Sos Yachting - New Italian VAT Law from April 1st 2020

The Italian Budget Law for 2020 (law no.160/2019, article 1, point 725 and 726) has been published on the Italian Official Gazette on December 30th 2019 and changes, the provision of the application of the Italian VAT due on charters with departure from the Italian territory.

This new Law will be applicable from April 1st 2020 and onwardsto all Italian charters that will start in the Italian territory, regardless of the date of signature and payment of the charter contract. It cancels and replaces the “lump sum VAT criteria” therefore the ordinary Italian VAT rate of 22% will be due from now on, on all Italian Charters.

Within February 29th 2020, the Italian Inland Revenue will issue a new method for the calculation of the effective useof the yacht outside the Union territory that will allow the Owning Company not to charge Italian VAT on such portionof use.

The EU Commission disagreed on the lump sum criteria applied, not only in Italy but also in Malta, Cyprus and France.In light of the position of the EU Commission, the VAT reduction schemes will be replaced very soon also in France applying the ordinary French VAT rate (20%) on charter activities according to the effective use of the yacht outside the
Union territory during a French charter.

The yachting association ECPY and Thierry Voisin as President of SOS YACHTING France are involved in the discussion with the French Administration in order to obtain instruction about the application of this new principle.