France: The end of the French VAT lump sum reduction.
France | The end of the French VAT lump sum reduction.
The French Official Tax Bulletin published on Friday 6th 2020 announced the end of the VAT lump sum reduction in France, with retroactive effect BOI-TVA-CHAMP-20-50-30, para 40 .
The French VAT lump sum reduction is now replaced by an effective reduction in proportion of the time spent outside European waters. Therefore, only the time spent outside EU waters is VAT exempted.
The owning company needs to demonstrate by proper evidence the actual use and enjoyment of the service outside EU waters.
Charter contracts signed from November 1st 2020 are subject to the new rule.
It means that only charter contracts signed prior November 1st can benefit from the lump sum reduction of 50% of the taxable base in case of cruising outside EU waters.
On another hand, please note that the 70% rule remains in place. As a reminder, the owning company can benefit from a VAT exemption in France under the French Commercial Exemption (FCE). One of the conditions of the FCE is to perform at least 70% trips outside of French waters.
The 70% rule shall not be mistaken with the French VAT due on charter contract.
DISCLAIMER | The information provided in this text is for general information purposes only and doesn’t replace the advice of a legal advisor or of a tax consultant.
