In consideration of Article 182 of the French tax code, French fiscal authorities now require that superyacht charter and management companies pay a 33 per cent Withholding Tax on all funds transferred from French businesses to companies found in fiscally non-cooperative nations.

“Those countries that the French authorities consider to be non-cooperative include: British Virgin Islands (BVIs), Marshall Islands, Isle of Man and a number of the other nations frequently used by superyacht owners for corporate services,” starts Thierry Voisin, president of the European Council for Professional Yachting.

When a management company, or charter broker, receives money from an owner as the central agent, it subsequently pays the commission of the broker, pays its own commission as the central agent and returns any outstanding money back to the ownership structure. If this ownership structure happens to be in a non-cooperative nation, which many are, the management/charter company must pay the French government 33 per cent of the amount they are returning.

European Union Withholding Tax, the aim of which is to is to stop citizens evading taxation by depositing funds in a state beyond the single market, has, hitherto, never been applied to superyacht charter and management companies before. Within French law the charter/management companies are understood to be the beneficiaries of the transaction and, therefore, are liable to pay the Withholding Tax – not the owners.

“The negative effects are mostly being felt by charter brokers and management companies because we are considered to be the beneficiaries,” continues Voisin. “It is almost impossible to say for us to the owner, ‘I’m sorry, you need to reimburse us’. For some companies we are talking about hundreds of thousands or euros, for others we are talking about millions. Offices are already closing.”

Both Voisin, on behalf of the ECPY, and MYBA, on behalf of the brokerage community, have engaged the highest French fiscal courts on the premise that it is, in fact, the owners who are the ultimate beneficiaries of the transactions.