The Yachting Transport Agreement new version available online
I. Why a Yacht Transport Agreement
To enable a yacht owner to make his vessel available to a third party, professional yachting has relied for decades on the method of chartering the vessel by a Client, who became the charterer for the duration of his cruise.
In recent years, the European Union has changed the taxation of these operations. In particular:
• the flat-rate exemption which allowed a reduction of half of the VAT (20%) applicable to a charter is no longer allowed: it must be made in real terms
• similarly, the TICPE (excise duty on fuel) can no longer be exempted in the case of a charter, considering that the purpose of the charter is not to put the yacht into commercial operation
In addition to the traditional charter contract known as the "MYBA Charter Agreement", ECPY has proposed the creation of a contract that would again benefit from the said TICPE exemption and, on most routes, from a large or even total exemption from VAT, on a full 10% basis.
In order to do so, the contract changes its nature and becomes a TRANSPORT AND SERVICES AGREEMENT FOR YACHTS (the "ECPY Transport Agreement").
II. Tax Comparison between the ECPY Contract of Carriage and the MYBA Charter Contract
Thus proposed, the Transport Agreement is intended to :
• remain in the coutinuity of the traditional offer of navigation and accomodation on board a yacht, as an experience of very high quality;
• make the authorized exemptions and exonerations applicable without any fiscal or customs risk being taker by the parties;
• fit into the overall framework of European transport regulations, while being adapted to the wishes of the parties in terms of the jurisdiction clause;
• contribute to the process of professionalizing the world of yachting.
The present provisions, fully compliant with European regulations, have been validated with the French tax and customs authorities. They are intended to be deployed progressively according to the same principles in all the countries of the European Union, each retaining its own specific definition (rates, criteria, etc.).
The ECPY Transport Agreement has been used seamlessly since the 2017 Yachting season in the Mediterranean, and fully compliant with fiscal and customs rules, as requested when the cruise itinerary starts from France. In 2019, a new version has been issued, after a thorough legal analysis proved that, in most cases, the role of Central agents and Charter brokers does not fall under the status of Travel Agent.
III. Characteristics and implications
By developing the contract in this way, yachting professionals place this part of their activities within the framework defined by the cruising activity, with however a single beneficiary of the service (no cabin sales).
1. The use of a transport contract instead of a charter contract (MYBA charter) is fiscally very interesting, but it has counterparts in terms of the obligations of information and transparency towards the Clients and the formalism of defining the service.
2. The yacht manager and its captain must rigorously follow the elements: itineraries and its changes; embarkation and disembarkation of passengers; keeping a fuel log (all tax/tax free), and archive them carefully.
3. The "Client" who previously chartered the Yacht becomes, together with his Guests, a Consumer and a Passenger, with the legal protections implied by these Statutes.
4. The Yacht, if used under the exemption regime applicable to merchant ships, must continue to respect the principles of this exemption to avoid any questioning of this taxation.
5. The Transport agreement is a package price which includes the voyage itself, including fuel, accommodation for passengers, a set of basic services, but also the pre- and post-carriage of the ship to/from the port of the start/end of the cruise.
6. If the service is provided on the quay (in the case of static events in the port, Cannes, Monaco, etc.) it is not possible to offer a transport contract since there is no actual transport.
Thus, the use of one or the other of the two types of contracts, transport or charter, must be chosen according to the use of the Yacht.