Tag Archives: italy

VAT News 2018

VAT EXEMPTION REGIME APPLICABLE TO VESSELS

On September 2017, the Italian Tax Authorities (Agenzia Delle Entrate) and the Association of Italian Shipbuilding Industry (“Unione Nazionale Cantieri e Industrie Nautiche”, “UCINA”), issued the general guidelines on tax and yachting matters (Guidelines), contained in the book “Nautica & Fisco (see also https://ucina.net/en/ucina-new-tax-rules-for-the-nautical-sector/)”. The Guidelines provide further explanations about VAT exemption for transactions related to vessels:

a. used for commercial purposes
b. used for navigation on the high seas (“navi adibite alla navigazione in alto mare”).

Primarily, on 12 January 2017, Agenzia Delle Entrate issued the Resolution 2/E providing certain clarifications on the definition of vessels used for navigation on the high seas for the purpose of the application of the exemption regime under Article 8-bis, letter a) and letter d) of the Presidential Decree No. 633/1972.
Specifically, the above mentioned Article 8-bis reproduces the content of Article 148, letter a), c) and d) of Directive 112/2006/EU, providing for an exemption of certain operations relating to “vessels used for navigation on the high seas and for carrying passengers for reward or used for the purpose of commercial, industrial or fishing activities”.
In this respect, taking into account the position expressed by the Court of Justice of European Union, the Agenzia Delle Entrate pointed out that:

1. In order to benefit of the exemption regime, the condition that the vessel shall be “used for navigation on the high seas” refers to vessels carrying passengers for reward, or used for the purpose of commercial, industrial or fishing activities, but it does not refer to vessels used for rescue or assistance at sea or to vessels engaged in inshore fishing (CJEU, Elmeka, joint proceedings C-181/04 e C-183/04).

2. For VAT purposes, “high seas” shall be intended as that part of the sea exceeding the maximum limit of 12 nautical miles from the base lines under International Law of the Sea (Article 3 of the Montego Bay Convention of 1982).

3. In order to assure that the exemption regime under Article 8-bis of Presidential Decree 633/1972 is applied, with limited reference to the cases provided by the law (i.e., only to vessels actually and for the predominant part navigating on the high seas), it not sufficient to exclusively take into account the length or tonnage of the vessel.

For the above reasons, the Agenzia Delle Entrate clarifies that “a vessel can be considered as used for navigation on the high seas if, with reference to the preceding year, she has effected, by more than 70%, voyages in the high seas (i.e., beyond the 12 nautical miles)” and “such condition shall be verified for each tax period based on official documentation”.

With specific regards to the adequate “official documentation” necessary to prove the prevalence of voyages carried at the high seas, the Resolution No. 6/E, released by the Italian Tax Authority (Agenzia delle Entrate) on 16th January 2018, provides the below list of documents that shall be considered as “official”:

i. the Log Book (also known as ship’s log or captain’s log), according to articles 169-173 and 174 of the Italian Navigation Code (Codice della Navigazione).
ii. The maps of voyages as well as the data extracted from the ship’s tracking or identification systems (for instance, with no limitation, the A.I.S., GPS, etc.).
iii. The charter contracts, invoices and relevant payments.

As of today, such documentation is absolutely necessary to prove the “high sea cruising condition”. If the Company owning the vessel is not able to provide the suppliers with all or any of the above listed official documents, a mere statement issued by the yacht Owner/Master (self-declaration) declaring the “high sea cruising status” of the vessel might suffice just if the Declarant (Owner, Captain, Master, Manager, or any other person in charge for this, clearly listing his connection with the vessel or position on board, etc.), clearly explains the reasons why it is not possible to provide the required documents.

