Formalities & Expert Assistance
YMCA CAN HELP YOU WITH YOUR SUMMARY TABLE REGARDING THE FRENCH EXCISE EXEMPTION ON FUEL (TICPE)
As you may know, the rules regarding the exemption of the excise on fuel differ whether you are using a transport contract or a charter contract.
When you are using a transport contract you benefit from a complete tax relief on the fuel (VAT + excise).
In contrast, when you are using a normal charter contract, you only benefit from an exemption on VAT if you respect the conditions of the French Commercial Exemption (Articles 262 and 291 of the French tax code).
At the end of the fiscal year, if you have used more duty-free fuel than authorized, you have to keep a summary table including the periods in which you were under a transport contract (and thus eligible to an excise exemption) and the periods in which you were under a normal charter contract (non-eligible for an excise exemption).
This summary table will also state whether you have used taxed or duty-free fuel.
If you have used more duty-free fuel than authorized, this summary table will be sent to French customs who will determine the tax due to them.
YMCA can help you with this process by summarizing all your fuel purchases, filling in the summary table and sending it to customs for you.
If this summary table is not kept and if you have used more duty-free fuel than authorized, customs will be able, in case of investigation, to readjust the excise on the fuel you illegally purchased duty-free. Customs are also able to inflict penalties that may severely increase the total due amount.
It is not too late to send this summary table concerning the year 2018.
Payment of VAT
The importation gives rise to the VAT chargeability. VAT can be requested upon the crossing of the border by the vessel (Article 293 A of the French tax code).
The following schemes are to be considered as a “vessel importation”:
- The entry in France, originating or from a territory which doesn’t belong to the European
Union and which haven’t been released for free circulation.
- Or the release for consumption in France of a good placed under one of the regimes laid down in the Union customs code upon its entry in the European Union territory (regimes such as inward processing, temporary admission…)
The VAT is paid by the person designated as the “real recipient of the vessel” on the importation declaration and recovered by the French Customs.
A customs declaration is established.
Temporary admission for exhibition
According to article 234 of the delegated regulation issued by the European commission on July 28th 2015, a non-EU vessel under temporary admission can benefit from the complete exemption of both VAT and customs tariffs when the vessel is intended to
be exhibited or used in a show opened to the public (for example: boat shows).
Two declarations must be established: a declaration upon the entry into the regime and another upon the exit of that same regime.
A non-EU private registered vessel under temporary admission willing to charter can benefit from a complete tax relief. When the registration flag allows private vessels to engage in commercial activities, the vessel can carry out its commercial activity in France without paying VAT on the hull.
There are two famous flags allowing this specificity:
- The Marshall Islands flag (For yachts over 24 meters)
- The Cayman Islands flag (For yachts over 24 meters)
In these cases, the private yacht can charter for a precise lapse of time. However, the days in which the private vessel is authorized to charter is time-limited. Under a Cayman Island or a Marshall Island registration, it is possible to charter up to 84 days per calendar year.
Tenders and Chase Boats
Tenders which are registered in the list of equipment of the main vessel they follow the regime of the latter.
The chase boats having their own registration can benefit from the Temporary Admission Relief if they fulfill the conditions of that scheme (non-EU flag, non-EU owning company, non-EU resident UBO).
The tender having her own registration cannot be used by EU residents unless the following conditions are fulfilled:
- The main vessel has been formally imported into the European Union
- The tender is mentioned in all the charter contracts
- The tender is exclusively used with the main vessel
- The tender is only used for specific purposes (shuttles to the shore, inaccessibility…)
- A verbal declaration document is filed for the tender after the main vessel is imported.
Temporary importation for works
The inward processing regime allows a non-EU vessel, as a private means of transportation to be repaired, refitted or rearranged in the European Union customs territory without the need to pay any tax or duty.
The Commercial Importation
The Commercial Importation
Before January 1st, 2022, the main way to import a yacht in France was to do so under the “French Commercial Exemption”.
Since January 1st, 2022, owners have to import their commercial yacht under the reverse charge mechanism (it is now a requirement).
With the French reverse charge, no VAT is disbursed upon importation. The owning company only needs to write the tax amount on their declaration and deduct it instantly through their tax representative or tax agent.
The process of importation
In order to import a commercial yacht under the reverse charge procedure, it is necessary to obtain a French VAT number beforehand.
This procedure can take some time (anywhere between 1 and 3 months).
It is also necessary to be registered under a commercial certificate of registry and to carry out a real commercial activity (charter or transport contracts).
The importation document (SAD or DAU type) must be sent to your tax representative or tax agent who will declare and deduct the VAT so that the yacht can be considered as “VAT accounted for”.
With this system, the only way the VAT on the value of the yacht could be readjusted is because of a complete lack of commercial activity (a yacht not doing any charters or transport contracts cannot benefit from the VAT deduction anymore). It is therefore crucial to maintain a commercial activity year after year.
