“Spanish IVA (VAT) remains at 21% – nearly double the typical fees found in other EU countries,” states Jana Sheeder, President of SailAway Yacht Charters and 1-800 Yacht Charters. Sheeder adds, “A myriad of permits and registration requirements makes it difficult for charter vessels to commit to cruising in Spain.Without Spanish registration, these yachts cannot begin and end a charter within Spanish waters. So the combination of administrative burdens and high IVA keeps most charter yachts out of Spain.”
Sheeder explains, “The tax has not been eliminated. The Ministry was careful to use the words, ‘Ceased to be applied.’ While we expect the Spanish Parliament to vote in favor of the Ministry’s position on the matriculation tax, there is no guarantee that a future administration won’t vote to reinstate it.”
This entry was posted in News Educational and tagged Jana Sheeder, president of 1-800 Yacht Charters, Spain yacht charter, VAT, Balearic yacht charter, IEDMT (Impuesto Especial sobre Determinados Medios de Transporte), matriculation tax, IVA, what is VAT, luxury yacht charter taxPosted on
In July, we informed our readers about the new regulations imposing French VAT on yacht charters taking place in that country.
The new regulations will apply from 15 July 2013 to charter agreements for yachts for the purposes of leisure travel.
We sat down with Jana Sheeder, President and corporate Maven of SailAway Yacht Charter Consultants and 1-800 Yacht Charters, to review the answers to the three most frequently asked questions regarding the new rules.
Question #1: What rate will apply to French charters after 15 July?
“The rate has been set at 19.6% and will increase to 20% on January 1, 2014. However, the taxable base can be reduced by 50% if the yacht is used outside European Union territorial waters, which by definition extend out 12 nautical miles from the coastline. Thus, if you started a charter in Nice, France, and cruised out beyond the 12 nm limit, and concluded the trip the next day in Sardinia, the tax would drop to 9.8%.”
Question # 2. Does it apply if the charter starts and ends outside France?
“No. The law reads VAT is applicable on the charter if the vessel is put, ‘…at the disposal of the charterer in French waters.'”
Question #3. Will charterers need to be involved with VAT registration and compliance in France?
“Not at all. It is the responsibility of the yacht owner to make the necessary arrangements to register his or her vessel with the French taxing authorities. As to the collection and processing of the tax, most owners are hiring local French-based fiscal agents.”
“As charter consultants, our responsibility is to clearly explain the new regulations to our clients. Many are repeat charterers who cruised multiple times in France in the past. For some, it will be a shock to hear their next Western Mediterranean yacht charter vacation may be subject to a tax of nearly 20%. We will work with them to modify their itineraries, in an effort to mitigate as much of the tax liability as possible.”
This entry was posted in News Educational and tagged Frequently Asked Questions, South of France yacht charter, VAT, yacht charter maven, what is VAT, france yacht charter, VAT in France, faq's, yacht charter questions, maven, mitigation, cannes france yacht charterPosted on
The cost of enjoying a Mediterranean yacht charter vacation may be going up as new rules, and confusion, regarding taxes on commercial yachts go into effect.
In the past, luxury mega yacht charter vessels in the Mediterranean were often exempt from paying a French Value Added Tax (VAT or sometimes referred to as, TVA) on both the value of the charter and on any fuel and provisioning. Recently, increased pressure from the European Union to bring French law into line with the rest of the union states has resulted in the European Commission forcing the French Government to amend its rules on exemptions.
“In the past, a yacht used solely for commercial activity would hire a permanent crew and register as a commercial vessel to obtain an exemption from paying the VAT. Under the new rules, the same activity, crew, and registration rules apply, but there is a catch – the yacht ‘must be used for navigation on the high seas.‘”
It is this new wrinkle that has Sheeder and the yachting industry confused. “So far, the French government have not defined or clarified what is meant by the term, “used for navigation on the high seas.“
A manager of a fleet of mega yacht charter vessels in France, who wished to remain anonymous, echoed Sheeder’s concerns. “At what point does ‘high seas’ come into play? Ten miles off shore? Twenty miles? No one knows,” the manager said.
“While we are not charging the VAT to any of our clients, we are clearly explaining the potential tax liability they may incur, perhaps even after the conclusion of the charter.“
Click HERE to request more information or advice on this topic.
France’s efforts to seek an exemption from VAT on yacht rentals has failed, and starting July 15, 2013, charterers can expect to pay an additional 9.8% for their Côte d’Azur yacht charter.
For years, the majority of Mediterranean yacht charter vessels based in France were registered as commercial vessels, a strategy that allowed their owners to sidestep VAT on the purchase of fuel and on the prices charged for charters. The European Union prevailed in court to force France to follow EU VAT guidelines, and beginning July 15, charters will be subject to the nearly 10% fee.
