Crazitaly! New VAT Rules Instantly Postponed!

Sanremo, July 21st 2020

It has all the makings of being an endless story.

Yes, Italy has changed his mind again!

Contrarily to what we have informed you about this past 16th June 2020 (see here for more info www.yachtwelfare.it/new-rules-in-italy) the new VAT rules (VAT at 22% due on actual time spent into EU waters) have unexpectedly been postponed to 1st November 2020.

The Italian Minister has now decided – with a huge delay – to follow in the footsteps of the French Finance Minister and so to suspend until 31st of October the application of the new VAT rules in order to revitalise the yachting industry, especially after the recent situation of COVID-19 pandemic.

So let’s keep the old rule (e.g. 6.6% flat-rate reductions on Charter Fee) with the purpose of implementing the Charter activity for the current summer season encouraging (is anybody feeling encouraged now?) tourists to come to Italy.

The above is part of the last “Simplification Decree” N. 76/2020 published on the Official Gazette (Gazzetta Ufficiale, Serie Generale N. 178 del 16/07/2020, Suppl. Ordinario N. 24), entered into force on July 17th 2020 (in which the word “April” – contained in subparagraph 726 of Law 27/12/2019 N. 160 – has been replaced by the word “November”).

Please inquire us to info@yachtwelfare.it for any questions and additional info.

We remain at your disposal.

Staff Yacht Welfare



New Rules in Italy

Sanremo, today 16th June 2020

As you all know, this past 25th May 2020 the Italian Revenue Office (Agenzia Delle Entrate) has put under Public Consultation (for more info see our news on 27th May 2020 here) 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 new regulations have been finally issued with Provision N. 234483/2020 by the Italian Revenue Office.

Therefore, as of yesterday, June 15th 2020, the VAT due on Italian charters must to be calculated on the basis of the actual time spent by the charter into the EU territorial waters.

As a logical consequence of this, the taxable amount will be subject to a pro-rata reduction based on the cruising outside the European territorial waters (international waters), according to the real time miles spent at “high sea” (international waters), in accordance to the hereinbefore mentioned article 59.

The new rule does not apply to any Italian charters signed before 15th June 2020 (date of release of the official Provision by the Agenzia Delle Entrate).


What do we need to do now on?

To put it quite simply:

Firstly Captains/Officers on board need to split the Charter time into two parts:

a. total hours spent into EU Waters (Italy, France, Spain, etc.).

b. total hours spent at the High Sea (International Waters).

Secondly, and particularly important, the following evidences/proofs must be collected, kept on file and submitted in case of inspections by the Authorities:

1. trip route cartography.

2. data/info extracted from satellite and/or navigation systems.

3. data/info extracted from transponder systems (e.g. AIS system).

4. logbook (ship’s log) and/or navigation log.

5. papers attesting any berth stay in non-EU ports (e.g. berth invoices, berth contracts agreements, arrival/departure formalities, etc.).

6. papers attesting any purchase of goods and/or services in non-EU shops/businesses.

7. the short-term Charter Agreement and/or analogue Contracts regarding the hire of the yacht.


The evidences collected must prove the maritime routes sailed by the yacht with extreme accuracy and coherence.

All the evidences/proofs collected must be kept on file for a period of time according to Art. 57, paragraphs 1 and 2, of the Presidential Decree N. 633/1972 (therefore, until 31st Dec. of the fifth year subsequent to the year in which the Declaration has been filed or – in the event that the Declaration hasn’t been filed – until the 31st Dec. of the seventh year subsequent to the year in which the Declaration should have been filed).

To simplify the procedures and reduce the burden we – at Yacht Welfare – have set up a special form for all our Clients to summarize all the necessary data and info. This form is called PPNRF (Passage Plan & Navigation Report Form) and it is made in editable pdf file.

The PPNRF needs to be fulfilled in all its parts and sent back to us along with the necessary pictures, mini videoclips, logs, etc. annexed.

Yacht Welfare will keep assisting you by double checking the info provided.

Please feel free to inquire the PPNRF form emailing us to info@yachtwelfare.it



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

Cayman Islands (YET) in Italy

According to Shipping Notice 03/2017 released on 19st December 2017 by the Maritime Authority of the Cayman Islands, pleasure yachts registered in the Cayman Islands are now finally allowed to obtain Yacht Engaged in Trade Certification (YET). This certification includes a Yacht Engaged in Trade Certificate of Compliance (YET COC) and temporary Certificate(s) of British Registry for a Yacht Engaged in Trade (temp COBR YET) enabling the yacht to charter up to 84 days per calendar year in European (EU) waters. Please find hereby a quick summary of what the YET programme is:

A YET can be defined as a yacht of 24 metres or more in load line length, holding a valid Certificate of Class, which is voluntary compliant with all applicable commercial standards and regulations; which has obtained and maintains a Yacht Engaged in Trade Certificate of Compliance, allowing the yacht to obtain temporary Certificate(s) for a Yacht Engaged in Trade, and therefore to engaging in up to 84 days of charter per calendar year with no more than 12 passengers.

