/or services purchased in France for its commercial activity.
In addition, during major events such as MIPIM, Grand Prix Monaco or Cannes Lions International, a MYBA charter contract can be drafted without VAT.
How a charter can benefit from VAT exemption during the MIPIM or the Cannes Lions International ?
To benefit from this option, the charterer that hires the vessel must resell a service to his own clientele. For example: an event company which hires a yacht during the Monaco Grand Prix and welcome on board customers attending the event.
In order for this exemption to apply, the charterer must have a commercial contract with the end users showing that the vessel is being hired for commercial purposes.
BOI (BOI-TVA-CHAMP-30-30-30-10): the VAT is due in France on charters for recreational purposes but not if the vessel is chartered for commercial reasons with an established remunerated/gainful activity behind.
Remember that, in order to ensure full compliance, the correct wording must appear on the contract:
The contract is exempt from VAT according to article 262 II-2 of the French tax code.
In order to benefit from this option, the yacht must meet the FCE conditions set out in Article 262 II of the French General Tax Code:
- The yacht is commercially registered,
- The yacht has a permanent crew,
- The yacht is engaged in commercial activity,
- The yacht is at least 15 meter long,
- The yacht left French territorial waters for at least 70% of the trips carried out during the previous calendar year.
