VAT on provision of yachts

12.3.2018

Question for written answer P-001512-18
to the Commission
Rule 130
David Casa (PPE)

The Commission has issued a letter of formal notice informing Malta that it intends to start infringement proceedings over the manner in which VAT is charged on the provision of yachts in that Member State.

Malta charges VAT on the amount of time a yacht is used within EU waters, on the basis of the principle of effective use and enjoyment contained in the VAT directive. France and other Member States apply the same principle. In fact, in France a 50% reduction is applied on the total rental time in the case of pleasure craft.

The French system also features a total exemption from VAT on works and services on the basis of a yacht undertaking a commercial activity. The yacht’s location in international waters is justified by the taking of photographs. This French system was introduced by Pierre Moscovici in 2015 when he was a minister.

The Commission in its letter is questioning the classification by Malta of the leasing of a yacht as a supply of a service when France also classifies yacht leasing in such a manner and applies a reduction of 50%.

Why is this being done with respect to Malta and Cyprus?