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"Exemption by anticipation" does it work for me? June 2016
How to qualify for duty-free services and supplies in France and Monaco
Are you a new to the charter market? Have you just finished a year-long refit? Are you back on the charter market after a break of 12 months or more? Have you returned to the Med after some time in the Caribbean or other cruising grounds?
If you are one of the above, commercially registered, and did not charter in France or Monaco last year but plan to do so this summer, you can qualify for the French Commercial Exemption (FCE) “by anticipation”.
This means that you will automatically be granted a VAT and excise exemption on the purchase of supplies and services in France and Monaco on the assumption that you will comply with all provisions of the FCE in 2016.
What are the provisions?
1. The yacht must be registered as commercial
2. The yacht owning company must employ permanent crew on board
3. The yacht must be used exclusively for commercial purposes*
4. The yacht’s LOA must be over 15m
5. The yacht must do more dynamic charters than charters at the dock
6. During each calendar year 70% of cruising trips must be outside French waters
* i.e. under a charter agreement (no switching to private use in the EU)
The “70% rule”
Provisions from one to four concern administrative requirements.
Five and six relate to charter itineraries. For instance, if you only charter during the Monaco GP you will not qualify since a GP charter is considered static. The 70% rule is slightly more complex.
The map shows the charter itinerary of M/Y Sushi. The charter starts in Monaco and finishes in St Florent, Corsica. A trip is a segment in a charter itinerary defined by guests’ embarking and/or disembarking.
The map shows that charter guests embark/disembark in Cannes, St Tropez, Calvi and St Florent. The charter includes 4 trips 3 of which are in French waters and one in international waters.
If this were the only charter, Sushi would not meet the terms of the FCE since 75% of the trips were in French waters (three out of four).
All charters worldwide in each calendar year count towards computing charter trips.
What happens if I don’t meet the 70% rule?
You will have to pay the VAT on all supplies and services purchased duty-free in France and Monaco in 2016 and you will not be exempt from VAT in following year.
However, if the following year you comply with the FCE requirements, you will be VAT exempt in 2018.
So, if you intend to apply the FCE by anticipation (in addition to the administrative requirements) you must be sure your chartering schedule will allow you to meet the 70% rule.
We can help.
Find out about our “Trip tacking service” which enables you to chart your charter schedule in real-time throughout the season. Contact Thiabult Hermant Operations Manager for SOS Yachting France and Monaco for more information.
One last point….
Even if you don’t qualify for the FCE but you meet the first 3 conditions you are entitled to TIPCE exempt fuel. TIPCE (a consumption tax on energy products) amounts to just over 50% of the overall cost of fuel in France. Ask Thibault for more information.