Specific Features Of Yacht Chartering In Italy And Tax Administration Controls

Chartering in the Italian seas always arouses great interest both for the beauty and importance of our coasts and for the highly professionalism of the operators offering these services. It therefore seems right to address once again the issues relating to the taxation of nautical charters, but looking at different profiles from those dealt with in the articles published in previous issues.

In fact, the performance of charter services by operators in the sector also entails having to pay the utmost attention to certain peculiar issues concerning taxation and possible controls by the tax authorities. Controls which, it is obvious to all, are intensified in the summer months, also by the boarding of yachts and access to them by the authorities of the tax administration.

First of all, it should be clarified in this regard that charter activity may be performed through the use of yachts, regardless of their flag, which does not even affect the tax regime of the purchase of the yacht and the related charter activity. The only caveat regarding the foreign flag relates to the obligation of the entity interested in carrying out this activity in Italian waters to submit the relevant application to the competent maritime authority. Once endorsed by the maritime authority, a stamped copy of the application must be kept on board, available for any checks.

If the yacht is non-EU, it is necessary to access the temporary admission regime, with the typical peculiarities of the regime applicable to yachts intended for commercial activities. This is without prejudice, however, to the obligation of definitive importation in the event that the yacht in question is used exclusively for charter activities in Italian waters. Attention to the observance of these rules is of considerable importance given the fact that their violation exposes not only to the risk of payment of taxes and penalties but also to the violation of criminal rules on smuggling.

The subject of control is then the manner in which VAT is applied in Italy and the related obligations. Referring here to the more detailed analyses carried out in previous articles on the subject, it is recalled that in most cases VAT is due in Italy when the charter begins in Italy or when it begins outside the EU but the service is partly carried out in Italian waters. In these cases, the foreign entity is obliged to open an Italian VAT number for the purposes of applying VAT and, if the it is non-EU, is also required to issue a guarantee for the correct payment of VAT. In the event of a control by the tax authorities, it is therefore necessary to be able to prove both the place of departure of the charter (for example, by means of the charter contract and the documentation of the port of departure) and the correct application of Italian VAT, in the terms mentioned above.

A further point to consider with regard to nautical charters relates to the attention that the authorities of the financial administration place on analysing possible distortions connected with the use of the yacht by the natural person who is the de facto owner of the yacht itself (UBO). Indeed, there are several hypotheses in which the fictitious interposition of the charter company can be contested. This entails the disallowance of all the tax advantages connected with the purchase of the yacht by the charter company compared to what would have happened if the yacht had been purchased directly by the UBO (such as, for example, the non-deductibility of the VAT applied to the purchase or maintenance of the yacht). In this regard, both practice and jurisprudence have established principles that are useful in determining whether a hypothesis of interposition can be found, and among these are the following: (i) the charter company must be able to prove that it is actually carrying out an economic activity aimed at the public, and thus, for example, have several clients unrelated to the UBO and in any case have made several quotations to several clients, at least potential ones, and carry out promotion, advertising and marketing activities (ii) any charter services provided to the UBO, in addition to not being exclusive, must not be prevalent with respect to those provided to third parties; and in this regard, it should be noted that prevalence may be measured both in terms of days of use of the yacht and in terms of revenue generated by such charter activity; (iii) the price charged to the UBO must be market price and in any event in line with that charged to other clients.

In relation to the aspects highlighted above and in view of the peculiarities of the taxation regime of the yachting world in general and of the charter activity in particular, it is recommended that operators rely on the specialisation of professionals in the sector and, in any case, take care with the utmost detail of every aspect pertaining to the different taxation regimes involved.