French VAT rules create confusion

South of France is the Mecca of luxury crewed yachting.

This has been the case for a long time and it is likely to remain so for the foreseeable future.
There are numerous reasons for this, none of which will be explored here, but in simple terms, the region between Monaco and St Tropez is simply stunning. In addition, the climate is perfect year

Super Yachts Blade, Adriana and Starling in Fontvielle, Monaco

round and anyone who is everyone wants to be there at the end of July and first few weeks of August, despite additional costs that are likely to be burdened on the shoulders of either the super yacht owners or the super yacht charter clients.

French VAT uncertainty:
The introduction of new VAT rules to all super yacht charters as of July 2013 has however created a number of uncertainties prior to being announced.  A number of clients who wanted to charter super yachts such as a Ferretti 80', a Perini Navi 45m or a Benetti 55m, at least a dozen of them, all decided either to delay their booking or to switch the destination all together.  And while this did not affect the success of the luxury crewed charter season here in South of France in any big way, it certainly did increase number of enquiries and certainly bookings too, to other destinations, namely Croatia, Spain and Greece to name but a few.  This is mainly due to uncertainty, rather than the extra costs.

Monaco's luxurious swimming pool at Port Hercules

Extra Costs:
On the other hand, once new rules were published, one regular charterer, who hires at least three different yachts out of Monaco or St Tropez every year, during different seasons and for a range of different occasions, reported as being totally upset with the French governement. He thought of himself as a resident of Monaco and as such did not assume or want to pay any additional costs.  For him and his party, this additional costs was unacceptable so instead of chartering three yachts, they have taken up only one in France and even so, decided to start and finish the charter in Monaco, rather than in St Tropez as it was usually the case, all in order to avoid any chance of having to pay the additional 9.8% reduced VAT rate.  The new VAT rate is actually, 19.6%, yet for yachts which spend at least 50% of their charter time outside French Territorial waters ie. 12nm from shore, it is possible to apply reduced rate.

Luxury Yachts moored in Mahon, Menorca in the Balearics

Mega charter yachts moored in Marina Icici, in Opatija, Croatia

This example clearly shows that there will be mega yacht charter clients who will want to avoid the additional costs and in fact that the owners themselves cannot or do not always want to include these costs in the advertised charter rates.  At the same time, we have a situation where Spanish Government has decided to open up its super yacht charter market to additional mega yachts by reducing the tax they charge for all yachts above 15m, and which are registered in Spain for luxury crewed charter purposes. Given that areas such
as magnificent Puerto Banus and trendy Malaga in the Costa del Sol, historic Barcelona on Costa Brava and the whole of Balearics are equally prestigious as South of France yacht charter locations are, this could mean that longer term some of the yachts will move from France to Spain.  On top, certain locations in Montenegro, Croatia, Greece and Turkey are increasingly creating their own glamourous events, clubs and destinations in their own right, so that in the longer run, we may indeed see a transfer of super yacht lifestyle from South of France to other parts of the Mediterranean, at least to a certain extent.

In case you would like to add your own comments, experiences or ideas to this argument or even enquire about current situation with French VAT being applied on luxury crewed and mega yacht charters in South of France, please drop us a line at charter@supersailyachts.com  .