Prepared by Francesco Pizzo, Lorenzo Ontano, Marta Marrapodi and Noemi Tozza
In the following we outline the evolution of the domestic legislation and practice with regard to the VAT provisions set out for the nautical sector by the Budget Law 2021 (i.e. Law no. 178/2020) which provided for some new provisions on the following matters:
- transactions treated as exports consisting in the supply of vessels used for navigation on the high sea and the related provision of goods and services pursuant to art. 8-bis, letters a), d), e) and e-bis), of the Presidential Decree no. 633/1972;
- leasing services, including financial leasing, chartering and similar services, not of short-term, of pleasure vessels, whose territoriality is linked to the place of use of the boats according to art. 7-sexies of the Presidential Decree no. 633/1972.
1. VAT treatment for vessels used for navigation on the high sea and penalty system
Art. 1, paragraph 708 of the Budget Law 2021 integrated art. 8-bis of Presidential Decree no. 633/1972 with the new paragraph 3 which, for the first time, provides a definition of “vessel used for navigation on the high sea” and of “voyage on the high seas“.
The above-mentioned legislation has also introduced the need to draw up a “special declaration”, based on the model approved by the Italian Tax Authority with provision no. 151377 dated June 15, 2021, to prove the use on the “high sea” (box A) or to certify the percentage of use in the EU territory for rental, leasing, chartering and similar services, not on a short-term basis, relating to pleasure vessels (box B).
The instructions for filling in the declaration form have been updated to incorporate the clarifications given by the Italian Tax Authority with Resolution no. 54 dated August 6, 2021.
The declaration must be submitted electronically to the Italian Tax Authority, which then issues an electronical receipt indicating the protocol number that must be indicated by the supplier on the invoice or by the importer in the customs bill to prove the non-taxable status of the purchases/imports carried out.
This provision also applies to non-residents without a fiscal representative or a direct identification.
Moreover, the rule provides for the possibility to make the declaration with reference to the intended use of the vessel, to be verified at the end of the calendar year. Taking into account the inconveniences that the more stringent deadline provided for the verification could have entailed, especially for the shipyard sector of ships under construction, the Italian Tax Authority, in line with the previous practice documents (Resolution No. 2 year 2017), clarified that for ships under construction the condition of the effective use of the ship must be verified at the end of the calendar year of the first use (launch or commissioning) of the same.
With reference to the penalty system, paragraph 709 of the Budget Law 2021 introduced, as part of art. 7 of Legislative Decree no. 471/1997, paragraphs 3-bis, 3-ter and 4-ter indicating the cases to which the penalty, from 100 to 200% of the tax, already provided for in paragraph 3 of the same article, applies.
In particular, the penalty applies:
- to those who carry out transactions without charging tax in the absence of the declaration of navigation on the high sea, as well as to the buyer or importer who issues the declaration in the absence of the conditions required by the law (paragraph 3-bis);
- to those who, in the absence of the conditions required by the law, declare to the other contracting party or to customs the existence of the condition of navigation on the high sea (paragraph 3-ter);
- to the seller who carries out provision of goods or services without having first checked electronically that the declaration for navigation on the high sea has been submitted to the Italian Tax Authority (paragraph 4-ter).
2. Declaration of use, by non-taxable customers, of leasing, chartering and similar services, not of short-term, of pleasure vessels within the EU and penalty system
Paragraph 710 of art. 1 of the Budget Law 2021 introduces a new measure within the pleasure vessels tax rules. In particular, non-taxable users of pleasure vessels must certify the percentage of use, within the EU territory, of the services, not of short-term, of leasing, chartering and similar services of the vessel by filling in box B of the declaration.
On the basis of this certification, the provider of services will apply VAT only on the part of the consideration corresponding to the percentage of use within the EU territory; this is in compliance with art. 7-sexies, letter e-bis), of the Presidential Decree no. 633/1972.
For the application of these rules, it is therefore important to verify the place of effective use of the service. The evidence of the effective use and fruition of the service outside the EU are set out in the provision no. 341339 dated October 29, 2020 of the Director of the Italian Tax Authority.
Moreover, in the case of a declaration submitted on the basis of the presumed use of the vessel, there is the obligation to verify what has been declared, regarding the expected use of the boat by the end of the calendar year, and to integrate the declaration within the first month of the following year. In the event of an amendment of the previous declaration, the service provider must issue the variation note for the higher tax due, if any, in accordance with art. 26 of Presidential Decree no. 633/1972, without penalties and interests.
With reference to the penalty system, introduced by paragraph 710 of the Budget Law 2021, the Legislative Decree no. 471/1997 has not been affected. The behavior subject to penalties is the “mendacious declaration”, meaning “any and all requests to take advantage of the benefit in the absence of the subjective and objective conditions provided for by the Law” and, therefore, both the hypothesis of sending an inaccurate declaration and the hypothesis of failing to send the final declaration, should the documentation regarding the use of the vessel show a use different from that declared.
In this case the Italian Tax Authority proceed to recover, from the user, the difference between the VAT due on the basis of the effective use of the good in the territory of the EU and the tax shown on the invoice of the provider of service on the basis of mendacious declaration. Moreover, the Italian Tax Authorities imposes to the user an administrative penalty equal to 30% of the tax evaded and orders the payment of default interest calculated at the legal rate accrued day by day.
The service provider, carrying out the services without having first checked electronically that the declaration has been submitted to the Italian Tax Authorities, shall be liable for the higher tax due in relation to the effective use in the territory of the EU of the leasing services, including financial leasing, chartering and similar services, not of short-term, relating to pleasure vessels as well as for any penalties and interest.
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PwC TLS Avvocati e Commercialisti
PwC TLS Avvocati e Commercialisti