DEFINITION OF “VOYAGE”

Pursuant to the Guidelines and according to the provisions contained into the Resolution No. 6/E dated 16th January 2018, “voyage” shall mean any cruise carried out between ports (Italian, EU and/or non-EU ports) where embarkation/disembarkation of goods and/or people take place or more generally where said ports are used by the vessel for the purposes of carrying its commercial activity. Within the same Resolution (6/E) the Italian Tax Authority clarified that for “voyage” shall be intended also any cruise starting from and coming to the same port (also known as “circular cruises” or “circular voyages”). If during a “circular voyage” (starting from and coming to the same Italian port) the 12 nautical miles at some point will be crossed by the vessel to sail the high seas, said voyage is qualified as an “international voyage” (voyage at the high seas). Further, any voyage entirely carried outside the Italian territorial waters (exempli gratia: any charter contract having both embarkation and disembarkation places in France) shall be considered as international voyages (voyage at the high seas) as well. If on the contrary a “circular voyage” will only take place within the 12 nm Italian territorial line, said voyage cannot be considered as an “international voyage”.

Lastly – still in respect of the calculation of the 70% of voyages – the Italian Tax Authority explained, with Resolution 6/E, that any displacement (moving from/to) of the vessel to one other port or shipyard for technical reasons (even if those reasons are connected to the vessel’s commercial activity) cannot be considered as a “voyage” and so cannot be included into the calculation of the 70% of voyages.

Moreover, the “high sea cruising condition” shall be verified each year. In case of a percentage of voyages greater than 70% during a calendar year, the VAT exemption pursuant to Article 8-bis applies to the following calendar year. In the event that the percentage above does not exceed 70% during the calendar year, it shall be no longer possible to enjoy the VAT exemption as from 1 January of the following year, except in the special cases listed hereinafter:

a. the vessel is under construction, or
b. the vessel has not yet carried out any voyage in the sea.

Only in these cases, it could be possible to apply the VAT exemption on the basis of a statement declaring the intention to use the vessel on the high seas. Therefore, in order to issue an invoice VAT exempted under Article 8-bis, the supplier shall require the owner or the person responsible for the yacht (for example, the master of the yacht) to provide a statement attesting: the declarant’s personal data, the legal status of the declarant in relation to the vessel and the period for which the statement is provided. However, in the following year, the declarant shall verify if “70% high sea voyages condition” is met and, in the event of a failure in reaching the 70% of voyages on high sea, he shall inform the supplier accordingly. On the contrary, if such condition is met, the declarant shall provide the supplier with the official documentation proving that voyages on high sea, as described above, have been carried out.

COMMERCIAL USE (THE CONDITION)

To enjoy the VAT exemption, in addition to the “high sea cruising condition”, another condition shall be met. Said condition is that the vessel must be used for commercial purposes. Therefore, any transaction related to vessel intended for sport or pleasure purposes shall be excluded from the VAT exemption.
Firstly, it has to be pointed out that, VAT exemption shall apply, in any case, to vessels registered in the International Register, since such registration implies that the registered vessels shall be used for commercial purposes only.
In addition, the Italian pleasure yacht code (“Codice della Nautica da Diporto”) provides a list of cases of commercial use of pleasure yacht, including, charter, leasing, professional teaching of navigation and activities carried out by diving centres using the vessel as basis for diving; for which, generally, the VAT exemption also applies.
However, to benefit of the VAT exemption, the commercial use of pleasure yachts shall be attested by a public register (Italian, International or foreign). Hence, as a general rule, the relevant foreign Harbor Authority or the relevant foreign shipping register shall indicate the use for business purposes of the vessel by inserting, for example, the wording “Commercial Yacht”/“Commercial Vessel/ Yacht in commercial use” in the relevant records. The VAT exemption, as above described, also applies to any advanced payment made during the construction of pleasure yachts, in accordance with the terms of the contract executed between the parties. When the VAT exemption is required for the purchase of a new pleasure yacht, the seller shall require a certificate of the Company Register attesting that that the buyer’s core business is a commercial activity in the maritime sector.
Finally, it has to be underlined that, the transfer of a vessel, registered or to be registered for non-commercial use (private use), to a natural person, shall not qualify for VAT exemption.
Moreover, to register a pleasure yacht as having commercial purposes when it is conversely used for personal purposes may imply significant sanctions. In fact, by law, pleasure yacht used for commercial purposes must be exclusively used for the activities for which they are officially registered. Nevertheless, the use of private pleasure yacht for occasional charter activities is allowed by law, but it never can be qualified as commercial use for VAT exemption purpose.

