We can arrange French yacht leasing that can help you reduce the tax on your new yacht or boat by up to 50%
Yacht Leasing – Reduce The Tax On Your New Boat
In a drive to stimulate new boat sales, the French, Italian and Maltese governments have permitted yacht and boat buyers a significant tax concession reducing the effective rate of VAT / TVA / IVA on a new boat. Though long-established and completely legal, the European yacht leasing concessions are neither well-known nor well understood by many yacht and boat purchasers.
The concessions are open to any EU citizen, including a British sailor, provided the boat is correctly registered and care is taken to meet all the requirements of the tax concession legislation.
Though each tax jurisdiction has its own variation, the new boat financing tax concession has essentially the same mechanism at its core – a yacht or boat leasing contract.
Yacht Leasing – A Range Of Yacht Leasing Schemes
Typically the scheme will provide a substantial value added tax allowance and is applicable to all yachts and boats on which a leasing company could reclaim the value added tax portion of the transaction. Though the lease / purchase schemes vary in detail and can be arranged through a number of financial institutions the principle conditions are common to all schemes and are relatively simple.
There are six principle conditions which normally apply to approved schemes:
- The boat must be purchased new or, if not new, any VAT / TVA / IVA paid or due must be reclaimable by the leasing company.
- VAT / TVA / IVA is only due on the fraction of the price of the boat that forms a lease deposit.
- The lease purchase contract must be for an extended period, typically between 3 and 12 years.
- The lease payments will not be subject to VAT / TVA / IVA.
- An option to purchase the vessel at around 1% of the yacht or boat’s price must be included in the contract.
- The boat must be appropriately registered when purchased.
The French law covering yacht leasing can be found Here.
Yacht Leasing – A Worked Example Of How Yacht Leasing Can Save You Tax
To understand the scheme let’s take a look at two simple worked examples, one for a cash buyer and one for a credit purchaser, each purchasing in France. For Italy and Malta the numbers would be different but the principle is broadly the same.
For a cash buyer, able to make a 50% initial payment on a £100,000 ex VAT yacht, UK VAT would be £20,000. The same yacht, brought from a UK company but using a qualifying French lease / purchase scheme would only be subject to French TVA of £9,800. The financing charge from the lease / purchase scheme would be £10,900 at current Euro rates of interest but this would be offset by placing a matching sum on deposit and earning interest thus offsetting interest paid with interest received thus neutralising most of the financing charges.
For a credit purchaser the situation is very similar except that the 50% saving on TVA is somewhat offset by higher financing charges. For a buyer needing to finance the whole cost of a new £100,000 boat over three years the VAT / TVA / IVA saving would pay for almost all of the credit charges.
Additionally, there are two further positives to be taken into account. French ports are generally readier to grant annual marina berths to locally registered boats and a for a typical 11 metre yacht a French marina berth will cost around £700 per year. With a French registered boat, French insurance is advisable and this, like car insurance, will be about 30% cheaper than in the UK.
On the down side the “droit de francisation et de navigation” is an annual duty levied by the French government on French registered pleasure craft and for a typical 11 metre yacht would amount to around £400 per year for as long as the boat remained French registered and this would eventually claw back the TVA saving unless the boat was re-registered outside France at the expiration of the yacht or boat financing contract.
