French Tax Code Causes Problems for Yacht at MYBA Show

European Union (EU) Commissioners have referred France to the European Court to consider infraction proceedings, following concerns over the country’s adoption of the EU Directive for VAT exemption on commercial vessels.

The controversy has been building over the past few years, concerning France’s original tax code, which did not include the words “for use on the High Seas.” Following discussions with EU Commissioners, the French Tax Authorities included these words in Article 262 of its Tax Code – but with no clear definition.

“It was crystal clear that they had no intention to change their stance on commercially registered yachts engaged in third party charter,” said Chris Allix of Dominion Marine Corporate Services which offers advice on EU regulations to superyacht owners.

“This has resulted in further arguments with Brussels and, as a result, the Commissioners have referred France to the European Court to consider infraction proceedings.”

The European Court has not yet ruled whether the French Authorities are in breach of the rules. The Commissioners are thought to not be completely against the exemption in France’s Tax Code, but dislike the fact there is no definition of ‘High Seas’.

French rules apply this to all commercially registered yachts with permanent crew which are chartered on the high seas to third parties, which must be accepted by all EU member states under EU directives.

This resulted in confusion for a non EU yacht at the recent MYBA yacht show in Genoa. The vessel was boarded by Italian Customs, suspecting the yacht to be there under temporary admission.

After three days of scrutinising the vessel’s documents and asking questions, the customs authorities found that yacht had been formally imported and was free to circulate in EU waters.

Chris Allix said this was because the yacht had been imported through France correctly, and zero rated as a commercial vessel under Article 262 of the French Tax Code.