French authorities introduce VAT on yacht charters

On 25 June 2013, the French tax authority published an official notice (administrative instruction) to confirm that VAT must be applied to yacht charters commencing in French waters.

France had been notified by the European Commission that the criteria it was applying to allow a commercial VAT exemption to yacht charters was not in line with European case law (Bacino Charter Company SA case [Case c-116/10] of 22 December 2010).

In compliance with the ECJ Bacino ruling, the exemption will no longer apply to hiring and charter operations for leisure use, either with or without a professional crew, including operating the yacht on the high seas.

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