With the fast-approaching Spring and Summer 2023, major events in France starts seeing the light of day. Did you know that a MYBA charter contract can be exempt from VAT during these events?
Be careful though: not all yachts are eligible for this option. Easytax International will explain everything to you so you can be up and running by then.
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 – https://www.easytax-international.com/en/guides/commercial-vessels/ can benefit from VAT exemption on goods/services purchased in France for its commercial activity.
What you may not know is that during major events such as MIPIM, Grand Prix Monaco or Cannes Lions International, a MYBA charter contract can be drafted without VAT.
To benefit from this option, the charterer that hires the vessel, must resell a service to his own clientele. 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.
Please note: In order to justify the VAT exemption and to allow the Owning Company to invoice the charterer excluding VAT, it is necessary to provide some evidences of economic activity on board, such as: clients’ contracts, proofs of payments, marketing proofs, etc.
