Abrupt end to the VAT rebate for LOA vessels
The ad turned the French world of pleasure boat sales upside down. On 6 November 2020, the tax authorities published a text in the Bulletin Officiel des Finances Publiques (Official Bulletin of Public Finance) abolishing the lump-sum allowance on the basis of VAT-taxable rents for the rental of pleasure boats, with retroactive effect from 1 November. It follows a repeated request from the European Union to harmonise the situation in order to avoid distortion of competition between European countries. "The project planned for March 2020 had been withdrawn at the time of containment. We had started hearing about it again this summer. We knew that the end of the VAT rebate was coming, because France has many other issues in progress with the European Union and had decided to follow its requests for this one. Discussions were ongoing, but we were talking about next January or next summer. In Italy, we had already been warned in the summer of the date of 1 November. In France, we were surprised. It's the timing and the manner that are regrettable," explains Eddy Pazalja, who is in charge of the French market for the ship financing organisation CGI-Finance, which is also present in Italy.
Tools for boaters and dealers to review
The operational consequences are important for funders. Even if they had prepared for the end of the reduced VAT for LOA vessels, the year 2020 did not allow them to fully focus on it. "We had obviously prepared the subject and anticipated the stakes. But the March-April period, the confinement period, was devoted to accompanying boaters and our dealer partners with extensions. From May to the end of August, there was an explosion of sales and files to deal with. July was a record in Europe, with +50% compared to our best month. Then the cancellations of trade fairs, replaced by private events, mobilized the teams over a long period of time. Today, we have to reprogram all the tools at the dealerships, review the general and special sales conditions," says Eddy Pazalja.
An effect that will pay off in the boating market
Faced with a brutal change, but one that is expected in any case in the medium term, the head of CGI Finance wants to be reassuring. "For clients who signed between November 1 and 6, we are confident in the case law. The law protects the client and the rate is maintained at 10%. A client who wanted to buy a boat at 100,000 euros over 10 years will have 80 to 100 euros more on his rentals. He may extend his existing boat and postpone his purchase. But we have already had the opportunity to work on new products and insurances, launched and to come, to compensate and reduce the impact of this VAT" he concludes.
