Italy: From April 1st, 2020 it shall be mandatory to prove the use of the vessels outside EU for Vat purposes on charter Fees.

The “D.D.L di Bilancio 2020“ (the Italian Finance Act 2020)  approved by the “Senato“ and transmitted to the “Camera“ provides a new rule related to the place of taxation for VAT purposes of short-term charter of pleasure boats.

The new provision refers to the VAT territoriality contained in article 7 quarter paragraph e) of the Vat Code DPR 633/72, for short-time charter of means of transport (within 90 days).

It is now provided that the above mentioned operations are to be considered as carried out outside EU “when, by proper evidences, it is demonstrated the actual use and enjoyment of the service outside EU”.

The new rule will enter in force from April 1st, 2020, and therefore it is to be applied to Charter Contracts carried out from such date.

Within 60 days from the entering into force of the Italian Finance Act 2020, the Agenzia delle Entrate will identify means and modalities evidencing the actual use of the vessels outside EU, replacing the current law based on the well-known “lump sum criteria” contained in Circular 49/E of June 7, 2002. At today there are no clarifications from Tax Authorities about the new modalities by which the calculation of the cruising in international waters should be done, i.e. if it has to be considered the miles cruised or the time spent outside EU or in international waters.

SOS Yachting will keep you updated in case of any further news on this issue.