The main benefit of the program is flexibility; owners do not have to choose anymore between purely private or commercial registration. Owners can now use their yacht privately whilst being able to offset some of the running costs by offering their yacht for charter. Unlike commercially registered vessels, owners need not sign a charter agreement nor pay VAT on their own use. Unlike yachts operating under the switching regime, there is no need as well for switching between pleasure and commercial registration every time yachts change their mode of operation and use, nor to proceed with export/import formalities, leave the EU and visit a third country port each time yachts switch between pleasure and commercial use.

To be eligible to register as YETs, a yacht must either be in possession of a Value Added Tax [VAT] paid certificate or other document proving that the yacht has a VAT paid status; or operate in EU waters under the Temporary Admission [TA] regime in accordance with EU regulations meaning the yacht can enter and stay in EU waters for a period of up to 18 months without being liable to pay VAT on the hull. This second option is only available for yachts ultimately owned by non-EU residents and owned by non-EU Companies.

Pleasure yachts in possession of a valid Yacht Engaged in Trade Certificate of Compliance (YET COC) should expect to be inspected and audited as commercial yachts. Furthermore, private yachts operating under temporary Certificate(s) for a Yacht Engaged in Trade (and not only under private certificate of registration) shall be subject to inspection and control measures under the Paris Memorandum of Understanding.
For the time being pleasure yachts which are operating under a temporary YET certificate can only start their charters in Monaco, France and in Italy under certain conditions.


Please find below a quick summary of the most important points about YET:


PURPOSE

The purpose of this Shipping Notice is to define the procedure to be followed for a Pleasure yacht registered in the Cayman Islands to obtain Yacht Engaged in Trade certification.


APPLICABILITY

This Shipping Notice is applicable to all Cayman Islands registered pleasure yachts that seek to charter in EU waters, which have a VAT paid status or operate under Temporary Admission regime in EU waters.

This Shipping Notice also sets out the technical requirements necessary to qualify as a Yacht Engage in Trade.


CAYMAN ISLANDS – MEANS OF REGISTRATION

At the present, the Cayman Island Shipping Registry offer yachts two means of registration:

  1. full registration ‘pleasure’ and
  2. full registration ‘commercial’

The Yacht Engaged in Trade (YET) program has been developed as a new dual use operation program to offer a third means of registration for commercially compliant yachts. This is to allow owners the flexibility they require to operate their yacht privately with the option to charter their yacht for up to 84 days per year while taking into account EU VAT and Port State Control requirements.

Yachts meeting the requirements of this Shipping Notice will be issued with:

  • a Cayman Islands Yacht Engaged in Trade Certificate of Compliance (YET COC) and
  • temporary Certificate(s) of British Registry for a Yacht Engaged in Trade (temp COBR YET) covering the charter periods or periods of commercial promotion. These certificates authorize yachts to charter for up to 84 days per calendar year in European (EU) waters.

Yachts wishing to engage in trade activities are required to be in compliance with:

  1. the Merchant Shipping (Vessels in Commercial Use for Sport & Pleasure) Regulations, 2002;
  2. the applicable sections of the Large Yacht Code;
  3. this Shipping Notice; and
  4. all other applicable and international requirements.


ADVANTAGES APPLICABLE TO YACHTS ENGAGED IN TRADE (YET)

  1. Ultimate Beneficial Owners can privately use their yacht without losing the option to charter the yacht on an occasional basis to offset the annual running costs
  2. Eliminates the need for switching between pleasure and commercial registration every time the yacht is to change its mode of operation and use
  3. Eliminates the need to proceed to export/import formalities and the need to leave the EU and visit a third country post each time the yacht is to switch between pleasure and commercial use
  4. Ultimate Beneficial Owners do not need to sign a charter agreement when using their own yacht on a private basis
  5. Ultimate Beneficial Owners do not need to pay VAT on their own use
  6. No risk of substantial penalties for extensive pleasure use
  7. VAT Exemption is available on works for non-VAT paid yachts (inward processing relief regime)
  8. The 18-month Temporary Admission allowance period is paused each time the yacht is used as a Yacht Engaged in Trade (YET) and placed under Temporary Admission for Commercial Activity (TACA YET)


