I. The "Italian Lease"
End 2018 the EU raised a tax infringement against the Italian Lease comperable to that against Malta. So this scheme we present below may be a concept of the past shortly...
In principle, the Italian lease allows the following VAT rates;
» A yacht more than 24 m length is therefore 0.9% more expensive than the Malta Solution at 5.4%; a yacht less than 24 m is 1.2 % more expensive than the Malta Solution at 7.2%.
II. Important legal changes in 2013-2014 are the “EXCLUSION” of Non-Italians from the scheme
Common rules indicate clearly that this special VAT for the lessee is applicable only if the leasing is for less than 90 days (like in Germany). After the ratification of the EU guidelines, § 3a III 2 VAT read in conjunction with the Federal Finance Ministry (BMF) utilization decree dated 9/2013 was modified such that yacht leasing for yachts more than 24m long for a period of more than 90 days at the residence of the tenant are to be taxed, i.e., if the taxation takes place in Germany the rate is 19%. Traditionally therefore, Italian Leasing functions for owners and lessees who are non-Italian EU citizens only for small yachts!
III. It does not offer any legal certainty and is a deceptive package which in the final analysis, is subject to audit and hardly ever holds muster even for Italian citizens.
The above mentioned rates are valid – unlike in Malta – only SUBJECT TO AUDIT BY THE TAXATION AUTHORITIES. If these rates (i.e., 70% of the travel time outside 12 nautical miles in the EU) cannot be proven accurately with the help of the log books, then the full VAT, which is 22% at present, will be due:
“The captain of a yacht shall carefully Keep the logbook of the yacht. The logbook is a record of operational data relating to a ship (under Italian navigation code, a vessel whose overall length exceeds 24 meters is a ship) such as weather conditions, times of routine events and significant incidents, crew complement or what ports were docked at and when. The logbook, which can be also in electronic format, is essential to traditional navigation, and must be filled in at least daily. The captain of a yacht is required by international maritime conventions and national legislation to keep accurate records of the cruise. As such, in the case of inspections on board carried out by Italian Cost Guard or by Guardia di Finanza, the captain of the yacht shall immediately provide evidence of the cruise and of the route taken with indication of the actual time spent in international waters. This should be sufficient evidence to prove the correctness of the application of the reduced rate or of the non-application of VAT on the invoice.”
90% of the yachts more than 24m long cannot prove the 70% offshore stay as required, so that after a check, the 30% quota is obsolete.
The Italian Leasing thus functions only for owners who can prove that they are in transit predominantly or exclusively outside European Union territorial waters, e.g., in the Caribbean.
» Fixed rates are applicable in Malta, without any Audit.
IV. The scheme is subject to Italian law, place of jurisdiction is Italy and the official language of all documents and processes is Italian:
V. I myself have a few mandates involving Italian Leasing, which on the whole are not only causing a lot of distress, but are also not working out as expected.
In the end the owner did not get the sought EU VAT paid certificate, he received only a proof of the VAT paid for the purchase option price.
» In Malta, there is legal certainty right from the start of the lease; the concrete model is rubber-stamped after the presentation of all data by the finance ministry through notification.
In our opinion, Italian Leasing is not worth recommending; too many factors militate against it. A risk that should not be underestimated is that leasing with fixed design is possible only through leasing companies that are approved in Italy (mostly bank subsidiaries). Therefore, the lessee pays for a boat that belongs to the leasing company. If this company goes bankrupt, as many examples indicate, its purchase option at the end of the financial lease becomes worthless. Besides, many banks / Leasing companies in Italy create problems if attempts are made at free purchase, be it due to lack of knowledge about the material, or through excessive compliance. We required more than 6-12 months for such takeover processes which should rightly have taken less than a month.