French 70% VAT rule exemption for 2020
Commercial operations, both charter and transport contracts, have been given an exemption from meeting the 70% VAT rule for the past year, by the French tax authorities. In light of the global pandemic and limited opportunity for charter in 2020, tax authorities have said that the year should be written off for both yachts that have operated commercially and those that have not.
Specifically, the year 2020 will not be taken into consideration to assess the conditions of the 70% rule. Instead in 2021, these yachts will need to fill out a provisional commercial activity statement to maintain the benefit of the French Commercial Exemption.
The provisional commercial activity statement released by French tax authorities details that vessels must comply with the 70% rule before the end of the year concerned.
Given the exemption for 2020, it means that these yachts filing a provisional commercial activity statement in 2021 will need to be compliant with the 70% rule before December 31st, 2021. If yachts do not comply the VAT could re-adjusted on the value of the yacht and on the goods and services purchased within the scope of her commercial activity. Although this VAT can be offset as is the case with any operating business.
See SOS Yachting for more information.