YMCA yachting best practice
“YMCA has been involved in a difficult case with a vessel that had been controlled by the customs in France. The authorities were trying to readjust the VAT based on the value of the boat. As a matter of fact, the situation of the vessel was perfectly legal but this had to be made clear to the customs.
The vessel was an EU good, built in the European Union and sold by a dealer established in France to an economic operator who had a VAT registration in Italy. By this transaction, the VAT could be accounted for in Italy and no disbursement of VAT was necessary. Indeed, the main activity of the buyer, as an economic operator, was the long-term rental of boats to third parties.
The difficulty of the case was that the main place of establishment of the vessel’s buyer was in another EU country (“Country C”), different than Italy (the owning company of the vessel had, thus, a second VAT number in that country).
The authorities of Country C accepted, as a common rule, that the VAT was not due on the value of the boat when a pleasure vessel was acquired in a member state of the European Union and transported to Country C provided that the buyer was a taxable person and that the vessel was
purchased to carry out economic activities.
The VAT was, according to country C, only due on the value of the rents when the vessel sailed in the European Union waters.
These explanations did not satisfy the French customs as they considered that, as the vessel had been delivered to Italy, and not to Country C, the VAT should have been paid on the value of the vessel.
Fortunately, in an official document specifically addressed to the buyer, Country C had considered that:
- The buyer of the vessel had to be considered established in Country C and not in Italy (despite the place of delivery of the vessel and the Italian VAT registration).
- In case of a long term hiring to a non-taxable person, the place of delivery is supposed to be the place of establishment of that latter person as long as they do not have a fixed-establishment in the country of delivery. In our case, the lessee was established in Country C and had no fixed-establishment in Italy.
This last piece of information has been crucial and customs have considered that there was finally nothing wrong with the customs and tax status of the vessel.
The intervention of YMCA has been conclusive as we have assisted our client liaising with the French customs and putting an end to the investigation”.
« We encountered some challenges with an American built boat. The owner asked us to carry out the importation in France using the French commercial exemption procedure.
However, in the meantime, the European Union issued a regulation imposing a 25% customs duty applicable to American builds.
The French customs wouldn’t accept the importation of the vessel unless the owning company paid the duties which amounted to more than one million euros.
We had, as a consequence, to find a solution to that problem. Therefore, we submitted a file to customs in order to convince them that the 25% duty was not applicable to the vessel for three reasons:
- The customs duty was only applicable to vessels exported from the USA after June 22nd, 2018 (which was not the case of “the vessel”)
- The vessel had to be considered an antiquity vessel due to its age. For such vessels, no customs duties were applicable
- The vessel had been refitted in the European Union and only the bare hull had been exported from the USA – many years ago
In these conditions, the French customs refused to accept the first point considering that the vessel had to pay the 25% customs tariff as soon as it became “commercial”. Indeed, the Yacht was exported from the USA as a private vessel many years ago.
The second point required a time-consuming survey and the client was not keen to carry out such a procedure.
As a consequence of our tenacity and experience, customs accepted to relieve the vessel from the customs duty basing their answer on the third point. Indeed, the vessel had been refitted in Europe and had lost its USA origin becoming a European built Yacht.
It has been a great success for YMCA and it proves that we always work to the best of our abilities always providing our clients with a correct and proper solution. »
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