ITALY: Clarification on electronic invoicing, YET and infringement on the reduced VAT base on Italian chartering contracts
Following the recent news and information conveyed by various consultants and industry experts regarding the charter activity in Italy, we are pleased to clarify the following points:
ELECTRONIC INVOICING and PEC
the Italian tax authority (Agenzia delle Entrate) recently confirmed the following points regarding the obligations of Owning companies identified in Italy for VAT purposes through the Fiscal Representative and not established in Italy (no Permanent Establishment):
DO NOT have the obligation to be accredited to the new “electronic system” in force in Italy from 1st January 2019, called "Interchange System- Sistema di interscambio",
are NOT required to issue invoices electronically and therefore the procedures for issuing invoices relating to VAT due on charter contracts continue to be issued in paper format, which means that the procedures currently in force will not change.
the subject may continue to exercise the right to deduct VAT on suppliers' invoices in paper format if the words "hard copy of the invoice- copia cartacea della fattura " will be printed on them;
the subject is not obliged to obtain an Italian SDI code (Recipient Code) and therefore the owning company / yacht will not have to provide this code to the Italian suppliers;
It is no longer obligation to deposit the declaration called "esterometro" electronically with reference to the aforementioned;
It is NOT required to these companies to have an email address PEC (Certified Electronic Mail - system allows sending email messages giving legal value) as this system is necessary only for Italian subjects or for these having a permanent establishment in Italy.
The Italian office of SOS YACHTING is approaching on these days the Italian Custom Authority depositing an official request of clarification about Yachts under YET scheme chartering in Italy in order to obtain a reply in written, in order to apply (with no risks) the YET scheme also in Italy.
On a VAT point of view, it is our opinion that these yachts do not have issues and therefore the Owning company can register for VAT and collect and pay VAT on charters, however these yachts are not considered as commercial yachts and cannot benefit of duty free fuel and all other purchases must be VAT included.
It’s also our opinion that on a Maritime point of view YET yachts during their charter period in Italy should comply with all the same port/maritime formalities requested to Commercial yachts without any restriction regarding embarkation/disembarkation of guests in Italian harbours.
We are confident we’ll obtain a clear position from the Italian Customs Authorities in the next months and we’ll promptly inform you as soon as we’ll receive the official reply of the Italian Authorities.
Infringement on the reduced VAT base on Italian charter contracts:
On the 8th of March, 2018 Malta, Cyprus and Greece received an Infringement from the EU Commission concerning the Maltese Leasing Scheme. On the 8th of November 2018 also Italy received an Infringement from the EU Commission concerning the reduced VAT base on charter contracts. Italy already officially replied two times to the Commission’s complaints with the following considerations:
Distinction between long term contract (leasing) and short term contract (90 days);
Wrong position of the EU Commission in the interpretation of the derogation contained in art. 59 bis of the EU VAT Directive (where the Commission would like to apply art. 56);
The “pro rata” VAT reduction in force in Italy protect and optimizes the interests of the Italian Tax authorities on incomes and reduces the probability of fiscal evasion.