The Internal Revenue Service has officially posted online the declaration that the owner/user of the boat purchased through Italian nautical leasing must fill out in order to obtain VAT savings. You can find it HERE
Unfortunately, it is not all that clear, because the bureaucratese, very difficult to interpret if you are not an accountant. Therefore, we have consulted with experts in the field (who also are not yet clear on all the details) and try to clarify what needs to be done to get, even with the new legislation, a saving on VAT compared to the 22 percent VAT charged on nautical lease payments for the purchase of a boat.
Nautical Leasing 2021
Must do everything the owner/user of the boat under nautical lease
First of all, in the new regulations, the responsibility of the declaration to obtain the VAT reduction is the sole responsibility and liability of the user/owner of the boat and not of the boat leasing company or, in the case of chartering, the company renting the boat.
Actual navigation, not stationing, counts
Then, let’s make it clear right away that in order to get the VAT reduction, you have to certify and prove, if required by the Internal Revenue Service, that you sailed in non-EU (European Union) waters when you used the boat. It does not cover the stationing of the boat when it is stationary and not in use.
Where are the non-EU waters in the Mediterranean
Be careful, make no mistake, the parameter that allows you to reduce the VAT rate of the lease is based on the concept of how much you have sailed in non-EU waters while using the boat. And here it is worth clarifying when a boat is in non-EU waters.
First case, beyond 12 miles from the coast the waters are international and no longer the territory of the nearest nation. For example, if in the Mediterranean you sail in the middle of the Gulf of Lion and you are more than 12 miles from the coast (France and Spain) you are in non-EU waters.
Or, sail to non-EU European countries such as Albania or the African or Turkish coasts you are outside European Union waters.
You have to prove non-EU shipping
Therefore, in order to be eligible for VAT savings on nautical leasing fees you should monitor your sailings, keep a logbook in which you record the time you sailed on non-EU waters, and possibly in support you should have a document from an AIS or other navigational instrument that serves as proof of your “VAT-free” sailing.
How the VAT reduction is calculated
At this point you need to calculate on the period of actual use of the vessel, for example 30 days in a year, how much time you have sailed in non-EU seas. Let’s say it is 30% of the total browsing use. You will be able to get a 30% VAT discount.
All this you will have to declare to the Internal Revenue Service with the appropriate form and at the same time hand it over to the leasing company (which is the actual owner of the boat). The leasing company will have to reduce the VAT on the installments it is going to issue.
Is it worthwhile or not?
This is what we understood, interpreting the documentation in our possession.
Last, we give you our very personal advice. Pay full 22% VAT on lease payments, now with favorable interest rates. Then if you happen to sail in non-EU waters, make a note of it and then consider whether or not you should apply for the VAT reduction. Accounts in hand.
