For ship rental and charter contracts concluded by 31st October 2020:
- Short-term leasing of ships (less than 90 days) to a taxable or non-taxable person was taxable in France as long as the ship was made available to the lessee in France (Article 259 A 1° a) of the General Tax Code).
- Rentals were taxable in proportion to the use of the vessel in Community waters. As this share became difficult to determine, the ship hiring client could apply a flat-rate reduction of 50% on the total amount of the fee, regardless of the nature of the vessel concerned.
For ship hire and charter contracts entered into on or after November 1st, 2020:
- Short-term leasing of ships (less than 90 days) to a taxable or non-taxable person remains taxable in France when the ship has been made available to the lessee in France
- However, the flat-rate reduction of 50% disappears. From now on, the the part of the rental corresponding to the time the vessel is actually used or operated outside the territorial waters of the European Union is exempt from VAT under Article 59a of Council Directive 2006/112/EC of 28th November 2006 on the common system of value added tax. The taxpayer is responsisble for assessing the exempt part of the rent and this is subject to checks by the authorities. The taxpayer may corroborate the assessment by any means.
