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50 shades of VAT


June 2017

The Italian Commercial Exemption (ICE)

What we know to date about Resolution 2F/2017

To ensure compliance with Article 148(a) of the Sixth Directive, the Italian tax agency defines the scope of "vessel to be used for navigation on the high seas”. Resolution 2/E clarifies the conditions commercial charter yachts must meet to benefit from an exemption on VAT and excise duty in Italy.
The Italian resolution follows the French lead (BOFIP 05/2015). Resolution 2/E requires "effective" cruising on the "high seas", i.e. in international waters. This means waters beyond 12 nautical miles from the coastline. Class, length or tonnage of a vessel are no longer considered to provide sufficient bases for exemption.

The resolution also states that at least 70% of the total number of "voyages" in any one calendar year should be on the high seas. Exemptions are granted by assessing the navigation itineraries of the previous year.

The resolution came into effect immediately. This means that commercial vessels wishing to be exempt in 2017 will be judged according to their 2016 records.
We are waiting for further clarification.
Should the above-mentioned 70% be calculated on the number of voyages (as in the case of the French system), or on the hours of cruising?
If the 70% is defined as the number of voyages, what is the precise definition of “a voyage on the high seas“?
Secondly, what documents can be considered "official proof" of compliance with the 70% ruling?
Finally, when purchasing supplies and services, what documents or declarations should the owning company provide Italian vendors to prove eligibility for exemption?