Sanremo, 19th December 2019
The new Italian Budgetary Bill contains anti-avoidance provisions which specifically regard the VAT on the short hire of a boat. These provisions, which will enter into force on 1st April 2020, will involve any charter having fiscal relevance in Italy, commencing from that date onwards.
The VAT reduction on charters as practiced in Italy, France, Croatia, Malta, Greece and Cyprus would no longer be applicable as done up to now (i.e. cruising into international waters to obtain the application of VAT on just a portion of the Charter Fee).
The above as a consequence of the infringements proceedings started on 8th November 2018 and continued on 25th July 2019 (with the “July Infringement Package”) by the European Commission (more info at this link: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_4265).
The EU Commission’s purpose is to harmonize the rules between all the EU Member States applying the general criteria contained in articles 56 and 59-a of the EU VAT Directive 2006/112/CE and so the reduction of VAT on charters will need to be calculated according to a new method.
Which one? What is the method?
The most credited one 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.
The Italian and French Authorities are actually cooperating with the EU Commission in order to outline the new guidelines to be provided before the date of 1st April 2020.
Yacht Welfare has brought to the Authorities’ attention that the new rules to apply should be known as soon as possible as the charter market needs to receive responses and guidance in the shortest time in order to plan the upcoming Med charter season.
If meantime no clear guidelines will be provided within the deadline, we strongly recommend the Charter Industry to set up a safeguard procedure (so that all parties involved into a Charter Agreement can be safe and sound) which might consist in paying a security deposit for every possible balance of VAT due.
Stay tuned with us in the forthcoming weeks to know and assess the developments of this matter.
For any additional info or clarifications required please email us to firstname.lastname@example.org.