Why Italians register boats with Polish or Slovenian flags

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Polish flag

Having lost the advantages of Belgian and Dutch flags(we had discussed them here) many Italian boaters now register their boats to fly the Polish or Slovenian flag.

The fact that many owners decide to change the flag or register the boat with one other than Italian is not an uncommon phenomenon at all. This is a trend that should be reversed by studying ad hoc solutions that will bring our flag back to being “smarter” and thus more palatable.

Giving up one’s flag is no small thing. The flag of the Italian merchant navy, contains the effigies of the four maritime republics, a symbol of civilization well before the unification of Italy. If an Italian sailor feels more represented by a foreign flag anyway, institutions should sense the seriousness of this and understand that they have not done enough to represent the interests of Italian boaters. Boat after boat we are giving away money and floating possessions to foreign states just because of taxes, levies and bureaucratic procedures that need to be simplified.

Passing with your own Polish or Slovenian flag boat

The phenomenon is well-known and on the rise and is the ploy of the yachtsman seeking to escape Italian rules and taxation. At the same time it has become a business both for specialized shipping agencies and for foreign states themselves, which gain from this silent exodus.

This is how you get the Polish flag in 10 days

The music of the slogan is always the same: Do you have to register the boat? If you choose a Slovenian or Polish flag today, it’s easy, it’s legal, it’s fast–and they take care of it. And confirmation has also come to us from many of our readers. For the Polish flag, you email your ID card, purchase invoice, EC type approval certificate, power declaration and photos of engine and hull plates, pay online once (average around 800 euros for a 12-meter) and in about 5 days you have provisional leave.

With another 200 euros or so, a copy of VHF radio make and model and a copy of RTF license, one quickly obtains the MMSI number for VHF and AIS. Basically, on average within 10 days of starting the practice, you can sail around the world with a provisional license, happily hoisting the Polish flag. Completion of the file and receipt of final documents takes 4 weeks.

Italian flag: the problems of the process and why many “flee”

In Italy this process is much longer. From the long waits for STED (we’re talking at least a month, see the whole procedure here) to the lines at the post office to pay postage stamps, revenue stamps, onerous periodic costs such as the inspection to update the safety certificate, which, in many other states, does not exist for boating.

It is not the procedural aspects, however, that are triggering this “mass flight.” It is Italian taxation that makes our boats flee abroad, far more than bureaucracy. Under the Polish flag, for example, there are no annual taxes on boats, nor are there road taxes.

Example:

In Italy, pleasure boats longer than 14 meters (10 mt, before the changes introduced by Decree 69/2013) are subject to payment of an annual tax after the first year of registration, 870 euros annually up to 17m, 1300 up to 20 meters e 4400 euros up to 24 meters (going up for recreational vessels up to 25,000 annually over 64m).

Registering abroad certainly does not exempt one from declaring and paying taxes. If we are residents of Italy we have to pay, and these days many tax bills are coming in contesting this very aspect. Registering a boat under a foreign flag is sometimes a ploy used to hide the boat not from the IRS, but from a financial assessment or foreclosure in the course of a lawsuit.

The VAT issue. You still pay for all EU boats

Many try to get around VAT or find a way to pay less. If you buy a boat abroad from a company based in an EU country, the VAT of the country of origin will apply, but if it is imported, you will still need to pay VAT at 22%. Only between private individuals in used boats is VAT not required. Few people know, however, that a boat owned by an EU citizen or company, regardless of the flag flown, can only sail freely in Europe if it can prove that it has paid VAT. Even in importing used goods, what the IRS always chases is proof of proper payment and registration of VAT, in an EU state.

What if I register the boat with a foreign company?

Here comes the crux of the matter. If the boat is registered in the name of a foreign company or an individual not resident in Italy, (and therefore registered with AIRE), it is likely that an accountant can find the legal formula to avoid the tax or pay a lower one in the country of residence.

Looking carefully among the services offered by many shipping agencies in fact, it is often offered along with the flag, the possibility of opening through the agency itself, a company abroad outside the EU, for example UK or USA. So you register the boat in the European Union, to make it easy to sail in the Mediterranean, but you register it to a person outside the European community to avoid the Italian tax burden. The Finance Guard is very familiar with these strategies today, and the most tax-checked boats end up being the foreign-flagged ones.

