Italian Budget law approved and in force from April 1st, 2020
The Italian Budget Law for 2020 (Law no. 160 of December 27th, 2019) published on the Italian Official Gazette (GAZZETTA UFFICIALE) on December 30th 2019, changes the provision of the application of the Italian VAT due on short term charters with departure from the Italian territory.
Here below the exact text of the above-mentioned new Law:
point 725 of article 1 law no.160/2019): “in order to avoid cases of double taxation, non-taxation or distortion of competition for the purposes of value added tax (VAT) , the place of supply of the services of short term rent or charter of Yachts, referred to in article 7-quater paragraph 1 letter e) of Presidential Decree 633/1972, are considered to be outside the Union if the effective use of the service is outside the European Union demonstrated through adequate proof. With the provision of the Inland Revenue, to be issued within sixty days from the date of entry into force of this law, the methods and means suitable to demonstrate the effective use and effective use of the service outside the European Union are identified”;
point 726 of article 1 law no.160/2019: “Paragraph 725 applies to operations carried out from the 1st April 2020.”
All above said, we further clarify that this new Law:
will be applicable to all Italian charters (starting in Italy and/or those starting outside the EU territory and than entering in Italy) and the “lump sum VAT criteria” (6.6% Vat for charter of yachts over 24 meters) will not be applicable anymore;
The ordinary VAT rate of 22% will be due on all Italian Charters (starting in Italy and/or those starting outside the EU territory and than entering in Italy) from April 1st 2020 and onwards;
within 60 days from the publishing of the Italian Official Gazette (March 1st 2020), the Italian Inland Revenue (Agenzia delle Entrate) will issue a new method for the calculation of the effective use of the yacht outside the Union territory that will allow the Owning Company not to charge Italian Vat on this portion of use (it is still under discussion if the “ effective use “ refers to the time or the miles spent in international waters);
the law will enter into force on April 1st 2020, which means that regardless of the date of signature and payment of the charter contract all Italian charters starting from April 1st and onwards in Italy will be subject to the new law.