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Clarity on the 25% import duty on US superyachts entering France

French customs clarifies its position on the additional 25% duty owed on US-built vessels entering the EU …

As of 22 June 2017, superyachts built in the US that are imported into the European Union are required to pay an additional 25 per cent customs duty on top of VAT. The European Commission has implemented Regulation (EU) 2018/724, amended with (EU) 2018/886, as a direct response to the US’s changes in trade policy, which has seen the US implement safeguarding measures in the form of a tariff increase on imports effective as of 23 March 2018 with an unlimited duration.

“The first discussion that we had with the French customs authorities were not very productive because they considered that all US-built vessels entering French waters were required to pay the additional 25 per cent duties, regardless of their status, and this including vessels under temporary admission” starts Jean-Philippe Maslin, senior associate at Ince & Co. “From a customs law point of view this did not make a great deal of sense, but we understood that the move was politically motivated in order to, essentially, punish the US for the imposition of its tariffs as part of the ongoing trade war between the US and the EU.  This was initially not encouraging because of the number of yachts potentially affected by the policy.”

However, following a series of negotiations, the French customs authorities have provided an update that outlines how the regulation will be enforced. Firstly, the 25 per cent additional duty does not apply to vessels operating privately under temporary admission. However, the duty would apply to yachts imported for commercial use under a VAT exemption, such as the French Commercial Exemption or the Returned Goods Regime, except if the duties have already been paid.

It must be noted the 25 per cent additional duty is calculated on the customs value of the hull and is, therefore, a significant risk for the yacht.

“There are a number of options for commercial vessels which are being discussed with French customs which may allow commercial vessels imported from the US to be outside the scope of these additional duties,” continues Maslin. “We are, for example, still discussing the possibility of doing yacht engaged in trade (YET) as a viable alternative, because the system is a hybrid between temporary admission and commercial operation that is allowed in France and Monaco and tolerated in Italy under certain conditions.

“However, there is a risk that French customs could require a guarantee for part or all of the additional duties due, which would make this regime a lot less appealing for US-built yachts.  We are also exploring the idea of a commercial temporary admission regime, similar to what Spain has recently implemented, as the rules under the Union Customs Code are much more flexible. There would not be a single, fit-all solution, but we would have various options at hand depending on the specificity of each vessel.”

It must be noted the 25 per cent additional duty is calculated on the customs value of the hull and is, therefore, a significant risk for the yacht.

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Clarity on the 25% import duty on US superyachts entering France

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