Withholding tax on charter revenues: has this battle been definitively won? As you may have heard MYBA and ECPY members have recently been subjected to French tax inspections in their capacity as Stakeholders. In compliance with Article 182B of the French General Tax Code, French Fiscal Authorities wanted to apply a 33% withholding tax on charter funds held by Stakeholders based in France, in relation to the commercialactivity (charters) made into the French territory and territorial waters. The withholding would apply when charter funds were transferred to Owning Companies or Yacht Owners which did not have a permanent professional establishment (business) in France and were based in jurisdiction which did not have a double tax treaty with France.
MYBA and ECPY decided to seek the official position of the tax authorities at the ‘Direction de la Législation Fiscale (DLF) in Paris. They asserted that Stakeholders are only intermediaries of on charter revenues realised in France and not the debtors.
The first reply was unfavourable but MYBA and ECPY lodged an appeal for a second interpretation by the National College. The DLF has now replied favourably, indicating that “the Stakeholder is not liable to pay the withholding tax provided for under Article 182 B of the General Tax Code”.
This is of course a great success but this is only the first stage, as now MYBA and ECPY need to ensure that this national decision is implemented at local level for the ongoing cases.
But when the battle is won at local levels are the tax authorities going to accept defeat or are they going to try to find a new debtor?
There’s still plenty of grey areas around this … stay tuned, we will release up-to-date news as soon as possible.
For any additional info or questions needed please email us to email@example.com.
We are always at your disposal.
Please find below a detailed update for 2017 released by our Croatian partner:
Part of our business is keeping up with the ever changing maritime laws and regulations in the region. So with the possibility of some important changes to charter tax potentially being instated this year, we’ve been keen to inform everyone in the industry. We were going to wait until the changes took effect before sending out this update, but after hearing conflicting information from many other people in the industry outside of the country, we decided to send it out early. It covers the main VAT regulations and charter activities in Croatia that are set to change this year. Of course, we will continue to release pertinent information as we learn more from the relevant authorities. The following are the changes we have been informed of that should come into force for the upcoming 2017 season.
VAT and Charter Regulation Changes for 2017:
1. VAT will be charged to all commercial yachts that start charters (embark guests) in 3rd countries, proportionate to the time spent in Croatia. For instance, if a yacht embarks guests in Montenegro and comes to Croatia for 6 days, charter guests will need to pay Croatian VAT for 6 days.
2. All non-EU flagged commercial yachts will be allowed to perform charters in Croatia, but will be required to obtain a charter license. There is no longer a limit on the yacht’s length in order to perform charters in Croatia. The license will be valid for the calendar year. The number of licenses issued might be limited based on the Croatian market supply situation. Please note from the above info, ALL non-EU flagged commercial yachts will be able to start charters in Croatia if they obtain a charter license and have a charter and VAT representative!
3. Commercial yacht owners and owning companies are allowed to perform charters in Croatia, either through charter companies / ship agents or if they open their own charter company in Croatia.
4. Commercial yacht owners and owning companies from the EU are NOT obliged to have a VAT and fiscal representative in Croatia, while yacht owning companies from non-EU countries ARE obliged to have a VAT and fiscal representative in Croatia.
5. Private yachts will still be able to embark and disembark their guests in Croatia regardless of flag. In cases where the owner and family members are not onboard, the Captain will have to have an authorized list of people with: 1) names of guests and, 2) length of time that these guests will spend on the yacht. This list of people will have to be authorized by the Captain’s signature and the yacht’s stamp.
6. VAT for charter activities in Croatia is still 13% for weekly charters and 25% for daily charters.
As soon as the administration finalizes and publishes the relevant information under points 1 and 2 above, we will inform you immediately. Meanwhile, if you have any questions, please do not hesitate to contact us at any time
Advice: if you are coming to Croatia this season and plan on having a busy charter season, you should start preparing NOW.
Thank you for your time and attention. All the best and we look forward to hearing from you soon.