Part of the hereby provided info has been provided by ucina.net.
For any questions or additional info please email us to info@yachtwelfare.it

Download useful files and documents:

YW News “VAT” 2018 (pdf)
Resolution 6/E January 2018
Resolution 2/E Januery 2017

Italy Cancels VAT Rise

Sanremo, 21st December 2017

 

ITALY CANCELS 2018 VAT RISE: VAT STAYS THE SAME

The Italian Council of Ministers has overturned plans and announced the country’s new financial measures for 2018. Italian value-added tax will not rise in 2018, although it is scheduled to increase in 2019 and 2020 asper below listed:

10% VAT will go up by 1.5% in January 2019 and a further 1.5% in 2020.
22% VAT will increase by 2.2% in 2019 and by an additional 0.7% in 2020 and another 0.1% in 2021.
Excise Tax will also go up in 2019.

Any question can be sent to info@yachtwelfare.it.

Monaco – Italy Tax Agreement

In early April 2017 an important taxation agreement between Monaco and Italy came into force and, as a direct result, Monaco now appears on the Italian ‘white list’ of tax compliant jurisdictions. The Agreement gives rise both to opportunities and challenges for those individuals who fall within its scope.
In March 2015, Monaco and Italy concluded the terms of the Agreement for the exchange of tax information between the two jurisdictions. However, it was not until earlier this month the Agreement completed the formal ratification process by the competent authorities in both Italy and Monaco.
With ratification the Italian authorities can request their Monaco counterparts to provide information on individuals who are Italian tax resident and who hold assets in the Principality. Furthermore, both states have the possibility for their respective tax authorities to conduct a tax audit in the counterpart state.
The Agreement also seeks to avoid the double taxation of income and also defines the concept of ‘tax residence’ in the two states.
The Agreement is an important change for those individuals who are tax residents in Italy and Monaco with economic interests in the other jurisdiction.
The Agreement should be seen in the context of the introduction of automatic exchange of information on financial accounts which came into effect on 1 April 2017 between Monaco and the European Union, including Italy. For more info please do not hesitate to contact us writing an email to info@yachtwelfare.it.

Delivery / Redelivery Fees in France

Sanremo 1st March 2017.

Please find hereby the info just released by our French partner: As you are aware, it has been EASYTAX policy since July 15, 2013, when the VAT became applicable to charter hire in France, to include any Delivery/Re-delivery fees charged to the charterer into the taxable base. This approach was based on Article 267 of the French Tax Code, which considers Delivery/Re-delivery fees as an ancillary service to the main service. Therefore this ancillary service should be treated the same way tax-wise. Over the years, there has been some confusion within the industry on this matter, with various positions taken. As a result, several of our partners have asked that we seek confirmation from the French Tax Administration on this particular point – which we did.

Some time ago, we had requested for a legal ruling from the French Tax Administration Rules and Regulations Division (“Département de Legislation Française”) to confirm the taxable regime to be applied to Delivery/Re-delivery fees. Recently, we received the ruling (Ref. D2B/1500014757D) that confirmed that such fees – regardless if they are just fuel &/or “a time package” – charged in order to put a vessel at the charterer’s disposal, EITHER before the charter from one port to another OR after the charter to reposition the vessel, are indeed constitutive of an ancillary service to the main service, and therefore are taxable under the same condition.

To quickly summarize: DELIVERY/REDELIVERY FEES ARE TAXABLE IN FRANCE

1. If the charter fees are taxed at 20% French VAT, the delivery/re-delivery fees are taxed at 20%
2. If the charter fees are taxed at 20% French VAT on 50% of the charter fees, the delivery/re-delivery fees are taxed at 20% French VAT on 50%.

For any additional info please call or email us to info@yachtwelfare.it or chartermcf@easytax.fr.
We remain at your disposal for any clarifications or questions.

70% of what?

Sanremo, 6th February 2017

The Convention on the High Seas (replaced by United Nations Convention on the Law of the Sea) defined “high seas” to mean “all parts of the sea that are not included in the territorial sea or in the internal waters of a State” and where “no State may validly purport to subject any part of them to its sovereignty“.

