Italy will be following the EU directive and charging VAT on chartering in her waters this summer. But it is not simply a matter of any yacht in Italian waters must pay VAT.
Fiona Maureso, Head of YPI Charter has worked hard on drawing up some simple rules for yachts on charter for less than 30 days. These guidelines apply regardless of the flag and the residence of the owner or charter.
- If a charter starts and finishes in Italy and remains within 12 miles of the Italian coast, VAT at the full rate of 21% will apply.
- If a charter starts and finishes in Italy but, at some point, cruises 12 miles offshore into non-Italian territorial waters, VAT at a reduced rate of 6.3% will apply.
- If a charter starts in another EU state before entering Italian waters, it is the VAT applicable in that state that will apply. In the case of France, where the French Commercial Exemption is still applied, the charter is exempt from VAT.
- If the charter starts outside the EU (e.g. Croatia, Montenegro, Turkey) and then enters Italian waters, then VAT at the reduced rate of 6.3% will apply only to the portion of the charter taking place in Italy, providing it is demonstrable.
- If the charter starts in an Italian port but then cruises to a non-EU state, VAT at the reduced rate of 6.3% will only apply to the portion of the charter taking place in Italian waters.
- If the charter starts in Italy but leaves Italian waters within 6 hours, no VAT is due.
This information is based on YPI’s understanding of the situation at the time of writing. It should not, however, be considered as legal advice. For appropriate information on individual circumstances, YPI strongly advises yacht owners to contact their own legal counsel or fiscal advisors.