VAT REDUCTION ON CHARTERS WOULD NO LONGER BE APPLICABLE IN 2020

On Nov. 29th, the President of ECPY met with the administration of the Directorate of Tax Legislation – DLF. The DLF officers informed
ECPY that the application of the VAT reduction on charters as practiced in Italy, France, Malta, Greece, Cyprus and Croatia would no
longer be applicable for the 2020 season (i.e. just cruising into international waters and obtaining a VAT reduction).

In 2020 the only possible reductions will be pro rata reductions for cruising outside European waters (i.e. time spent/or distance in
international waters, at this stage we do not know).

The European commission has asked the above-mentioned countries to modify their practices in order to apply the principle
of ratio from January 1st, 2020. It is expected that the implementation of the new rules on VAT reductions will be applied
under the same terms and at the same time in the different countries.

ECPY has requested that the new rules applicable in 2020 should be known as soon as possible and before the end of 2019. Several points remain to be clarified to date, ECPY is taking part in the negotiations that will take place during the month of December.

The objective is to obtain identical rules in all European countries and for these rules to be applied concurrently.

ECPY will keep its members informed of the rules that will have been adopted.

OTHER POINTS CONCERNING YACHT CHARTER WITHOLDING

During this meeting, we reminded the administration representatives that we were waiting for answers to the questions
asked in our letters of July 1st and August 2nd, 2019.

The subjects raised in these letters are as follows: taxation and VAT on brokers’ commissions, taxation of Yacht Charter in proportion
to time spent in territorial waters (topical issue), VAT exemption scheme provided for in Article 262(2) of the CGI, 70% criterion,
refueling regime and requirement of a VAT identification number in the country where the company owning the yacht is located.

 

WITHHOLDING TAX

We also reminded the administration representatives that certain French companies involved in the charter or management of yachts
were subject to tax audits by the tax authorities (DGFIP), which resulted in adjustments that could not be absorbed by companies
based on the withholding tax that these companies should have made during payments to clients located in non-cooperative tax
countries.

ECPY once again expressed its deepest and definitive disagreement with the DGFIP’s attitude in this case, which is causing prejudice.