“We are investigating other countries in the European Union as alternative Mediterranean yacht charter destinations. Gibraltar, for example, has no import duty for yachts over 18 meters – and no VAT.”
This entry was posted in Educational and tagged SailAway Yacht Charter Consultants, Mediterranean yacht charter, Jana Sheeder, president of 1-800 Yacht Charters, cote d'azur, VAT, france yacht charter, VAT in France, GibraltarPosted on
With many of her clients still onboard their yachts enjoying their 2013 year-end St Barts yacht charter vacations, Jana Sheeder, President of SailAway Yacht Charters and 1-800 Yacht Charters, takes a few minutes to reflect on the year that was (and offers us a glimpse of what’s to come in 2014).
Q: The charter industry still seems to be recovering from the global economic downturn of the past couple years. Did 2013 represent an uptick in the volume of charter business?
Sheeder: “Our research indicates 2013 showed significant improvement in charter revenues when compared to both 2011 and 2012. Many newly-built yachts entered the charter marketplace in 2013. These are builds that had stalled while under construction during the height of the downturn. As the global economy began to pick up, delayed construction projects commenced.
The result is a beautiful new fleet of superyacht charter vessels that hit the seas in time for the 2013 summer Mediterranean charter season.”
Q: Did the year end on an uptick?
Sheeder: “We haven’t seen any industry data yet, so we can’t speak for our competitors. We can tell you in terms of the Caribbean yacht charter marketplace, SailAway (1-800 Yacht Charters) had its strongest December in over 3 years. While the inquiries for smaller vessels did not grow, our bookings of superyachts – some of the largest yachts in the world – increased significantly.
Presently, we have the two largest charter vessels currently docked in St Barts for 9 night charters – motor yacht LAUREL (240 feet, $525,000 per week) and the Lurssen yacht charter motoryacht MARTHA ANN (230 feet, 600,000 EUROS per week).”
Sheeder: “I would have to say the ending of VAT exempt charters in France. For many years, our clients enjoyed St. Tropez yacht charters and summer vacations along the Cote d’Azur, free of the burden of VAT. That all changed in the summer of 2013 when the French yacht charter VAT went into effect. As of July 15, 2013, charterers can expect to pay an additional 9.8% for their Côte d’Azur yacht charter.”
Q: Are you optimistic as you look ahead to 2014?
Sheeder: “Our team is extremely optimistic as we focus on incremental growth in 2014. During the economic downturn, while many of our competitors hunkered down to ride out the storm, we took a contrarian approach. We focused our efforts on increased marketing. Our strategy was simple – stay in touch with existing clients and prospects. We wanted to be “easy to find” once the economy turned around.
Internally, we call it our “Tip of the Tongue” project. Clients had tightened their belts during the downturn, and we were committed to be the brand they remembered (always on the tip of the tongue) when they were ready to loosen their discretionary income belts again!
Now that 2014 is here, we are excited to announce that:
The sky’s the limit! It will be an exciting, challenging, and awe-inspiring year!”
For more information about yacht vacations around the world, please visit 1-800 Yacht Charters at https://www.1800yachtcharters.com/book-now-contact-us/ and share our information with your friends, family, and associates!
This entry was posted in News Educational and tagged largest yachts, SailAway Yacht Charter Consultants, Mediterranean yacht charter, Jana Sheeder, president of 1-800 Yacht Charters, martha ann, St. Barts yacht charter, yacht charter industry, VAT, Laurel, industry news, year-end vacationPosted on
“In each of the past three summer seasons, we have seen an increase in interest in Dalmatian yacht charter adventures in Croatia,” says Sheeder. “We are advising our clients to budget not only for the increase in VAT, but also for the higher excise taxes on fuel that were approved in November. In short, the cost to enjoy both a Croatia bareboat rental or a fully crewed yacht vacation will cost about 5% more in the summer of 2014.”
This entry was posted in Destinations News and tagged sailing yacht, Eastern Mediterranean yacht charter, VAT value added tax, Destinations, Jana Sheeder, 1800yachtcharters, Croatia, Waterfalls, sailboat charter, president of 1-800 Yacht Charters, VAT, yacht charter croatia, luxury yacht charter croatiaPosted on
Back in February, we speculated the cost to rent a private yacht in the fabled south of France was about to go up, due to a ruling by the European Union the VAT exemption on chartering yachts in France was not compliant with EU VAT rules. Now, France’s efforts to seek a VAT exemption have failed, as the European Court of Justice has ruled the French tax exemption for commercial vessels is illegal.
What does the ruling mean?
On March 21, the European Court of Justice (in European Commission v. France; C-197/12) held that French legislation providing a VAT exemption for some commercial vessels used for navigation on the high seas that carry passengers for remuneration or are used for commercial activities, “…does not comply with Directive 2006/112/EC (the VAT directive), specifically with article 148(a), (c), and (d).
