Public Consultation for VAT on Charters

Sanremo, today 27th May 2020

Following to our news released on 19th December 2019 (see here for more info: www.yachtwelfare.it/vatreduction) this past 25th May 2020 the Italian Revenue Office (Agenzia Delle Entrate) has finally put under Public Consultation a draft concerning the provisions for the application of the VAT reduction on Italian charters, according to the EU’s articles 56 and 59 of the EU VAT Directive 2006/112/CE.

The most credited method to calculate the actual VAT due would seem to be a pro-rata reduction based on the cruising outside the European territorial waters, according to the real time or to the actual cruising miles spent at “high sea” (international waters), in accordance to the hereinbefore mentioned article 59-a.

Therefore, the main focus is to find and agree the list of papers, equipment and methods to determine the actual use of the yacht outside the EU territorial waters and so the exact VAT due in Italy.

This Public Consultation can be found at this link https://www.agenziaentrate.gov.it/portale/web/guest/consultazione-pubblica-del-25-maggio-2020 and it will be open to the professionals’ review and contributes until 3rd June 2020.

After this date, finally, the new law will come into force only from its official publication.

This also means that any charter signed before the official publication of the new law will be subject to the old legislation (e.g. 6.6% flat-rate reductions on Charter Fee).

Anyway there’s still the chance that the Italian Minister will decide to follow in the footsteps of the French Finance Minister and so to suspend until 2021 the implementation of the new regulation in order to revitalise the yachting industry, especially after the recent situation of COVID-19 pandemic.

We will let you know about the progress of this long-awaited decisions as soon as possible.

Stay tuned with us in the forthcoming weeks to know and assess the developments.

For any additional info or clarifications required please email us to info@yachtwelfare.it.



Italy is sailing again!

Italy is sailing again! With his last DPCM (Decree of the President of the Council of Ministers) released on May 16th 2020 the Italian Prime Minister expressly authorised the possibility to sail in Italy within the region of residence. This rule will last until 2nd June.

As of June 3rd 2020 the regional limit will fall and it will be possible to freely sail around all the Italian coasts.

Also – not less important – from this date June 3rd) the Italian Government will reopen the borders to all EU citizens without the need to spend quarantine periods.

This is the clear sign that the Mediterranean summer 2020 is finally started.

The charter sector has received the go-ahead for the measures to be taken for the resumption of the charter activity.

These measures consist in very simple procedures, most of which are now widely known to everyone.

Firstly it has been confirmed that a COVID-19 test will be required for the charter’s permanent crews, who will need to deal with many different guests, especially on large yachts.

Secondly the Ministry has pointed out that in pleasure yachting the individual responsibility is the essential element in making social distancing measures effective, therefore:

a. interpersonal distance of at least one meter

b. avoiding close contact

c. proper sanitization of spaces

d. nose and mouth protection for passengers

We must make it clear that the rules published by the Ministry regard pleasure yachting, chartering, renting as well as the management of ports and marinas.

Below you will find the key points to respect when sailing in Italian waters.


PRIVATE / PLEASURE YACHTS

The primary measure remains the “social distancing”. As you all know this means that persons need to stay at least one metre from each other, unless they are part of the same family or live together.

Even the relatives, if not living together, must respect the social distance of one person for each linear metre of the boat. The provision of personal protective equipment for passengers and the use of surface sanitizer are also mandatory.


COMMERCIAL / CHARTER YACHTS

The same preventive rules for private vessels apply to yachts engaged in charter activities. Only persons living in the same family are allowed to stay together in the same cabin.

The owner is required to sanitize all the yacht’s areas, including the engine room and services. Owners are also obliged to provide adequate supplies of sanitizing products as well as information signs, written in several languages, to make the charterer and his guests aware of the necessary social and hygienic measures to take.

Certain specific measures must be adopted by the crew; let’s see which ones.

Firstly crews have the obligation to use masks and gloves and any other protective equipment depending on the type of the boat and the particular circumstance, for instance during mooring, unmooring, bunkering and towing operations.

Also crews – being called in some cases to carry out first aid actions (as in the case of the Captain for whom the elementary first aid course and BLS is compulsory) – there should be the obligation to undergo a preventive (before boarding the yacht) and periodical first aid test at COVID-19, the result of which must be duly kept on board.

Further for each member of the crew is mandatory the measurement of the temperature on a daily basis.

The crew must also implement the prevention of unauthorized access to the ship to strangers, while in port or at sea.

Those who generally live in the same house are allowed to share accommodation in the same cabin.

What about guests?

Also for guests the general rules on social distancing and interpersonal prevention measures apply (i.e. one person per meter of the linear length of the boat, including crew members, unless the guests live together).


TOURIST PORTS AND MARINAS

The managers of Italian marinas must provide their ports with special information signs, written both in Italian and English language, on the measures of conduct to respect, the use of personal protective equipment (PPE/DPI), the installation of sanitizing dispensers on the docks, the limitation of movements, bans on gatherings and the respect for social distancing.


