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VAT on full and reduced charter fees: how does it work? June 2016
What is the VAT rate on charters?
Can I pay VAT on reduced fees in case of international voyage?
Yes, if a yacht cruises within and outside Italian/EU waters, VAT is only due on the time spent in EU waters. Since it is difficult to determine how much time will be spent within and outside EU waters before the charter, the time spent outside Italian/EU waters can be quantified as a ‘package’. The larger the yacht, the more time it can spend on high seas so the fees subject to VAT are lower.
What is the ‘package’ for yachts over 24m?
22% VAT is due on only 30% of the total charter fees if the yacht is over 24m.
When is 22% VAT due on the full charter fees?
22% VAT is due on static charters (for the Biennale of Venezia for instance) and on charters that start from an Italian port with a cruising itinerary only in Italian/EU waters. EU waters are those within 12 nautical miles from the mainland and any islands.
When is VAT due only on only 30% of the charter fees?
When the charter starts from an Italian port with cruising itinerary within and outside Italian/EU waters as long as the itinerary hasn’t been determined in advance and the yacht is over 24m.
Do I need proof of an international voyage?
Yes, cruising itineraries must be recorded in the logbook as proof of navigation in International waters. ‘Touch and go’ navigation into high seas simply to qualify for the package rate is a “no-no”.
Is VAT due if the charter starts outside Italian waters?
Yes, if a charter starts outside the EU, 22% VAT is due on the portion of the charter which takes place in Italian waters.
If the charter starts in another EU country and cruises in Italy, no VAT is due on the Italian portion of the cruise. VAT will have been paid in the ‘place of supply’, e.g. where the charterer boarded.
Can EU and non-EU yachts charter in Italy?
Yes, but in order to charter a yacht must be in free circulation in the EU. This means that the yacht is either EU registered or that it has been imported into the EU or that VAT on the hull has been paid. For more information about importation see the FCE section at the end.
Are there any compliances?
Nothing other than the above.
How long does it take to be legal to charter?
It takes a couple of days. But you cannot start charter operations before the VAT number has been issued.
Does the fiscal representative need to collect the charterer’s details?
Yes. The Italian Tax Agency requires the details of owning company’s suppliers and clients for the purpose of the monthly and the annual returns. In case of an audit, the Italian Tax Agency can review the previous four years records.