Understanding the

Bulletin Officiel des Finances Publiques-Impôts

(BOFIP) 12.05.2015

What does it mean for commercial yachts?

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What does BOFIP 12.05.2015 say?

It clarifies the criteria commercial yachts must meet to enjoy VATexemption on the supply of goods/services purchased in France.

Although it deals with VAT, the Bulletin does not affect the VAT due oncharter fees. VAT regulations in place for charter in France are thesame as before.

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What are the criteria?

To benefit from VAT exemption, commercial yachts must comply with the following:

• The yacht must be registered as commercial

• The yacht owning company must employ permanent crew on board

• The yacht must be used exclusively for commercial purposes, i.e. under a charter agreement

And the 2015 criteria: 70% of cruising trips must be outside French waters.

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What is a ‘trip’?

Every time a guest disembarks or embarks a new trip is generated. Embark or disembark means to join or to leave the charter for good.

In one charter you can have more than one trip (each generated by the embarkation or disembarkation of guest/s).

Static charters do not count towards generating trips. Of the total number of charters carried out in any year static charter must be less than 50%.

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What trips qualify?

Qualifying trips:

The yacht sails from:

• French waters to international and/or foreign waters

• foreign waters to international and/or foreign waters

Non-qualifying trip :

The yacht does not exit French territorial waters

The yacht’s logbook and guest lists must be accurately maintained to reflect the exact itinerary and changes in guests.

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When do the provisions of BOFIP 12.05.15 come into effect?

In 2016.

The 2015 cruising trips provide the basis for the 2016 assessment andonly yachts that meet the conditions in 2015 will be granted anexemption for 2016.

In the same way the 2016 itineraries will be the basis for 2017, 2017for 2018 and so on.

The exemption lasts for one calendar year (Jan 1-Dec 31) and isrenewed on a yearly basis.

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What happens if a yacht doesn’t qualify for the exemption?

If one of the above conditions is not met, the yacht will have to pay VATon the purchase of good and services.

However, the VAT paid by the yacht will be reimbursed when the VATdeclaration is filed by the VAT representative.

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The slides below show the 2015 summer season of a 62m yachtcalled MY Sushi carrying 12 guests.

Each slide shows:

• the number of trips

• the itinerary

• which parties embark/disembark

• the cruising waters*

Will M/Y Sushi retain her exemption?

* Trips in French waters are highlighted in yellow

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Charter 1 - June 21-28, 2015

Itinerary: St Tropez, Corsica, Portofino

Charter party: 12

Trip Itinerary Charter party WatersDoes the trip qualify for the exemption?

1 St Tropez /Cannes All 12 guest onboard French No

2Cannes/ St Florent/Calvi/Bonifacio

2 guests disembark and 2 new guests

embarks in CannesInternational Yes

3Bonifacio/ Portofino

2 guests disembark and 2 new guests

embarks in BonifacioInternational Yes

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Charter 3 - July 18-25, 2015

Itinerary: St Tropez – Porto Cervo

Charter party: 12

* Went whale watching for the day beyond 12nm

Trip Itinerary Charter party WatersDoes the trip qualify for the exemption?

1 St Tropez/BonifacioAll 12 guests

onboardInternational Yes

2 Bonifacio/Porto Cervo2 guests disembark

and 2 guests embark in Bonifacio on day 3

EU Yes

3Porto Cervo*/Porto Cervo

2 guests disembarkin Porto Cervo on

day 5International Yes

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Charter 4 - August - 8-15, 2015

Itinerary: St Tropez - Ibiza

Charter party: 12

Trip Itinerary Charter party WatersDoes the trip qualify for the exemption?

1St Tropez/Porquerolles/StTropez

2 guests disembark in St Tropez on day 2

French No

2 St Tropez/MenorcaOnly 10 guests on

boardInternational Yes

3 Menorca/Ibiza2 new guests embark

in MenorcaEU Yes

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Charter 5 – August 18-25, 2015

Itinerary: Porto Cervo, Naples

Charter party: 12

Trip

Itinerary Charter party WatersDoes the trip qualify for the exemption?

1Porto Cervo/Asinara/Cavallo/Porto Cervo

All 12 guests on board, 2 guests disembark on day 3 in

Porto CervoEU Yes

2Porto Cervo/Ischia

Yacht cruises to Capri with 10 guests on board

International Yes

3 Ischia/Capri2 guests embark in Capri on

day 5EU Yes

4 Capri/Naples2 guests disembark in Capri

on day 6EU Yes

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How does it pan out?

M/Y Sushi qualifies for the exemption since over 84% of trips wereoutside French waters. She meets the requirements of the 70% rule.

Number of charters in 2015 4

Number of trips in 2015 13

Trips qualifying for exemption in France 11

Trips not qualifying for exemption in France 2

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For more information and guidance on how to retain the commercial exemption contact:

Thibault Hermant

SOS Yachting France

+ 33 492 00 43 80

info.france@sosyachting.com

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