Despite some confusion in recent months, commercial yachts will still be able to fill up with duty-free fuel in France this summer.
The uncertainty surrounding duty-free fuel stems from the wording used in current charter contracts in relation to the end user i.e. the charterer using the yacht for pleasure rather than commercial purposes.
EU Court rulings have identified that the current MYBA format of charter contract being used does not meet the French Commercial Exemption (FCE) requirements and therefore those using it cannot benefit from duty-free fuel.
French Customs have been lenient and set a date of October 1st 2016 up to which point commercial yachts can continue to take on duty-free fuel under the current charter contract format.
So, what next?
The European Committee for Professional Yachting, along with French Customs, is in the process of drafting a new charter contract. It is hoped that this will clear up the current confusion regarding the categorisation of commercial yachts.
Assuming that the new charter contract format is agreed and implemented, commercial yachts will still have to comply with a number of rules to qualify for and take advantage of duty-free fuel in France.
Two taxes, two sets of rules
There are two taxes on fuel in France – TICPE and VAT. So, to qualify for duty-free fuel, commercial yachts must comply with two sets of rules.
TICPE (Taxe Intérieure de Consommation pour les Produits Energétiques)
- The yacht must be registered as a commercial entity;
- A permanent crew must be employed on board;
- The yacht must have a service contract in place and be used exclusively for commercial purposes;
- Commercial yachts can take on fuel 72 hours before the start of a commercial charter and up to 96 hours after it has finished the charter.
VAT (Value Added Tax)
- The yacht must be registered as a commercial entity;
- A permanent crew must be employed on board;
- The yacht must have a service contract in place and be used exclusively for commercial purposes;
- The yacht must have an LOA of over 15m;
- 70% of its trips for commercial purposes must be outside of French waters during one calendar year and must be predominately voyages rather than stationary charters.
Next update
The European Committee for Professional Yachting is expected to respond with a new charter contract in October.
‘The new charter contract should clarify the position for commercial yachts and it is good to see the French authorities working together with the industry to support what is a significant contributor to the economy. There is of course a wider set of considerations for commercial yachts to operate in the EU relating to matters such as VAT, flag, MLC and free circulation status,’ reminds Bruce Maltwood from Sarnia Yachts.
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Want to know more about the French Commercial exemption and other VAT rules for commercial yachts or other fiscal laws and guidelines for yachts operating in the EU? Get in touch with Darryl Sharman or Bruce Maltwood.