Paying Vat on owners charter weeks?

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Danvilletim

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We are looking at 24-31m express style boat tat we hope to charter for about six weeks and be on board. The broker just told be we would have to pay Vat for the weeks we are on board. That sucks. Is this true?

What the best way to organize to minimize this?
 
Unless you are outside the EU VAT area, e.g. in the Channel Islands, I can't see how you can avoid paying VAT for the charter, fuel, mooring fees, etc. Not sure why you think there is a way of avoiding this.

If you are buying the boat to charter to others (your wording is not very clear), then you would have to pay normal VAT for periods the boat is not being used for business use. In fact should a tax inspector wish to check your records you would have to able to clearly prove the boat's use when up for charter was not a false scenario, e.g. you in fact charter once or twice a year so you can offset everything against this to avoid VAT.

Remember the three simplest ways to get a tax inspection - by phone, by letter, buy a boat !
 
Well, not necessarily. if the boat is owned by a private individual (not VAT registered) or a company that trades under the VAT threshold (not VAT registered) then why would VAT be payable?

On the other hand, a 30m charter of a high quality MY for 6 weeks is probably going to be over the VAT threshold on its own...
 
To clarify. We are buying a boat to use six weeks a year. We also want to charter the boat for 4-6 weeks a year. The boat is currently British flagged and did 8 weeks last year out of Antibes.
 
Danvilletim said:
We are looking at 24-31m express style boat tat we hope to charter for about six weeks and be on board. The broker just told be we would have to pay Vat for the weeks we are on board. That sucks. Is this true?

What the best way to organize to minimize this?
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I,am assuming that you ( entity that’s running the boat *) gonna claim the input VAT back .This all the VAT from stuff like services bills , fuel , and anything else that is VAT ed in connection with running the boat .
Therefore if you are claiming the VAT back —— then any “ output “ VAT is liable on the boat ,like charter fees .
This means you will you will have to pay VAT too on the weeks you use it at the going rate .

*The current VAT exception threshold in FR is €82,000 - over this turnover the entity that’s running your boat has to register
- and add VAT on charter weeks - which includes you using it too .
How ever the Fr ammened the rules recently to force all foreign owned Yachts supposedly for charter to reg for VAT irrespective of T/O - so disregard the local VAT threshold if you not Fr

Work out if your personal ( output ) VAT for your useage is less than the total prediction of input VAT claimed back for the “charter “ business to work for you .

Your Broker is correct I,am afraid.

When you use the boat the “ entity “ runing it bank account needs to see that you have paid too the going rate inc VAT .But Remember it’s your a/c so you are just moving your own €/$ about .
 
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Danvilletim said:
We are looking at 24-31m express style boat tat we hope to charter for about six weeks and be on board. The broker just told be we would have to pay Vat for the weeks we are on board. That sucks. Is this true?

What the best way to organize to minimize this?
Click to expand...

I paid vat for my boat and on all the running costs, what makes you think you shouldn't ? Too many people trying to avoid paying tax, if we all paid our fair share things might be a little better
 
I think you might be missing the point. VAt is paid on the boat. The boat charters for 40k a week. So Vat is 8k. Every time you use the boat for personal use, you have to pay the Vat amount as if you were chartering. Although it may only be 10% for owner use in France. So 6 weeks of personal use might be $24k Vat due IF the boat is registered commercially.
 
Danvilletim said:
I think you might be missing the point. VAt is paid on the boat. The boat charters for 40k a week. So Vat is 8k. Every time you use the boat for personal use, you have to pay the Vat amount as if you were chartering. Although it may only be 10% for owner use in France. So 6 weeks of personal use might be $24k Vat due IF the boat is registered commercially.
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I guess that’s where you have to decide whether to run boat as a business or not
 
Boat2016 said:
I guess that’s where you have to decide whether to run boat as a business or not
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And convince the French tax inspector that this is not some evasive scheme ! Good luck.

Or you could just buy a boat to go boating in, tax et al. Nothing wrong with chartering it, but the issue arises when you are perceived as trying to take an advantage, as your opening post suggests.
 
superheat6k said:
And convince the French tax inspector that this is not some evasive scheme ! Good luck.

Or you could just buy a boat to go boating in, tax et al. Nothing wrong with chartering it, but the issue arises when you are perceived as trying to take an advantage, as your opening post suggests.
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I’m no tax expert but what I do know is that it’s best to keep on the right side of the tax man unless you’re prepared to live your life looking over your shoulder
 
It’s the correct imho way to run a big chaterable boat .Rent it out if it will go .@ 40K / week .
The 6 weeks income of 240k , less expences should cover easily the owners VAT of stated 24 K and leave a bit in the kitty .

Output VaT 6 x 8 - 48 K from punters + owners ( @ 10 % ) stated 24 K -Totals 72K for the Fr taxman .
Less the claimed 20% or what ever inputs est circa 20 K so the Fr will not complain they are 52 K up ,they are not gonna discourage him if the Output s exceed the inputs - In fact pat him on the back :)and hope he can do more than 12 weeks in total 6 punter +6 personally

Out of the 240k gross charter fee deduct , mooring fees 25 K , guardianship + cleaning 10 K , engines service 10 K , annual lift n antifoul 6 K ,insurance 2 K , sundries 2K , skipper + crew @ est 5k / week - 30 K
All that lot leave s 240 less 85 , round up ( 15 K slush fund ) to 100 K to run it that still leaves 140K in the kitty to subsidise the owners VAT of 24 K , and his fuel , or what ever he chooses to do with it at arms length via the entity that’s runing the boat —- sounds like the right way to go .

There s no tax dodging it’s the other way round for the Fr and the owner gets free boating ,with a bit left over too .
 
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Most replies above are applying U.K. Vat principles. The vat rules in France for commercially registered boats are unique, and nothing like U.K. I have had 24 m boats in Antibes for years. The broker-advised position is that you pay vat on private use. The reality is slightly different but better discussed over beer not open forum.
 
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