NAVIGATION AND SYSTEM RULES

It is mandatory to comply with the regulations for travel within the Region and between Regions and the respect of international anti-contagion laws during navigation outside national territorial waters.

As this is changing for the better day-by-day we strongly recommend all of you to stay tuned to our website www.yachtwelfare.it/news to know the latest updates.


WHAT ABOUT VAT?

For what is concerned to the VAT due on Italian charters, UCINA (Confindustria Nautica, the Italian Marine Industry Association) is still dealing with the Italian Authorities to postpone the application of the new law (see here for more info www.yachtwelfare.it/somegoodnews). Everything leads to the hope that Italy will quickly join the decision taken in France, repealing the provisions contained in the new law and giving continuity to the old flat rate reduction percentages scheme (i.e. taxation at 22% on 30% of the agreed Charter Fee for yachts over 24 metres, equal to the “quick” rate of 6.6%) in order to guaranteeing “certainty” for operators in the yachting sector, especially now that they have just started their activity again after this extraordinary situation and encouraging yachts to come to the Mediterranean for the charter season.

Please know that the old legislation (flat-rate reductions on Charter Fee) will still be effective in Italy until the publication by the Italian Tax Office of appropriate provisions containing the clear list of methods and means suitable to demonstrate the effective use of the service outside the European Union.

For any further info or questions please email us to info@yachtwelfare.it

We remain at your disposal

Staff @YACHT WELFARE



25% YES OR NOT?

Sanremo, 14th April 2019

25% YES OR NOT?

The French Customs Office has released important dispositions and clarifications about yachts engaged in commercial and transport activities (e.g. charter).


25% DUTY TO APPLY TO US BUILT BOATS

The French Customs Office confirms that every US built boat having commercial registration and officially imported in European Community before the 22nd of June 2018 will be exempt from the payment of the 25% customs duty on the boat’s return in Europe if all the standard import formalities will be executed (the same formalities and practices arranged before the 25% rule).

The same principle applies for boats exported from EU before the same date (Export Declaration is required. In absence of this Declaration an alternative proof of exportation has to be provided).

All the boats having completed the import back to the European Community can benefit from FCE/ICE (French Commercial Exemption / Italian Commercial Exemption) advantages according to the +70% rule.

If the boat has been imported under the FCE/ICE regime in 2018, it is still required to provide the proofs attesting its qualifications to take advantage of the same benefits (+70% international voyages).

Therefore, we confirm that any and all US built boats falling within the below listed cases:

1. never imported before the 22nd of June 2018, or

2. imported before the same date but having changed the Owning Company (sold/purchased)

are subject to the application of the 25% customs duty.


CHARTER UNDER TEMPORARY ADMISSION STATUS

Besides, all US built boats never imported before the 22nd of June 2018 will have the possibility to perform commercial activities (Charter) under Temporary Admission status, whether the boat is registered as commercial or private (in the latter case only if the Flag Registry admits this condition).

However, there are specific restrictions to the above frame:

a. the impossibility to have EU resident Charterers

b. at present not all the EU Members States still permit a boat under Temporary Admission to execute commercial activities (Charter).

In regards to non US built boats (EU or non-EU) registered as commercial and to coming to Europe to execute commercial activities (Charter), which are under “Import Status”, the FCE/ICE benefits apply to all those non-EU boats (as well as to some EU boats in specific cases: more info will follow) intending to execute commercial activities (Charter). This is the only case in which the Charterer can be a EU resident.

Concerning the non-EU boats which will not be imported (both Commercial and Private registered), they will only have the possibility to execute Charters under the regime of Temporary Admission and will not be entitled to charter to EU resident subjects.

As far as is concerned to side boats (chase-boats/tenders) having own registration and which are employed to attend the mother ship (main vessel), we are still waiting for the necessary clarifications by the Customs about the possibility to charter said chase boats to EU residents.


All the hereby listed rules and information provided might be subject to variations by the Customs Office.

Therefore please always contact us to know if something has been changed, integrated or just updated.

For any additional info or clarifications required please email us to info@yachtwelfare.it


You can download the complete version of this news below:


“E-INVOICE” NOT REQUIRED

Owning Companies identified for VAT in Italy by a Fiscal Representative are not required to be accredited to the SDI – Interchange System (SDI – Sistema di Interscambio ) for the e-invoicing procedure introduced by the Italian Tax Authority (Agenzia delle Entrate) starting from January 2019.

Law Decree N. 119/2018 (art. 15) amends the Italian regulation that introduced the mandatory electronic invoicing starting from 1st January 2019 (art. 1, para. 6 of Law Decree no. 127/2015) according to Implementing Decision (EU) 2018/593 from 16 April 2018 – which authorized Italy to the widespread use of electronic invoices – specifying that the obligation applies only to subjects established within the State (Italy) and not to foreign subjects identified for Italian VAT purposes, but not residing therein. This amendment implements what had been anticipated by the tax Agency in its Circular Letter no. 13/2018.

Therefore Owning Companies do not have the obligation to issue electronic invoices (e-Invoice).