“ With the approach of the summer charter season at hand, yacht managers and owners are scrambling to make sure all paperwork is in compliance with the ECJ’s ruling.”
If Spain is hoping to entice more private luxury yacht charter business in the Balearic Islands, they have a funny way of showing it.
Regular readers of our blog might recall the controversy surrounding Spain’s 13.7% yacht charter Matriculation Tax (blog September 14, 2013). Heavy lobbying by the Spanish yachting and marina industries saw that tax removed. Spain, however, is still imposing far greater taxes on charters than fellow European Union countries like France, Italy and Malta.
Case in point – a specific yacht that is legal for charter in both Spain and France will incur TWICE as much VAT liability in Spain, even though the tax percentages are nearly identical!
A yacht charter example:
Formula 1’s Eddie Jordan often keeps his Sunseeker 155 motor yacht BLUSH in the Balearic Islands for the summer charter season. When there is demand, the yacht can easily reposition to the South of France for clients who prefer a French yacht charter vacation, even dipping into the coastal areas of Italy and nearby islands of Sardinia and Corsica. The weekly charter rate remains the same between both destinations (€220,000 per week in high season), and the VAT rates are almost identical: 20% in France and 21% in Spain.
A client who charters Sunseeker 155 yacht BLUSH in Ibiza, however, will see a tax of €46,200 on his charter agreement, while a client chartering the yacht in Cannes, will incur a charge of just €22,000.
If you’re the client taking the yacht in Spain, one word comes to mind (well, maybe a few words…), most notably, “OUCH!”
So what is the explanation? Why the drastic difference if the tax rates are nearly identical? The answer can be found in Article 58 of European Union Council Directive 2006/112/EC.
We’ll let our company President, Jana Sheeder, explain why this is the case:
“The European Union directive on VAT, as it relates to private yacht charter revenue, has a clause entitled, ‘criterion of effective use and enjoyment.’ This clause allows member states to implement a VAT reduction scheme. However, it is not compulsory. Popular cruising destinations like France, Italy, and Malta all take advantage of this opportunity to reduce VAT. Unfortunately, Spain does not.”
In our example above, the client who charters motor yacht BLUSH in France, ends up with an effective tax rate of 10%. The client who charters this yacht in Spain pays the full rate of 21%.
Note – the tax savings only kicks in when the chartered yacht cruises beyond 12 nautical miles – in essence, into international waters and out of the borders of the European Union. This is a simple task and almost all charter yacht captains will implement this strategy in order to save the charter customer 50% of the VAT rate. However, even if a yacht in Spain sails beyond the 12 nautical mile boundary, the Spanish government still insists on collecting the full VAT fee.
The Member States of the European Union include:
For those readers who enjoy the technical details, here is the verbiage of the directive:
In order to avoid double taxation, non-taxation or distortion of competition, Member States may, with regard to the supply of the services referred to in Article 56(1) and with regard to the hiring out of means of transport:
Alex Chumillas, the director of Tax Marine explains the directive and the result of Spain’s decision: “As is clearly defined in paragraph (a), the provision seeks to minimise VAT taxation applicable to certain services, among them the hiring out of means of transport (for instance charter),” “However, the provision has not been implemented in Spain. Therefore, chartering in Spain is subject to a flat VAT rate which does not benefit from any reduction, even when sailing beyond 12 nautical miles.”
Paragraph (b) allows Spain to levy VAT charges on certain services that have been provided outside of Spain – if the services are enjoyed inside of Spain. Let’s say a charter starts in Gibraltar. The yacht will need to register for VAT and pay VAT on the length of the charter in Spain (and of course, pass then expense on to the charter customer).
By choosing to implement paragraph (b) only, the Spanish government has chosen to only apply the more burdensome element of the directive. Is this the right thing to do to people wanting to experience travel in your country?
Like they did with the repeal of the oppressive matriculation tax in 2013, let’s hope the legislators in Spain come to realize a reduction in VAT will make the Ibiza yacht charter market competitive with neighboring France and the rest of the European Union states that derive strong financial benefits from the private luxury yacht charter industry.
VISIT https://www.1800yachtcharters.com/yacht-charter-monaco/ for a sampling of private yachts for hire in the Balearic Islands and throughout the Mediterranean this summer, courtesy of 1-800 Yacht Charters.We will be happy to create The Superyacht Experience for you.
This entry was posted in Destinations News and tagged Jana Sheeder, president of 1-800 Yacht Charters, Sunseeker, Spain yacht charter, Ibiza yacht charter, Blush, Corsica, Sardinia, South of France, VAT, Balearic Islands, yacht charter matriculation tax, European Union Council Directive, Member States, Article 56(1), Tax MarinePosted on