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Yachting French VAT exemption
Posted on April 22, 2013

On 21 March 2013, the European Court of Justice served a judgment (see here) against the criteria used by France for the application of the exemption to VAT on commercial vessels.
According to the Court, the French Republic has failed to fulfil its obligations under the EU VAT Directive n°2006/112/CE « by not making the exemption from VAT of transactions.. conditional on the requirements of use for navigation on the high seas, in respect of vessels carrying passengers for reward and those used for the purpose of commercial activities.. » .
The EU VAT Directive provides that exemption from VAT requires (in respect of vessels carrying passengers for reward and those used for the purpose of commercial activities) the vessel being used for navigation on the high seas. Therefore the European Court of Justice reproaches the French Republic to discard the navigation on the high seas required by the article 148 of the EU VAT Directive. Indeed, article 262 II,2 of the French General Tax Code and administrative circulars dated 2003 and 2005 provide that VAT exemption can apply should the vessels comply with three cumulative conditions i.e holding a commercial registration certificate, employing a permanent professional crew and being chartered for commercial purpose only.
Various alternatives under specific conditions are currently studying/discussing (like a reduced rate of VAT to be charged, ..)


For more details, please contact : contact@ecdas.com
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