What do you need to know about VAT when participating in a yacht charter?

As is the case everywhere, it is the consumer who bears the burden of Value Added Tax, even if they are not the ones who pay it directly to the government.

If I rent in my company’s name, can I avoid paying VAT?

This stems from a misunderstanding: you must always pay VAT on the service you purchase. It is then up to you to determine whether or not you can deduct it later on your VAT return, depending on whether the expense qualifies as a deductible business expense.

What is the VAT rate?

In France, VAT is 20% of the pre-tax price for all charters. Until 2020, boat charters were subject to VAT on only half the price (which equated to 10% VAT), but those “good old days” are over! Now, it’s 20% for everyone. Additionally, the VAT rate for yacht charter is 22% in Italy, 21% in Spain, 24% in Greece, 13% in Croatia, and 8.5% in the Caribbean.

What happens if the country where I rent my boat increases its VAT rate between my booking and the start of my charter?

In theory, yacht charter is considered a service, and as such, VAT is due upon receipt of payment. Therefore, the VAT rate applicable at the time of the deposit and then at the time of the balance payment is the one that applies. Thus, if the rate increases between the payment of your deposit and the payment of the balance, you will have to pay the additional VAT on your balance, as it is you, the consumer, who is liable for the VAT.

For a crewed charter, the price is listed excluding VAT, with VAT added separately. This is because a luxury crewed vessel is mobile, and you can board it wherever you wish. Consequently, depending on the country where you begin the charter, the VAT rate will vary. However, you must always pay the full rate of the country in which the charter begins. At least, this is the case for a standard private charter (under a so-called MYBA contract = Mediterranean Yacht Brokerage Association). For charters starting in France, there is an alternative known as the "Transport Contract." This is a contract in which the sailing itinerary must be strictly defined in advance down to the hour, leaving the client very little freedom during the cruise, but allowing them to pay only 10% VAT, or even 0% if the sailing itinerary passes through international waters (it also allows for exemption from fuel tax, which reduces the price by nearly half). Please note that inspections and tax adjustments by the tax authorities are frequent.