Resolution N. 2/E
Rome, 12 January 2017
SUBJECT: Tax exemption schemes for ships used to navigate on the high seas pursuant to article 8-bis of Presidential Decree n.633 of 1972. Clarification.
We have received a number of queries concerning the correct interpretation of the wording “ships used to navigate in high seas
” with regards to the application of tax exemption schemes under article 8-bis
of Presidential Decree n.633 of 1972.
Said schemes implement article 148 letters a), c) and d) of Directive 112/2006/CE and provide tax exemption for the supplies of goods and services relating to “ships used for navigation on high seas for the transport of paying passenger or used for commercial, industrial and fishing activities
To this purpose, and considering the applicable jurisprudence of the Court of Justice, the following is observed.
In order to benefit from tax exemption schemes, the prerequisite that ships must be “used for navigation on high seas”
applies to ships transporting paying passengers or employed in commercial, industrial and fishing activities, but does not apply to ships used for rescue operations or assistance at sea or ships equipped for coastal fishing (CGUE, Elmeka, joined cases C-181/04 and C-183/04).
With regards to VAT, ‘high seas’ is the portion of seas exceeding the maximum limit of 12 nautical miles from the base line as established in the international law of the sea (article 3 of the convention on the rights of the sea signed at Montego Bay on 10th
December 1982 and ratified into Law. n. 689, 2nd
In order to guarantee that the tax exemption schemes pursuant to the said article 8-bis
are applied only in the appropriate cases, i.e. to ships that genuinely and for the majority of time navigate on high seas, Member States may no longer take only objective criteria - like the length of the tonnage of a ship- into account (CGUE, French Commission, C-197/12).
Accordingly, a ship complies with the wording “used for navigation on high seas” if, with reference to the previous year, it carried out over 70% of trips in high seas (i.e. beyond 12 nautical miles). Such requirement must be complied with annually and supported with official documentation.
With reference to purchases for ships under construction – i.e. ships that have not yet performed any navigation at sea – tax exemption scheme may be applied in advance. The owning company must submit a declaration stating that the ship has been “designed to navigate in high seas”. With regards to said purchases, compliance with the rule requiring over 70% of trips to be on high seas shall be fulfilled in the year following the ship’s launch, unless amended pursuant to art. 26 of Presidential Decree 633/72.
The regional headquarters shall ensure that the principles and instructions included herein shall be complied with by provincial and local administrations.
The Central Administration