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Italy: VAT rules and use of pleasure boats outside EU

Italy: VAT rules and use of pleasure boats outside EU

A decree, issued 15 June 2020, implements the rules concerning the value added tax (VAT) treatment of business-to-consumer (B2C) short-term hires and leases of pleasure boats and yachts.

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The Budget Law for 2020 provided that, effective 1 April 2020, the place of supply for B2C short-term hiring or leasing of pleasure boats and yachts is deemed to be outside the EU (and thus outside the scope of Italian VAT) if there is adequate proof of the use outside the EU. The measure was introduced to address an infringement procedure initiated in 2019 by the European Commission, in relation to the flat-rate method used by Italy to determine the percentage of use outside the EU.


Craft’s use outside EU

The implementing decree (15 June 2020) provides guidance on what constitutes appropriate proof of use of pleasure boats and yachts outside the EU.

  • For boats equipped with a satellite or transponder navigation system, the data and information extracted from this system will provide adequate proof that the vessel is used outside the territorial waters of the EU. The data must document clearly and precisely the routes taken by the vessel and may be verified by the tax authorities.
  • For vessels without such navigation systems, proof that the vessel is used and enjoyed outside the EU can be provided by the lease contract, together with at least two of the following: (1) the ship’s log and the navigation logbook; (2) digital photographs of the ship’s position, taken at least twice a week during navigation; (3) documentary evidence (contracts, invoices, proof of payment, etc.) of the mooring of the vessel at ports outside the EU; and (4) documentary evidence (commercial contracts, invoices, proof of payment, etc.) of goods and services used in connection with the vessel and purchased from suppliers located outside the EU.

The new rules apply to all B2C short-term lease contracts entered into from 15 June 2020.

Read a June 2020 report [PDF 145 KB] prepared by the KPMG member firm in Italy

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