ELIGIBILITY FOR A YACHT ENGAGED IN TRADE (YET)

  1. The yacht must be 24 metres or more in length
  2. The yacht must be in possession of a Cayman Islands Pleasure Certificate of British Registry (Pleasure COBR)
  3. The yacht must successfully undergo an initial Compliance Verification survey in accordance with section 6 of this Shipping Notice
  4. The yacht must comply fully with the requirements of the relevant chapters of the Large Yacht Code
  5. The yacht must be classed by a Classification Society recognised by the Administration
  6. The yacht must operate in full commercial compliance at all times, whether engaged in trade or not; including full commercial compliance with all applicable national requirements and international Conventions’
  7. Yachts with a gross tonnage of less than 500, shall implement a Safety Management System as per the requirements of the Large Yacht Code. There is no requirement for a yacht under 500 gross tonnage to engage the services of a shore based company or Designated Person Ashore.
  8. The yacht must have a documented planned maintenance system for all identified critical equipment
  9. The yacht must hold a valid International Load Line Certificate issued in accordance with the Large Yacht Code for at least a short-range yacht
  10. The yacht must be issued with a Cayman Islands Yacht Engaged in Trade Certificate of Compliance (YET COC) and temporary Certificate(s) of British Registry for a Yacht Engaged in Trade (temp COBR YET) covering the charter periods or periods of commercial promotion


LIMITATIONS APPLICABLE TO YACHTS ENGANGED IN TRADE (YET)

  1. Whilst engaged in trade and operating under a temporary Certificate of British Registry as a Yacht Engaged in Trade (temp COBR YET), yachts are subject to any operational limitation included in the Yacht Engaged in Trade Certificate of Compliance (YET COC)
  2. Commercial operations / charters are limited to a maximum of 84 days per calendar year
  3. A maximum of 12 passengers may be carried
  4. Charters are currently limited to Monaco and French waters
  5. Owner’s pleasure use is not allowed during the period of validity of the temporary Certificate(s) of British Registry for a Yacht Engaged in Trade (temp COBR YET)
  6. A signed Master’s Limited Trade Declaration for a Yacht Engaged in Trade (YET) shall be made and retained for inspection on board
  7. Yachts certified as Yachts Engaged in Trade are not entitled to apply for any VAT exemptions on fuel or supplies


APPLICATION PROCEDURE FOR YACHT ENGAGED IN TRADE (YET) CERTIFICATION

  1. The registered owner of the yacht must submit registration application form and complete the applicable ‘Yacht Engaged in Trade’ (YET) declaration in section 5 of the registered form
  2. The yacht owner, manager or representative shall submit all applicable documentation to the Administration for Pre-Registration Vetting
  3. If not already in possession of a Large Yacht Code Compliance Certificate, the yacht must successfully undergo an initial Compliance Verification survey in accordance with section 7 of this Shipping Notice upon which a Yacht Engaged in Trade Certificate of Compliance (YET COC) shall be issued
  4. The yacht owner shall arrange for EU customs formalities to be addressed by the Customs Broker in the name of the Importer/Exporter
  5. The yacht must either:
  • Be in possession of a Value Added Tax (VAT) paid certificate or other document proving that the yacht has a VAT paid status; or
  • Operate in EU waters under the Temporary Admission (TA) regime in accordance with EU regulations which allows the yacht to enter and stay in EU waters for a period of up to 18 months without being liable to pay VAT on the full. This option is only available to yachts ultimately owned by non-EU residents and owned by non-EU Companies.

Note: a Customs Broker is only required to carry out customs formalities on behalf of the Importer/Exporter for yachts operating under Temporary Admission (TA).

The procedure includes:

  • The yacht being placed under Temporary Admission (TA) followed by Temporary Admission for Commercial Activity for a Yacht Engaged in Trade (TACA YET);
  • Issuance of the relevant oral declaration for the placement of the yacht under Temporary Admission (TA);
  • Issuance of the relevant import/export forms to provide clearance in and out for the yacht from the Temporary Admission for Commercial Activity for a Yacht Engaged in Trade (TACA YET) regime, during the period trade activities are undertaken.
  1. At the end of the charter or period of commercial promotion, the Importer/Exporter shall remove the yacht from the Temporary Admission for Commercial Activity for a Yacht Engaged in Trade (TACA YET) regime.

Part of the hereby provided info has been provided by other site. More info will follow soon. Please stay tuned and always email to info@yachtwelfare.it to know more about new laws and rules applying in the Med.


Download CISR Shipping Notice 03/2017

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.