Italy: “July Infringement package“. The EU Commission takes further steps.
The Commission this July 25, 2019 has decided as part of the “July Infringement package“ to take further steps on the infringement proceedings opened on November 8th, 2018 regarding certain Italian fiscal rules related to the Yachting sector and in particular on:
1. the application of reduced VAT rate based on the percentages of presumable use of the yacht outside territorial waters (Circular AdE 49/2002) on “short terms” contract (not more than 90 days);
2. excise duty exemption on fuels used for bunkering by yachts used in charter activities. The issue had already been analyzed by the Tax Authority in July 2016 regarding the VAT profiles recharged to the Charterer in the so- called APA procedure; today the Commission points to the exemption from excise duty, whose benefits under current legislation are in fact transferred from the owning company to the charterer.
Italy already officially replied two times to the Commission’s complaint about “flat-rate Vat reduction with the following considerations:
Distinction between long term contract (leasing) and short term contract (90 days);
Interpretation of the current derogation contained in art. 59 bis of the EU VAT Directive, instead of the
general provision of article 56 that Commission intends to apply;
The “advantages” of the current “flat-rate” VAT reduction in force that protect the interests of the Italian Tax authorities on incomes and also reduces the probability of fiscal evasion on a particular sector as this of the means of transport.