New rules for applying VAT to yacht trade-ins

The 2026 Budget Law amended the VAT regime applicable to trade-ins of goods and services. In particular, in order to overcome a finding of incompatibility between national legislation and Article 80 of the VAT Directive, it was necessary to amend the provision of Article 13 of the VAT Code under Presidential Decree No. 633/1972 which, for the purposes of invoicing a good or service given in exchange, took as the taxable base to which the VAT was to be applied the normal value of the goods or services in exchange. In fact, the aforementioned Article 80 does not include trade-ins among the exhaustively listed cases in which VAT is applied to a taxable amount represented by the normal value.

For this reason, the 2026 Budget Law amended letter d) of paragraph 2 of Article 13 of the VAT Code, which in its new version provides that in cases of trade-in, the taxable base is represented by the value of the goods and services that are the subject of each trade-in, “determined by the total amount of all costs relating to such supplies or services”.

On this point, it should also be briefly noted that, on the basis of Article 11 of the aforementioned VAT Code, trade-ins are understood to be the supply of goods and services in exchange for other supplies of goods or services and that they are subject to VAT separately from those in exchange for which they are made.

The legislative amendment is clearly also of great importance in the sale and purchase of yachts, where it is well known that the purchase of a new boat often involves the trade-in of another, usually of lesser value.

As is well known, in trade-in transactions between two VAT-registered parties in so-called B2B transactions, each party is required to issue an invoice for the sale it has made, and the party selling its boat in exchange for full or partial coverage of the price to be paid used to issue an invoice with a taxable amount equal to the normal value of its boat. As the relevant legislation has changed, the same party must determine the taxable amount to be indicated on the invoice on the basis of the total amount of the costs incurred by them for that boat, meaning not only the amount paid for the original purchase of the boat but also the costs relating to the purchase of other related goods and services, such as maintenance or other work on the boat. Moreover, with reference to EU principles on the application of VAT (case C-207/23), this taxable amount should also include the amount of cost components that are not relevant for VAT purposes, such as financial charges incurred for any loan taken out for the purchase of the boat.

As a result of this new regulation, every VAT-registered entity that trades in a boat is required to recalculate its total cost, including all related expenses. This requirement will probably mean that the parties involved will have to adopt a specific accounting system that keeps track of all costs relating to the boat and not just, as is usually the case, the directly attributable ancillary costs, which are added to the book value of the asset.

The new legislation obviously also applies to trade-ins between a VAT-registered entity and a private individual, in so-called B2C transactions. In this case, obviously, only the sale made by the VAT-registered entity will be subject to VAT, with the effects mentioned above, and not the sale made by the private individual.