FRENCH COMMERCIAL EXEMPTION AND IMMOBILIZED VESSEL
“YMCA has been involved in a case requiring patience and determination. The vessel, in this case, was under the French commercial exemption regime since a number of years and had always respected the 70% rule.
However, in 2019, the vessel could not have any chartering activity being immobilized in the shipyard for a great part of the civil year.
There is a specific provision in the French tax law allowing a vessel to continue benefitting from the French commercial exemption even though there was no commercial activity for a year but this must be justified by time spent in a shipyard and an impossibility to execute some charters.
The difficulty in this case was that the vessel in question did spend some time in the shipyard but was not immobilized for the whole year. Indeed, the vessel could possibly have had a chartering activity from January 2019 to March 2019. As you can imagine, this is not the best time for a vessel chartering exclusively in the Med.
YMCA was retained to file a Force Majeure request towards French customs for them to authorize the owning company of the vessel, in this specific case, to continue benefitting from the French commercial exemption in 2020.
We submitted a lot of documentation stating clearly that the vessel was in the shipyard for repairs from April to October 2019, thus during the peak of the summer season. Moreover, we also provided some elements proving that there had been some requests for chartering the vessel that had, unfortunately, to be declined because of the vessel’s conditions.
After months of struggle with the authorities, they finally admitted that, even though the vessel had not been immobilized for the whole length of the civil year 2019, it could benefit from the French commercial exemption in 2020 despite the absence of chartering activity in 2019.
In this case, the vessel had to file a commercial activity statement for 2020 indicating the respect of the 70% rule in 2018 (instead of 2019) according to the specific customs authorization that has been obtained by YMCA.
YMCA is proud to have achieved a satisfactory solution to our clients”.
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