Adopted by French Assembly amid industry warnings of economic harm but unlikely to be enacted.
In late October 2024, a controversial legislative proposal to significantly increase the Value Added Tax (VAT) on luxury nautical assets in France was decisively rejected following concerted opposition from the maritime industry.
It was tabled again with minor modifications in 2025, for the 2026 Budget, and accepted by the Assembly on 22 October 2025. However, the proposal is widely not expected to be turned into tax law.
The amendment (No. I-CF865, tax Project de loi de finances No 1906) to the 2026 Finance Bill, tabled by members of the Nouveau Front Populaire and La France Insoumise party, sought to raise the VAT rate on designated luxury goods explicitly including yachts, sailing boats, and motorboats over 20 HP to 33%.
The logic of the proposal was driven by controversial party logic that luxury goods are the preserve of the wealthiest with the narrative logic from the law proposers stating in their initial proposal ‘Luxury is known for its disregard for employment in France and shameful tax practices whilst reaping super profits’ and in the 2025 proposal they cited the ‘key luxury houses net profits’.
The French alliance tabling the law proposal comprises a board coalition of Socialists, Greens, Communists and radical left parties that was created in June 2024, in response to President Macron’s decision to dissolve the National Assembly.
Under the French legislative process, a bill must be adopted by both chambers, Assemblée nationale (lower house) and Sénat (upper house), before being promulgated by the President and published in the Journal officiel to become law. As of today, the amendment remains proposed, not enacted.
The broad measure proposed to increase VAT was not just about Yachts but covered art, private jets, yachts over 3 tonnes, gold, caviar and Motorcycles over 450 cc.
The measure against the yacht sector for yachts over 3 tonnes and 20 HP tabled was characterised by its detractors as a punitive and economically counterproductive form of wealth taxation.
Industry stakeholders swiftly warned that such a blunt fiscal instrument would jeopardise a sector generating approximately €5 billion in annual turnover and supporting over 50,000 direct and indirect jobs across shipyards, marinas, charter operations, coastal regions with high unemployment and supply chains.
Key Arguments Against the Amendment:
- Competitiveness and Demand Erosion: Critics argued the hike would catastrophically undermine French nautical competitiveness. Buyers of new vessels would likely defer purchases or relocate acquisitions to jurisdictions with lower VAT, leading to a sharp decline in domestic orders.
The risk of triggering a relocation of demand and a loss of market share for French ship yards was a central concern to the broader government. France CAC 40 is comprised of a number of global luxury companies in the premium such as LVMH, Hermes, Kering, Loreal and Essilor Luxottica providing jobs, dividends and taxation to the French government. France is also home to the biggest yacht manufacturers in the world such as Groupe Beneteau.
- Regressive Impact: Opponents emphasised that VAT is inherently non progressive. A flat 33% rate would apply equally to a modestly priced used boat and a superyacht, effectively penalising middle class leisure enthusiasts, key drivers of the coastal economies, alongside high net worth individuals. An outcome at odds with the stated goals of fiscal equity.
- Fiscal Counterproductivity: Analyses suggested the policy could backfire on public revenues. A collapse in sales and an increase in foreign flag registrations and ownership structures would shrink the taxable base, potentially reducing overall VAT receipts rather than increasing them.
- Supply Chain Vulnerability: The industry highlighted the proposal’s failure to account for wider economic ripple effects. Reduced sales would cascade into lower demand for maintenance, refits and ancillary services, threatening coastal economies far beyond initial purchase transactions.
- VAT limits: European Union VAT ranges from 17% to 27%, this would increase the upper limit to 33% which would raise discussions at a European level.
Faced with this overwhelming pushback, the amendment is unlikely to be approved by either the Senate or the President.
Media commentary described the proposal as ‘demagogic’, with warnings it would ‘kill the French boating market’. Speaking to key insiders and lobbyists in the industry such as the ECPY it is clear the law will never be adopted by the Senate.
The 33% VAT rate has not been adopted into the final Finance Act: it has remained an amendment and is not a law. So, there is no binding ‘yes’ or ‘no’ decree by the government or finance ministry re VAT on yachts.
The official legislative process is still in flux, the French 2026 Finance Bill was partly rejected by the Assembly (on 21-22 November 2025), which casts doubt on the entire package of proposed tax/vat changes but that rejection affects many measures for France, not just the yacht VAT amendment.
