What will happen from today and onward in Italy and France?
Italy and France (together with Malta and Cyprus) received in 2018 a letter of infringement by the European Commission on the subject of VAT on yacht rental/chartering based on the crucial point of the effective use of the yacht outside the Union territorial waters for the correct application of VAT. Last January 30th both jurisdictions had adapted their legislations on the subject publishing new regulations (BOFIP of January 29th 2020 in France and Italian Budget Law 2020, law no. 160/2019 article 1 paragraph 725 in Italy) that should have had to be formally applied starting from today (April 1st 2020) cancelling the scheme of flat-rate reductions previously in force in both countries.
Italy also established that the Revenue Agency by 29 February 2020, should have issued a provision where the "adequate means of proof" were established to prove the actual use of the yacht outside the EU territorial waters; but due to the COVID-19 emergency, it never saw the light of day.
In the light of this extraordinary health crisis, as we already confirmed yesterday, France cancelled the changes introduced on January 30th and allows again from now on (April 1st), the flat-rate reduction on charters (50%).
In Italy, UCINA Confindustria Nautica (Italian Marine Industry Association) is in a dialogue with the Italian Authorities to postpone the application of the new law. It is therefore to be hoped that Italy too 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. 6.6% for yachts over 24 meters) in order to guaranteeing "certainty" for operators in the yachting sector, especially when starting their activity again after this extraordinary situation, encouraging yachts to come to the Med for the charter season.
Pending decisions of the Italian Authorities on this topic, it is however to be considered that until the eventual publication of the appropriate provision containing the methods and means suitable to demonstrate the effective use of the service outside the European Union, you can continue to apply the old legislation and therefore the flat-rate reductions also in Italy.(see enclosed the official communication of our Fiscal consultancy company Moores Rowland Partners).
SOS Yachting is always strictly connected with the Authorities and will promptly inform you as soon as we’ll have confirmed news.
DISCLAIMER | The information provided in this text is for general information purposes only and doesn’t replace the advice of a legal advisor or of a tax consultant.
