A recent matter handled by the Firm provides an opportunity to recall a principle of particular relevance to the commercial yachting sector and, more generally, to operators providing services on goods of foreign origin that have not yet been definitively imported.

The case concerned a commercial yacht flying a non-EU flag, owned by a foreign company, which was present in Italy under the temporary admission regime at a shipyard for the performance of ordinary maintenance and repair works.

The key issue was whether those services should be subject to VAT or whether they could benefit from the VAT non-taxable regime applicable to international services or services connected with international trade.

Article 9, paragraph 1, no. 9, of Presidential Decree No. 633/1972 provides for VAT non-taxability in respect of the treatments referred to in Article 176 of the Italian Customs Consolidated Act carried out on goods of foreign origin that have not yet been definitively imported.

The practice of the Italian Revenue Agency and of the Italian Customs and Monopolies Agency has clarified that, with reference to means of transport under temporary admission, admissible activities may include works on the hull, keels and decks, as well as painting, polishing, carpentry, maintenance and repair of systems, equipment, propulsion systems, engine rooms and interiors.

It follows that, where these requirements are met, VAT should not be charged on the invoice.

Where the supplier has nevertheless charged VAT, that tax may have been unduly paid.

In the case of invoices issued with VAT for services that should have benefited from the non-taxable regime, the yacht owner may not, as a rule, apply directly to the Treasury for a refund. The ordinary remedy is to bring a claim against the supplier that issued the invoices and collected the tax, seeking restitution of the VAT unduly paid.

The supplier may then assess the tax remedies available to recover any VAT paid, within the limits and according to the procedures provided for by the applicable legislation.

The matter confirms the importance of a prior and accurate assessment of the yacht’s customs status, the temporary admission regime and the nature of the works performed.

In the yachting sector, an incorrect tax classification of the services may result in VAT being unduly charged, with consequent restitution claims and possible disputes between the yacht owner and the service provider.

For this reason, in the case of foreign commercial yachts under temporary admission, it is essential to assess from the outset whether the requested works fall within those eligible for the VAT non-taxable regime.

(By Avv. Federica Fantuzzi – federica.fantuzzi@studiozunarelli.com)