Italian VAT on charter superyachts - who pays what

If, like me, you find yourself increasingly confused by the welter of new Italian regulations covering VAT on superyacht charter, you might find the following information, researched by Fiona Maureso, Head of Charter at Yachting Partners International, useful:

The situation is complex and the practicalities seem to be open to interpretation. However, it is our understanding that the following general principles will be applied to yachts over 24 metres chartering in Italy from now on:

1. If a charter starts and finishes in Italy and remains within 12 miles of the Italian coast, VAT at the full rate of 21% will apply.
2. If a charter starts and finishes in Italy but, at some point, cruises 12 miles offshore into non-Italian territorial waters, VAT at a reduced rate of 6.3% will apply.
3. If a charter starts in another EU state before entering Italian waters, it is the VAT applicable in that state that will apply. In the case of France, where the French Commercial Exemption is still applied, the charter is exempt from VAT.
4. If the charter starts outside the EU (e.g. Croatia, Montenegro, Turkey) and then enters Italian waters, then VAT at the reduced rate of 6.3% will apply only to the portion of the charter taking place in Italy, providing it is demonstrable.
5. Similarly, if the charter starts in an Italian port but then cruises to a non-EU state, VAT at the reduced rate of 6.3% will only apply to the portion of the charter taking place in Italian waters.
6. Finally, if the charter starts in Italy but leaves Italian waters within 6 hours, no VAT is due.

These principles are applicable irrespective of the yacht’s flag or the residency of the Owner or Charterer, as long as the yacht is under charter and the charter period is less than 30 days.

In order to comply with the legislation, owning companies must be registered for VAT in Italy or appoint a fiscal representative in Italy to administer the tax on its behalf. We are now waiting for clarification on the mechanisms that are being put in place to collect the tax.

This information is based on YPI’s understanding of the situation at the time of writing. It should not, however, be considered as legal advice. For appropriate information on individual circumstances, YPI strongly advises yacht owners to contact their own legal counsel or fiscal advisors.