Major Refit And Navigation On The High Seas

With the Ruling No. 1 of 2025, the Italian Revenue Agency clarifies the conditions for the application of the VAT non-taxable regime provided for by Article 8-bis of Presidential Decree No. 633/1972 to the purchase of goods and services intended for extraordinary structural transformation works, so-called major refit, through which a vessel initially used for private use is then, by the new shipowner, used for commercial charter purposes.

On this point, it should be preliminarily recalled that under the aforesaid Article 8bis, recognition of the non-taxable regime for VAT purposes is subject to the double condition that it concerns only vessels used for navigation on the high seas and intended for the exercise of commercial activities. In particular, as regards the first condition relating to navigation on the high seas, the shipowner must proceed with the submission of the declaration pursuant to Regulation no. 151377 of 2021 by means of which he certifies the execution of a number of sailings on the high seas exceeding 70% in the calendar year preceding the year of execution of the activities to which the VAT non-taxable regime is applied, or, in the event of first use, the presentation of the ‘provisional’ declaration by means of which he declares his intention to carry out a number of sailings on the high seas exceeding 70% in order to avail himself of the aforementioned option to make purchases or imports without the application of VAT. Therefore, in the hypothesis that a vessel has not made any voyages on the high seas, the VAT non-taxable regime may be applied in advance for the purchase of goods and services subject to the issuance of the declaration in which the shipowner certifies the actual intention to use the vessel for navigation on the high seas, to be verified within the year following the year in which the vessel is put to sea or in any case the year in which it is operated.

In the case under discussion, the intention is to clarify what happens in the hypotheses in which navigation cannot take place in the year following the purchase of the goods and services for which one wishes to benefit from the VAT non-taxable regime referred to above.

In this case, underlines the Revenue Agency - in line with the EU policy - the major refit is assimilated to the hypothesis of a vessel under construction, which has not made any voyage in the previous year. For these vessels, in fact, the condition of actual use on the high seas must be ascertained not at the end of the calendar year of presentation of the ‘provisional’ declaration, but at the end of the year following the launch of the vessel or, in the case of major refit, following the year of first use of the vessel.

Moreover, the Revenue Agency confirms the reference to what happens for vessels under construction, also with regard to the destination of the vessel for commercial purposes: in this case, the commercial destination is assumed only following the registration of the same vessel in the register of commercial vessels. In this regard, the Ruling also refers to the importance of the certifying bodies that ensure that the nature of the major refit work is such as to allow the vessel to be used for commercial chartering purposes, on the basis of the requirements provided for by the reference regulations, which are quite different from those of vessels used for the shipowner's own personal purposes.