Duty Free French fuel for commercial yachts

Commercial yachts will still be able to fill up with duty-free fuel in France this summer, despite some recent confusion.

The uncertainty surrounding duty-free fuel stems from the wording used in current charter contracts in relation to the end user i.e. the charterer using the yacht for pleasure rather than commercial purposes.

EU Court rulings have identified that the current Worldwide Yachting Association (MYBA) format of charter contract being used does not meet the French Commercial Exemption (FCE) requirements and therefore those using it cannot benefit from duty-free fuel.

French Customs have been lenient and set a date of 1 October 2016 up to which point commercial yachts can continue to take on duty-free fuel under the current charter contract format.

So, what next?

The European Committee for Professional Yachting, along with French Customs, is in the process of drafting a new charter contract. It is hoped that this will clear up the current confusion regarding the categorisation of commercial yachts.

Assuming that the new charter contract format is agreed and implemented, commercial yachts will still have to comply with a number of rules to qualify for and take advantage of duty-free fuel in France.

Two taxes, two sets of rules

There are two taxes on fuel in France – TICPE and VAT. So, to qualify for duty-free fuel, commercial yachts must comply with two sets of rules.

TICPE (Taxe Intérieure de Consommation pour les Produits Energétiques)

1. The yacht must be registered as a commercial entity;
2. A permanent crew must be employed on board;
3. The yacht must have a service contract in place and be used exclusively for commercial purposes;
4. Commercial yachts can take on fuel 72 hours before the start of a commercial charter and up to 96 hours after it has finished the charter.

VAT (Value Added Tax)

1. The yacht must be registered as a commercial entity;
2. A permanent crew must be employed on board;
3. The yacht must have a service contract in place and be used exclusively for commercial purposes;
4. The yacht must have an LOA of over 15m;
5. 70% of its trips for commercial purposes must be outside of French waters during one calendar year and must be predominately voyages rather than stationary charters.

Next update

The European Committee for Professional Yachting is expected to respond with a new charter contract in October.

‘The new charter contract should clarify the position for commercial yachts and it is good to see the French authorities working together with the industry to support what is a significant contributor to the economy,’ said Bruce Maltwood from Sarnia Yachts, adding that there is a wider set of considerations for commercial yachts to operate in the EU relating to matters such as VAT, flag, MLC and free circulation status.,

This article was originally published on www.sarniayachts.com. Sarnia Yachts was acquired by Praxis Group in July 2023 and is now trading as Praxis Yacht Services.

Please note that this article is intended to provide a general overview of the matters to which it relates. It is not intended as professional advice and should not be relied upon as such. Any engagement in respect of our professional services is subject to our standard terms and conditions of business and the provision of all necessary due diligence. © Praxis 2023