French Finance Bill 2018 – what we know
Picture courtesy of PT Money
Photo courtesy of PT Money
Just when everyone was getting back from Monaco this year, the French government submitted a finance bill that could see bigger taxes on superyachts.
The new French Finance Bill for 2018 looks to replace the current wealth tax with a new IFI tax that specifically targets real estate. It is scheduled to come into effect from January 2018 and would exempt “moveable luxury assets”, such as yachts and jets.
Whilst this sounds like good news for the French yachting industry, MPs are looking to increase other taxes on these excluded moveable assets.
They said that yachts and similar “outward signs of wealth” should be taxed more following their exclusion. But having talked to Jean-Phillippe Maslin, avocat at international law firm INCE & CO, it appears that this has no real legal definition and could just as easily apply to watches or luxury cars.
Three amendments to the bill have been suggested to ensure that yacht owners do not get away so easily. They propose to integrate the items into the new IFI tax, implement a specific tax on “outward signs of wealth,” or to increase taxes on French yacht owners in accordance with the boat’s size.
Maslin suggests that additional tax could come in at around 30,000 to 200,000 Euros per yacht, depending on its size.
France has two taxes that could increase: an annual Francisation tax, levied on pleasure yachts registered in France, and passport-duty tax on yachts owned by French residents but not registered in France.
While the number of yachts registered in France is small (around 40), the passport-duty would target French yacht owners who have yachts registered under another flag. However, due to special purpose ownership schemes, this could be tricky to enforce.
Maslin explained: “It is very difficult to have an estimate of the number of yachts affected by the passport-duty because of the interposition of special purpose companies. It makes it harder for French customs to track down whether a French resident is behind the structure or is using the yacht.”
As it stands, tax stops increasing on a vessel once it reaches 30 metres, so you pay the same whether you have a 30-metre yacht or a 70-metre yacht. Discussions are also in place to add more tranches to this.
So, at this stage, the only people who should be worried are the small number of French yacht owners with French-registered vessels. And those who will be hit hardest are those with yachts above the 30-metre margin.
The final version of the bill should be submitted to French authorities the week after next, to be voted on by the French Parliament during the last days of December. More amendments could be introduced in this time but, until then, this is the situation as it stands.
This originally appeared in our Superyacht Investor Email Insight
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