Tax Notes Int’l

The European Court of Justice on March 21 in European Commission v. France (C-197/12) held that French legislation providing a VAT exemption for some commercial vessels used for navigation on the high seas that carry passengers for remuneration or are used for commercial activities does not comply with Directive 2006/112/EC (the VAT directive), specifically with article 148(a), (c), and (d). The ECJ held that France failed to adequately apply the high seas condition. (The judgment has not been published in English.)


In addition to the temporary importation exemption regime,1 the VAT directive allows, under specified conditions, a tax exemption for the supply of goods for the fueling and provisioning of vessels used for navigation on the high seas, as well as the supply, modification, repairs, and locations of these vessels. However, in almost all EU jurisdictions — France being a notable exception — commercial yachts do not benefit from the VAT exemption.

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