A value added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the value added to a product, material, or service, from an accounting point of view, by this stage of its manufacture or distribution.
VAT is a very complex area, particularly relating the EU. We have invested much time and energy in familiarising ourselves with the overall picture and while it is a moving target this is our understanding of the current VAT/TVA landscape during the summer of 2014.
The intention of VAT is for the government to tax the amount of value added to a product or service as it passes through the supply chain. In the end, the final consumer is expected to pay VAT, and if for personal consumption is usually unable to claim it back. Hence you are charged VAT on a meal in a restaurant or food in the supermarket.
Businesses are able to offset VAT that they pay (input VAT) with VAT that they charge (output VAT). Our business is delivering consumable products to yachts. Costs that we incur doing this reduce our profit and the VAT we pay on these costs is then offset against that VAT that we charge our customers.
If you are a VAT registered business, and your business is providing a floating residential experience, most countries now expect you to charge VAT to your clients (much like a hotel would). Costs that you incur, in providing this service, can then be offset against what you charge your clients, as can the VAT elements.
Deliveries in France
Due to the volume of business that we transact, we are TVA registered in France and the French government expects us to charge VAT on ALL deliveries that we make in France. Your bill will therefore have VAT on it. Current VAT rates are 5.5% on food and 20% on everything else.
If you are VAT registered in the EU, you will be able to claim back the VAT that we charge. Where you are registered will dictate exactly how this is done, but in principle, input VAT paid anywhere in the EU can be offset against output VAT owed in any country.
If you are not VAT registered, then you will have to pay VAT on all expenses that you incur (from fuel to food) and you have no way of claiming this back.
EU Deliveries outside France
Deliveries made outside France can be exempt of VAT providing you give us an EU VAT number before we deliver. If you are unable to provide a VAT number then deliveries outside France will carry VAT at the standard French rate.
TAX free deliveries in France
Historically, provisioners have offered a tax-free delivery capability and we are no exception. In France it is possible to receive goods specifically for a charter tax free, providing they are exclusively for use on that charter. The process in France was designed for cruise ships receiving large quantities of products and as a result there are some required aspects that are in our opinion not well suited to super yachts:
- Prior notice – the authorities require 48 hours notice of tax free delivery. So all products must be specified (no last minute additions).
- Use of a customs agent – we can’t just stroll in, we need to use a 3rd party agent who will charge based on value of goods. The agent requires that you provide both the charter contract, CoR and a list of crew and guests before they can make a submission.
- Inspection – the goods need to be available at the quay for inspection by the customs authorities (and a payment needs to be made, which depends on day of the week and time of day).
Duty on alcohol in France is minimal so the savings to be made relate mainly to VAT, currently charged at 20%. Food in France is taxed at 5.5% TVA so this route is only sensible if there are potentially large amounts of VAT on non-food items (usually an expensive guest wine order). If you are VAT registered (see above) then the VAT is reclaimable, so we would only recommend this solution for non-VAT registered yachts looking at high value alcohol orders specifically for charter.
*We refer to VAT and TVA interchangeably