Broader Context: The Luxury Asset Taxation Debate
This episode is indicative of a wider European trend in 2025, where governments across Europe are reassessing fiscal approaches to high value mobility and leisure assets, often linking them to debates on wealth inequality and environmental impact. Following the UK’s increase in Air Passenger Duty for private jets and the introduction of a Mansion Tax, Switzerland’s wealth tax proposal failed to pass.
- Parallel discussions are underway regarding taxes on private aviation to address carbon footprints.
- At the EU level, debates continue reforming energy taxation directives for maritime and aviation fuel, balancing environmental aims with industrial competitiveness concerns.
The French case illustrates the tension between redistributive or environmental tax ambitions and the practical economic realities of specialised industrial ecosystems. The unified resistance from businesses, workers and regional representatives underscored that policies perceived as threatening key industries face significant political hurdles.
Implications and Future Policy Trajectory
The adoption by the assembly of amendment I-CF865 offers several insights:
- Industrial Vulnerability: Sectors like nautical manufacturing, which depend on stable domestic demand and integrated supply chains, are highly sensitive to broad based tax increases on their products.
- The Limits of Blunt Instruments: Using VAT as a proxy for wealth taxation is often economically inefficient and politically challenging due to its regressive nature and potential for revenue contraction.
- Need for Policy Nuance: Future initiatives aiming to tax luxury assets may require more targeted mechanisms such as progressive levies based on value, emissions based fees, or means tested wealth taxes, to avoid collateral damage to industrial bases and employment.
Across Europe, the VAT payable on the purchase of a yacht ranges from 17% to 27%, depending on the member state.
Practically however, European owners have long been able to legitimately optimise or defer VAT exposure giving a cash flow advantage through several recognised and fully compliant ownership arrangements. These include EU leasing opportunities known in France as “LOA” Lease Option Achat, lease with a purchase options traditionally offered through financial institutions in Europe or hybrids known as ‘Yacht Lease Structures’ in Monaco, Cyprus and Malta where VAT is paid progressively over the term of the lease rather than in a single upfront payment.
Another well established option is to operate the yacht as a genuine commercial asset, registering it for VAT and making it available for charter. Unlike a standard commercial asset which may simply be owned by a business, a genuine commercial asset is actively used in real commercial operations, not just held for status or tax positioning. Provided the vessel achieves the required level of third party charter activity and is actively marketed (typically around 65% of third party charter of all operational time), owners may benefit from favourable VAT treatment while maintaining compliant commercial operations.
Ownership solutions remain essential tools for owners who wish to balance personal enjoyment of their yacht with efficient tax planning and regulatory integrity.
Martyn Fiddler, remains one of the most trusted advisers for owners seeking clarity, confidence and import solutions yachts.
With over 40 years of experience in ownership solutions and 40 passionate staff in yacht and aviation, EU VAT, customs, importation and cross border compliance, Martyn Fiddler works alongside owners, captains, lawyers, operators, brokers, managers and family offices to build robust solutions that stand up to regulatory scrutiny. The result is simple: owners can focus on enjoying their yacht, while Martyn Fiddler ensures everything behind the scenes is fully compliant, efficient and secure.
Conclusion
While the immediate proposal for a 33% VAT on yachts and pleasure boats in France has not currently been adopted into law the trajectory in France and Europe of these laws being tabled signals a persistent political impulse in Europe to levy new taxes on high end mobility assets and the wealthy. It is up to our industries to rigorously defend the public good of skilled jobs; taxes paid both corporation and social taxes, and dividends contributed to the public.
For such fiscal reforms to be sustainable, they must carefully balance objectives of equity and environmental stewardship with the imperatives of preserving industrial competitiveness, employment and regional economic health.
France, like many other European countries, is currently running a fiscal deficit which will require the government to look for innovative measures to raise growth and also taxes, attacking luxury and the wealthy is a vote winning strategy for governments but comes with a warning that these industries contribute significantly to the economy, mobility and tax take of each nation.
The robust successful unified defence mounted by the French nautical sector and its associated media serves as a potent case study for other luxury industries and as a strong coordinated, articulate and vocal lobby to be noted by policymakers across Europe navigating this complex terrain.
If you are looking to own, buy or sell a high value asset, contact hello@martynfiddler.com to find out how we can help.