What has become the French Commercial Exemption (FCE) ?
Conditions of the FCE
Prior to January 1st, 2022, the FCE was a way to import a commercial yacht under VAT exemption provided the following conditions were respected:
- The overall length must be over 15 meters.
- The yacht must be registered as commercial.
- The yacht owning company must employ a permanent crew.
- The yacht must be used exclusively for commercial purposes (for example, under a charter agreement).
- 70% of the trips must be done outside the French waters.
- Static charters must represent less than 50% of the total charter contracts.
These conditions are now still enforced but only for the VAT exemption on eligible goods and services purchased in France.
In other words, it means that the FCE is now an optional requirement. If you decide to respect the conditions above, you will benefit from a VAT exemption on goods and services that your purchase within the scope of your commercial activity.
The VAT exempted services are limited by law and only include services that are directly linked to the yacht’s commercial activity such as piloting, towing, mooring…
In any case, please note that if you, for example, do not respect the 70% rule during a calendar year, you do not risk the VAT readjustment on the value of the yacht anymore. The only risk would be the readjustment of the exempted VAT on goods and services as described above.
Provisional and permanent commercial activity statement
Provisional Commercial Activity Statement
The first year that the owning company claims the benefit of the FCE, they will need a provisional commercial activity certificate to ensure, among others, that the yacht will comply with the 70% rule during the current year (N). If the rule is not respected, VAT will be readjusted by the French tax authorities on the goods and services purchased without VAT.
Permanent commercial activity statement
If the yacht complied with the 70% rule, she will automatically be granted a permanent certificate of commercial activity for the next year. If during this “next year” (N+1) the 70% rule is not respected, the VAT will not be readjusted for that same year. The only consequence will be that the yacht will not benefit from the VAT exemption for the year after (N+1).
Note that even if you are not eligible to the FCE anymore, the VAT can be claimed back through your tax representative or tax agent.
Any yacht released for consumption or formally imported into the European union must, when she decides to leave the EU waters, fill out a formal exportation declaration.
All the procedures explained above require the filing of an exportation procedure when leaving French waters.
There are few exceptions:
- There is no need for a formal exportation after entering in the EU under the temporary admission when no other procedure has been used (TAE, TAC…)
- There is no need for a formal exportation when the yacht benefited from the TAE without being obliged to fill a formal importation declaration
If the yacht is not formally exported, it will be more difficult for her to be reimported in the EU the next time she comes. Especially if the yacht is seeking to obtain an advantageous fiscal regime.
Special authorization requested to Customs
The client can ask us to obtain a special authorization from French customs in some particular cases (For example: an authorization for the boat’s owner to sleep onboard during a show where the boat is exhibited).
Oral declaration procedure
According to the article 165 of the of the Union Customs code delegated act, a document accompanying an oral declaration can be established when a private non-EU vessel and owned by a non-EU company entered into the European Union waters and more specifically into the French waters. This document can also be established after a sale in international waters when the boat comes back into the French waters under a non-EU private registry and owned by a non-EU company.
When the newly owned vessel comes back, it can benefit from the temporary admission if the conditions required by the article 212 of the delegated act are respected. An oral declaration shall be filed according to the article 136 of the same act.
Cash-on-board Customs declaration
According to the article 3 (1) of the regulation (CE) n°1889/2005 concerning the relations with the third countries and according to the article 464 of the French customs code concerning the intracommunity relations, there is a declaration obligation when 10 000 euros in cash or more are carried onboard.
This mandatory declaration generally concerns the vessel carrying out a commercial activity and doing charter. These vessels tend to travel with large amounts of cash to pay the Advance provisioning allowance-APA (Fuel, food, drinks).
We can make this declaration and forward it to the customs authorities.
Note that this cash declaration can also be established for a vessel in the Monegasque waters. However, in this case, the declaration must be filed directly by the Monegasque authorities.
Temporary storage facility for vessels
When the boat arrives in French Waters without a determined customs status it is possible to use the warehouse regime.
The warehouse is a customs regime under which the non-union boats can be placed by submitting a customs declaration. They remain monitored by customs on a special quay. The vessels can use this regime awaiting to be imported or placed under a specific regime.
The goods placed under this regime are put into premises pertaining to the operator, to a service provider or someone else (commercial chamber, ports, …).
Temporary admission for sale
Vessels recently launched can benefit from an exemption when they are still owned by the shipyard and want to attend an event in order to be sold. A validation from customs is necessary.
We can clear the spare parts coming from non-EU countries that you may receive, pay the VAT on them and deliver them onboard.
Trade of goods declaration
We can assist you with intracommunity supplies (for example when a yacht is launched in the European Union and intended to be directly delivered in another EU country without prior exportation).