Charter Update: VAT Changes in France and Italy
14 Feb 2020
There have been important changes to VAT on yacht charters starting in France and Italy for the summer 2020 season.
Since the introduction of VAT on yacht charters in France and Italy for the 2014 season, yacht charters have been eligible for a reduction in VAT rate if they have involved travel into international waters, 13 miles offshore. However, it has been inevitable that the day would come when these two countries would be told by the EU that they must stop allowing such large lump sum rate reductions.
VAT rules for France and Italy now fall more in line with those of Spain for example, where the full rate of VAT has always been applied to yacht charter. While some see this as concerning news, the Spanish yacht charter market has been booming over the last few years, indicating that VAT rates have not been a deciding factor in charter destination decisions. Cruising in the Balearics accounted for 18% of all charters at Ocean Independence in 2018, with Palma de Mallorca being the most popular port of all to embark on a 7-star yacht charter experience.
Those who act quickly and book a charter in France before 30 March, 2020** can still benefit from the 50% rate reduction on VAT, if the charter genuinely involves a passage into international waters. After this date, the full rate of 20% VAT will apply with a pro-rata refund for time - not distance travelled - spent in international waters.
The Italians have approached the instruction from Brussels differently and any charter starting in Italian waters after 1 April, 2020, regardless of when the contract was signed, will be subject to their full rate of 22% VAT, again with a pro-rata refund for time spent in international waters.
While the new pro-rata refund is likely to have little monetary impact on the majority of charters, it is causing some confusion for those looking to book a charter and will likely lead to some administrative complications. The Ocean Independence charter team are dedicated to delivering the very best possible yacht charter experience and are available to advise clients on the topic of VAT to help them navigate these new rules.
Contact us or speak to your Ocean Independence broker for more information on the upcoming VAT changes and to learn how we can help you plan your next amazing yacht charter experience. In the meantime, view all yachts for charter here.
** requires full executed contract and first instalment by before 30 March 2020