A yacht charter of ninety days or less is subject to French VAT at 20 % whenever the client takes possession of the yacht in France, whatever its flag; only the part of the voyage spent outside EU waters, and proven, escapes the tax.
Where the charter starts, there is the VAT
The question owners ask, “which flag, in the name of which company”, is not the one that decides. What decides is the quay. Article 259 A, 1°, a, of the French General Tax Code places in France the short-term hiring of a means of transport when it is actually put at the disposal of the customer there, and the tax administration’s guidance specifies that signing the contract or handing over the keys is not enough: what counts is the place where the client physically takes possession of the boat (BOI-TVA-CHAMP-20-50-30, § 50). A Cayman-flagged yacht, owned by a Maltese company, chartered by a London broker to an American client, embarks its guests in Cannes: the VAT is French, at the standard rate of 20 %.
A crewed charter on the MYBA form is analysed as the hiring of the vessel, not as passenger transport. The client has the yacht at his disposal and decides the itinerary, which sets it apart from a cruise sold by the berth. That is the reading the tax guidance adopts for “the hiring of a boat for a pleasure voyage”. It no longer holds if the owner organises and controls the voyage himself, selling an itinerary rather than the use of the vessel: the transport characterisation then becomes arguable again.
Short or long term: the ninety-day line
For a means of sea transport, hiring is short-term if continuous possession does not exceed ninety days (art. 259 A, 1°, a, para. 2). The threshold is assessed on the duration stated in the contract, a rebuttable presumption, and contracts that follow each other with less than forty-eight hours in between are added together (BOI-TVA-CHAMP-20-50-30, § 80 and 90). The guidance itself gives the example of a vessel hired for ninety-one days and used for eighty-nine: the hiring is not short-term (§ 110).
Beyond that, everything changes. Hired to a taxable company, the yacht is taxed where the customer is established, under the general rule of article 259. Hired to a private individual, it is in principle taxed at the client’s place of residence (art. 259 A, 1°, b), except where the boat is put at the client’s disposal in France by a lessor operating it from a French establishment (art. 259 A, 1°, c). A four-month seasonal contract is therefore not a long charter of the same kind: it is another tax regime, and it has to be prepared.
The end of the flat rate: taxing the time spent in EU waters
Until 2020, the administration allowed a flat 50 % reduction on charter fees, whatever the actual navigation. Those days are over. For contracts concluded since 1 November 2020, the fees are “in principle fully taxable in France”, and only the part corresponding to the actual use of the boat outside the territorial waters of the Union is exempt, on the basis of article 59a of Directive 2006/112/EC (BOI-TVA-CHAMP-20-50-30, § 40).
The burden of proof lies with the lessor. For a vessel fitted with an automatic identification system compliant with SOLAS, AIS data are presumed to be probative; for others, the requirements vary depending on whether the boat is more or less than fifteen metres long. A one-week charter from Antibes, for 280,000 euros, spending two days on the high seas to reach the Balearics and five days between Majorca and Minorca, will be taxed in France on five sevenths of the price. That still requires the AIS record to exist and the transponder not to have been switched off. A day at anchor in Spanish waters remains a day in EU waters: only the high seas, or the waters of a non-EU State, reduce the taxable base.
The commercial yacht: when the charter escapes VAT
Article 262, II, 2°, of the Code exempts the hiring and chartering of commercial seagoing vessels used for navigation on the high seas. A yacht declared commercial and operated as such can therefore be chartered without VAT, provided it genuinely meets the criteria checked by customs, including the share of high-seas navigation, which our analysis of the commercial yacht sets out. The trap is well known, and it is expensive. A yacht that claims the exemption without meeting the high-seas proportion loses it for the whole audited period, with VAT reassessed on every charter and, often, on the duty-free fuel. A charter without commercial status exposes the owner to worse.
Monaco, Italy, Greece: the port of departure decides
A charter embarking in Monaco does not escape the system: transactions originating in or intended for the Principality are treated as French for VAT purposes (Directive 2006/112/EC, art. 7), and the Principality applies rules aligned with ours. From Genoa or Piraeus, on the other hand, the VAT is Italian or Greek, each State having its own method for measuring use outside the Union. Moving the embarkation twenty miles can change the applicable tax law. This is not a scheme. It is the rule. The other effects of a Monaco base, customs and litigation included, are covered in our analysis of the yacht based in Monaco.
What we check before signing
The actual port of embarkation and the total duration, successive contracts included; the status of the customer, private individual or company; the yacht’s regime, private or commercial, and its ability to meet the high-seas criteria; and finally the clause of the MYBA contract that decides who bears the VAT if the administration challenges the exempt portion. That last clause is almost always drafted in the owner’s favour. A client who signs it without reading it pays the reassessment. The firm handles these matters as part of its yacht tax and customs practice.
Frequently asked questions
What VAT rate applies to a yacht charter departing from France?
The standard rate of 20 %, applied to the charter price, for the part of the voyage spent in the territorial waters of the Union.
Does the 50 % flat rate still exist?
No. It was abandoned for contracts concluded since 1 November 2020; only actual, proven use outside EU waters reduces the taxable base.
Does the yacht’s flag change the VAT?
No. For a charter of ninety days or less, it is the place where the client takes possession of the yacht that decides.
Is a charter departing from Monaco subject to VAT?
Yes: for VAT purposes, transactions in Monaco are treated as French (Directive 2006/112/EC, art. 7).