Belgian and Dutch flag, what had happened

Obtaining a foreign flag or finding a legal way to pay less than in Italy remains in vogue despite the well-known potential complications that have extinguished enthusiasm for the Belgian and Dutch flags. Italian shipowners who had fallen in love with the Belgian flag found themselves with new regulations that require them to prove they live 50 percent of the time in Belgium.

Dutch-flagged Italian boat owners only discovered in June 2018 (when the Netherlands revoked concessions after the NGO Lifeline diplomatic incident), that they had their boat registered not with the Kadaster, the Dutch maritime registry, but had paid for a registration with the Watersportverbond, a list of boats for private tourist recreational activity, and that they had boat documents with little legal value. The Dutch flag however is still offered with the full registration procedure (Zeebrief), and apparently seems advantageous despite having to pay for a trip to a Dutch official in Italy to inspect and mark the hull with punch.

Slovenia and Poland: what they require

The Brexit has made life complicated for those who had chosen the English flag although the actual procedure of boat registration has not changed; Malta requires Maltese citizenship, or the appointment of a proxy to whom the boat can be registered; the France, which registers anything longer than 2.5 m, has fairly streamlined procedures given that the boat is as much a national sport and as beloved as the automobile, but requires proof of a physical address and address, which is verified when the documents are delivered to the mailbox.

Today the Slovenian and Polish flags are in fashion. The Slovenian flag still requires a periodic safety visit every 5 years. Poland already requires at the time of registration, the definition of a mooring port of choice on Polish territory. Is this a prelude to future tax for boats that are not in port for a specified number of days per year?

Switzerland, for example, has very restrictive rules, registers only boats to Swiss citizens, and imposes a periodic inspection even on dinghies every 5 years, as well as an anti-pollution certificate even for outboards, an engine that must be certified by the manufacturer for the Swiss market. We cite this as a reminder that nothing prevents a permissive state today from turning the tables and imposing more stringent measures.

Limitation and scams do not discourage “exodus” to other flags

We are well aware that a pleasure boat with an Italian flag, cannot be used for commercial purposes. It also applies to the foreign flag. A foreign-flagged pleasure boat will not even be allowed to engage in occasional chartering activities in Italy, for the famous 42 days per year.

Simple and unified community legislation is needed

So? There needs to be real fiscal bureaucratic simplification of all recreational regulations at the European level. We need a unified European Community Register of Boats, standardization and reciprocity for boat registration procedures, licenses, safety equipment, radio certificates.

The absurd hunt for the cheapest foreign flag among European states will end when it is cheaper to register a boat in Italy than in any other country in the world, a formula that would also give excellent positive publicity to our country’s tourism.

Luigi Gallerani

EU flags most requested by Italian citizens to register their boat

FLAG REQUIREMENTS DURATION COSTS
Polish Being EU citizens, indicate Polish port of call (although we will never go there). No safety inspection, renewal required every 30 months of the license. The most popular one today, you get it online from specialized agencies with about 800 euros, with 200 euros you have MMSI. A provisional license is obtained in less than 10 days.
Slovenian Being an EU citizen Required safety inspection every 5 years As an alternative to Polish, same costs, timing on 2 weeks.
Belgian As of 2019, it requires 50% residence in Belgium retroactively on all boats. Duration 5 years, those who still have Belgian flag will have to change it if they do not qualify at the end of the term. New regulations on compulsory residency have lost interest in this flag.
Dutch Dutch official inspection visit to boat with hull punching. Mandatory annual renewal at 195 euros each year. It costs about 1,600 euros plus 1,000 for inspection, about 3 weeks for paperwork, and time up to 6 months to arrange the official’s visit.
Maltese Be a Maltese citizen or Maltese legal entity (company), or appoint agent residing in Malta. Mandatory inspection of hulls more than 15 years old. With about 1000 euros, it is done in 2 steps, temporary in 3 days and then permanent. Frequently chosen by superyachts opening companies in Malta.

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