Consequently “high seas seagoing ship” means a ship other than those which navigate exclusively into the 12 nautical miles territorial waters, inland waters or in waters within, or closely adjacent to, sheltered waters or areas where port regulations apply.

Resolution No.2/E, released by Agenzia delle Entrate (Italian Tax Office) on 12th January 2017, gives a clear interpretation of “high seas” not only in relation to the technical nature of the ship but also to its fiscal aspects. In accordance to the provisions of said Resolution, a ship can be qualified as a “high seas seagoing ship” if she has performed more than 70% of the voyages sailing the “high seas” in the past calendar year.

If the ship effectively met this specific condition (voyages > 70%), she is qualified to benefit of the VAT exemption according to Article 8-bis, which meets the provisions of Article 148 points a), c) e d) of the EU Directive 112/2006/CE, stating that the VAT exemption regime can be applied to those commercial operations done by vessels “used for navigation on the high seas and carrying passenger for reward or used for commercial purposes (including the Charter activity), industrial or fishing activities”.

Official proofs and documents needs to be provided to attest that the ship really performed more than 70% of the voyages sailing the “high seas”.

Therefore Italy really seems about to follow in the footsteps of France with its law from 12th May 2015, better known to all as BOFiP (the French regulations governing VAT exemption).

For what is closely related to the Yachting and Charter industry, the hereinbefore mentioned commercial operations can be quickly summarized in the following points:

a. purchase of goods and provisions
b. purchase of fuel and lube oil (bunkering)
c. purchase of spare parts, machineries and equipment in general
d. repair and maintenance works on board

Despite the Italian Tax Authorities have provided clear information they didn’t provide complete ones. In fact there’s still plenty of grey areas and perplexities such as the way to calculate the 70% (time or number of voyages?), which documents and proofs can be considered as “official”, etc.
The most involved Italian fiscal representatives are now working hard to collect all the necessary info which will be shared with you as soon as possible.

For any additional info please call or email us to info@yachtwelfare.it. We remain at your disposal.

 

DOWNLOAD

Resolution-2E (Original)
YW News 2017-01 (pdf)

Reduction of Taxes for Berth in Italy from 22% to 10% only

The Italian government’s Gazzetta Ufficiale, which lists newly enacted laws, published no. 300 ‘legge di Stabilità’ on 30 December 2014. Article 1 clause 237 stated that temporary berthing and mooring in Italian waters would now incur a duty of 10 per cent, as opposed to the 22 per cent rate that had been castigated by the Italian yachting industry for its detrimental effect on business. This however, will not apply to permanent berth purchases. For more info please see also http://www.ucina.net/en/component/k2/item/304-il-senato-ha-convertito-con-la-fiducia-il-decreto-legge-sblocca-italia.

Duty free fuel still available in Italy

The rumors spread in the last days by the operators in the yachting industry about the taxations in Italy on the fuel taken for a charter are just hot air.
We have been officially noticed that the Circular No.10/D Reference Number RU 67167, raised by the Italian Customs Office (Agenzia delle Dogane) on 14 July 2014, goes in direct conflict with the EU laws and rules for what is concerned to the operations of import/export and purchases between EU/EU and EU/non-EU nations.
Many of the local Customs Offices (e.g. Viareggio, Sanremo, etc.) are already not adopting this rule.
In all cases, if for any reason the new rule will find application into the Italian law, the yacht importation (in total exemption of VAT) will be the most valid solution which will put all non-EU ship’s owner companies in the position to get duty free fuel in Italy.
In fact, in accordance to Art. 68 from DPR No. 633/72 and on the base of the Official Questioning 95/E from 14 March 2008, which clearly states that: “Pertanto, l’acquisto o l’importazione di navi da diporto dotate delle caratteristiche di cui sopra può avvenire in regime di non imponibilità, ai sensi del già citato art. 8-bis, a condizione, ovviamente che le medesime siano effettivamente utilizzate dal soggetto acquirente in attività di noleggio come previsto dalla normativa in materia (…) “ it is limpid that the importation practice is not subject to taxation. This means that if any non-EU ship’s owner company needs to import its yacht in Italy no VAT will apply on the yacht’s declared value.

 

For any additional info please call or email us at info@yachtwelfare.it.