This means that the actual procedure does not change and each invoice relevant to VAT due on Charters – having fiscal applicability in Italy – will still need to be issued in hard copy (paper format).

Please note that all the paper invoices issued by suppliers will need to contain the following wording: “copia cartacea della fattura” (translated: hard copy of the invoice). This will allow the Owning Company to still be able to deduct the VAT debited by the supplier. A “courtesy-copy” of the same invoice can be sent by the supplier to the client in digital format (e.g. pdf file sent by email).

A full explanation of the e-Invoicing in Italy can be consulted on the EU official website or visiting the following link: https://ec.europa.eu/cefdigital/wiki/display/CEFDIGITAL/eInvoicing+in+Italy.

For any questions or additional info please email us to info@yachtwelfare.it

Italy VAT Guide 2018

The new Italian VAT Guide for 2018 is now online.
Please feel free to download it here or below.
Stay tuned and make sure to comply with the rules.
We remain always at your disposal for any sort of clarifications.
Any need please email us to info@yachtwelfare.it.


YW VAT Guide Italy 2018

VAT on Spanish Charters

Please find below some important info to know about chartering in Spain:
As is well known, chartering in countries like France, Italy or Malta can benefit from really reduced VAT rates on charter fees. This is not the case in Spain. What is the reason why? Let’s find out what are the legal grounds on which this VAT reduction is based and what other implications this legal provision has.

Article 58 of EU Council Directive 2006/112/EC, VAT Directive, entitled “criterion of effective use and enjoyment”, provides that:

In order to avoid double taxation, non-taxation or distortion of competition, Member States may, with regard to the supply of the services referred to in Article 56(1) and with regard to the hiring out of means of transport:

(a) consider the place of supply of any or all of those services, if situated within their territory, as being situated outside the Community, if the effective use and enjoyment of the services takes place outside the Community;

(b) consider the place of supply of any or all of those services, if situated outside the Community, as being situated within their territory, if the effective use and enjoyment of the services takes place within their territory.

How does this affect chartering in the EU and more specifically chartering in Spain?

As the article lays down in its first paragraph, Member States may, which means this is an optional criterion which might be applied by each Member State or not. Having said this, we must distinguish what is stipulated in paragraphs (a) and (b).

Paragraph (a) – as it is clearly defined, the provision seeks to minimize VAT taxation applicable to certain services, among them the hiring out of means of transport (for instance charter), when part of the enjoyment takes place outside the Community. This provision or approach is in place in France or Italy which allows chartering in these countries to benefit from reduced VAT rates. However, this is not the case of Spain, which making use of its optional right, did not implement this provision in the internal Spanish VAT law. Therefore, chartering in Spain is subject to a flat VAT rate which does not benefit from any reduction even sailing beyond 12 nautical miles.

Paragraph (b) – the second part of the article seeks to subject to VAT certain services, which, although according to the rules on the place of supply can be understood to be provided outside the Community, their effective enjoyment takes place in the Community. This might be the case of a charter starting in Montenegro or Gibraltar, territories outside the Community, and visiting a Member State. There are certain countries which apply this approach, such as Italy. This is the case of Spain too. Spain implemented this provision in article 70.Two of the Spanish VAT law. Therefore, although not very well known, this rule is in force in Spain.

In practical terms, this would involve for instance that a charter starting in Gibraltar and visiting Spanish territory would oblige the yacht owning company to register for VAT in Spain and to pay to the Spanish tax authorities VAT on the length of the charter taking place in Spain.
Therefore, it cannot be said that the use and enjoyment provision is not in practice in Spain. It is, but unfortunately only the more burdensome part of the EU provision is applicable.

For further information, please email our Spanish referent Mr. Alex Chumillas to alex@taxmarine.com or send your inquiry to info@yachtwelfare.it. We are always pleased to assist you and remain at your disposal.
Thank you to our Spanish partner Mr. Alex Chumillas:

How to Invoice APA Subject to VAT

Sanremo, 1st July 2016

Given the new ruling by MYBA in regards to the APA (for more info see also here www.yachtwelfare.it/clarifications-on-apa-june-2016) the VAT collected on the expenses to meet navigation requirements, such as fuel and oil for the engines and on-board systems, needs to be remitted to the Italian Revenue Office along with the VAT collected on the Charter Fee.
To that end the amount of VAT raised by such expenses is to be immediately wired to Yacht Welfare at the end of the charter.

Yacht Welfare, on behalf of the yacht’s owner, will issue a separate invoice for APA which is required to regulate the hereinbefore mentioned operations.
For this reason there is undoubtedly a need to receive the APA report, duly fulfilled by the yacht’s Captain and countersigned by the Charterer, within the shortest time right after the disembarkation of the charter.

For the sake of clarity Yacht Welfare hereby informs all its Clients that penalties and delay fees will always apply for any late remittance of VAT raised by the expenses paid with APA.

For any additional info please email us to info@yachtwelfare.it

Download the full notice here YW_News_03_2016