About yacht charters, the ordinary Italian VAT rate for the rent is 22%, but the effective rate is lower due to the particular calculation of the taxable base. Yacht charter services carried out in the territory of the European Union are totally subject to VAT (at the rate of 22%).
Yacht charter services carried out elsewhere (= out of the territory of the European Union) are exempt. Up to 2019, the permanence of the boat in European territorial waters was subject of presumptions (based on the size of the boat and the type of propulsion). Such presumptions will no longer operate in 2020.
The Law no.160 of 2019 has introduced the obligation to demonstrate the effective use and the actual use of the service outside the European Union in order to achieve the VAT exemption. This new rule applies to operations carried out from April 1, 2020.
The Inland Revenue circulars explaining the new rules have been published only at the end of May. According to the circulars, the use of the boat outside the European Union is evident from the lease, rental, and other similar short term contracts and also on the basis of a “declaration” made by the user of the boat itself under its responsibility.
According to Inland Revenue circular:
The means of proof of sailing time outside the European Union must show that the boat has really sailed outside the European Union. There are two different cases:
- Boats equipped with satellite navigation systems
The proof of the use and use outside the European Union of the pleasure boat, equipped with satellite navigation systems or transponders (for example, AIS system, “Automatic Identification System”), is provided through data and information extracted from the navigation systems in use. The data and information must be able to indicate, with precision and consistency, the sea routes carried out by the pleasure boat. Except for phenomena of fraud or abuse, the provision of the data and information in question is suitable for proving that the pleasure boat has sailed outside the European Union.
- Boats without satellite navigation systems
The proof of the use and use outside the European Union of the boat, not equipped with satellite navigation systems, is provided through the presentation of the lease, rental, and other short term similar contracts TOGETHER WITH two of the following means of proof:
- the paper or digital data of the navigation log or logbook;
- digital photographs of the ship point for each week of navigation identified by any device and detected with a frequency of at least two for each week of navigation;
- the documentary evidence (invoices, contracts, tax receipts and related means of payment) the mooring of the pleasure boat at ports located outside the European Union;
- all documents (invoices, contracts, tax receipts and related means of payment) certifying purchases of goods and / or services, at shops located outside the European Union, relating to the use outside the European Union of the pleasure boat.
Except for phenomena of fraud or abuse, the provision of the data and documents indicated is suitable for proving that the pleasure boat has sailed outside the European Union.
The supplier and user of the pleasure boat are required to keep the documentation proving the effective use and use of the pleasure boat outside the European Union for a period of ten years starting from the year in which the boat has been rented (for a short term).
This documentation must be made available on request by the tax inspectors