Italy delays application of new VAT system

Following our recent article which confirmed the VAT proof required by Italian Authorities when sailing outside of the EU, Italian Authorities have now confirmed that this new system will not be implemented until November 2020.

According to a report published by Superyacht news, 'it had been argued that the Italian authorities’ seeming eagerness to apply the new system in time for the 2020 Mediterranean charter season was short-sighted in light of the damage already done to the tourism industry by the COVID-19 pandemic.'

Therefore, it comes with some relief to the local yachting industry that the application of this new VAT system will be delayed and it is hoped that this will boost yacht charters in Italy this summer and help the tourism industry recover from the Coronavirus pandemic.

Why is Italy implementing a new charter VAT system?

In 2019, in an effort to harmonize tax laws across Europe, the European Commission terminated the VAT laws implemented in Italy, France, Malta and Cyprus, and instead applied a general criteria contained in articles 56 and 59a of the EU VAT Directive 2006/112/CE. These new criteria stipulated that VAT reductions on charters in the EU would be strictly calculated on a pro-rata basis and prohibits vessels from simply cruising into international waters to benefit from a lump-sum reduction in VAT. 

Since the European Commission’s announcement, Italian authorities announced they would be charging a VAT rate of 22%, unless it is proven that the superyacht sailed outside of EU waters. On 15 June 2020, the Italian Tax Authority issued Provision n.234483 which clarifies how vessels can prove sailing outside of EU waters. 

To get the full details on the VAT proof required under this new system, read our recent article.

Disclaimer: The advice provided above should be confirmed with a local Italian yacht agent before making any travel plans or charter bookings. The PYA does not take any responsibility for any losses associated.