New (effective) VAT rate on chartering activities in Italy

Italian tax authorities will introduce new means to calculate the time spent in non-EU waters by boats starting a short term-leasing service in Italy. These changes will apply as from 1 April 2020. In practice, and until the new calculation methods are published, it is recommended to charge 22% standard VAT rate on all charters starting in Italy after April 2020.

Use and enjoyment in yacht chartering services

Under the current rules on place of supply of services, Member States are allowed to deviate the place of supply according to the place where the service was effectively used and enjoyed. This rule is called ´used and enjoyment provision´.  Such provision is an exception from the general rules on place of supply of services (either B2B or exceptions to the B2B). In the boat chartering industry, the place of supply rule says that VAT should be charged on the full value of the charter in the country where the passengers accessed the boat. However, the use an enjoyment provision allows for an effective reduced rate if the boat spent time in non-EU waters. The calculation of the time spent on non-EU waters is being revised in Italy by 1 April 2020.

France has a similar system in place, although in France VAT is normally calculated at 50% (effective rate of 10% ) without complex calculations like those applicable in Italy. Other countries like Spain do not apply the Use an enjoyment provision for this service, so that 21% VAT is due on the full value of the charter irrespective of the itinerary of the boat.

How can we help you?

Marosa has extensive VAT experience in the boat chartering industry. We handle VAT registrations , VAT advisory , fiscal representation and VAT return submission for chartering businesses across Europe. Contact us to receive more information on how we can help you recovering historic VAT and staying up to date with all your compliance obligations.