Bonus for yacht lease

The Circular Bonus Sud, which also covers the leasing of pleasure boats, has been issued by the Tax Administration

by Berardo Lanci*

The Italian Revenue Agency recently issued Circular Letter No. 33/E of 23 December 2023, in which it provided further clarifications regarding the entitlement of nautical charter companies to the tax credit under Law no. 208 of 2015, so-called “Bonus Sud”. Although the aforementioned benefit applies to investments made until 31 December 2023, the recent clarification is nevertheless important for all those who have made such investments. Indeed, on the one hand, it may open up a different organization of the business activity and on the other hand it may limit the risks in the event of a tax assessment by the competent authorities. The application of the Bonus to nautical charter companies has been at the centre of several discussions, so a brief excursus of the relevant provisions may be of common interest.

The Italian Revenue Agency clarifies the conditions for qualifying for the so-called Bonus Sud also in the hypothesis of leasing.

First of all, let us recall that the Bonus Sud is disbursed in the form of a tax credit, the use of which is authorized by the Revenue Agency following the submission of a specific communication. The amount of the tax credit varies depending on the Region where the enterprise is located and whether the latter is small, medium or large. Many clarifications, including by the Revenue Agency, have over time confirmed that nautical charter companies are among the potential recipients of the benefit. In this regard, however, there has been some debate in the past as to the eligibility of the Bonus concerning the purchase of new yachts to be used for the core business of such enterprises. In particular – having first recalled that the Bonus is due concerning new assets recorded in the balance sheet under the items of tangible fixed assets BII2 ‘Plant and Machinery’ and BII3 ‘Industrial and Commercial Equipment’ – the doubt was based on the fact that according to the interpretation given to the accounting standard OIC 16 – Tangible Fixed Assets, the pleasure yachts held by nautical charter companies could be entered in the balance sheet among tangible fixed assets under item BII4 “Other Assets”, thus lacking the aforementioned condition for entitlement to the tax credit. In this regard, the clarification given in 2022 by the Italian Accounting Standards Board was decisive. Indeed, in support of an interpretation formed over time, it clarified that the aforementioned standard OIC 16 does not provide an exhaustive list of what is meant by plant, machinery and industrial and commercial equipment, but limits itself to giving examples of the types of assets that in the operating practice of companies generally fall under the individual items of Property, Plant and Equipment.

This therefore confirms that, provided all conditions are met, pleasure yachts can be entered under item BII 2 or BII 3 on the balance sheet of charter companies. Moreover, with Circular Letter No. 32/E of 21 September 2022, the Italian Revenue Agency provided important clarifications on the concept of operating structure. Specifically, the investment is eligible for the Bonus if it is connected to a new structure or the expansion of a pre-existing operating structure, thus excluding from the benefit the purchase of new units associated with the disposal of used yachts. Moreover, clarifications were provided regarding the location of the operating structure in the facilitated territories and, in particular, it was confirmed, given the peculiarities of the nautical sector, that even if the boat sails outside the facilitated territories, the Bonus is still due as long as it is possible to find a link between the yacht itself and the operating structure located in the facilitated territory.

The Revenue Agency also clarifies that, in the absence of the appointment of a shipowner other than the owner, as provided for in Article 24-bis of the Nautical Code, the Bonus Sud will not be withdrawn if the yacht is leased to the client, provided that the relevant agreement does not transfer to the client the burdens and responsibilities typical of the shipowner.

The Revenue Agency also provided clarifications regarding the subject matter of the activity carried out by the beneficiary company with particular reference to the concept of transport company – a sector excluded from the benefit – emphasising, among other things, that the chartering contract, unlike the transport contract, cannot have as its object the activity of providing scheduled connections at predetermined times between two or more predefined locations. Therefore, time chartering, in which the parties establish the time limits during which the vessel remains permanently at the charterer’s disposal and the maritime area of use for sailing or for stopping is undoubtedly covered by the Bonus, while voyage chartering where the itinerary and times of departure and arrival are predetermined by the charterer himself is excluded. Concerning this last aspect and, in particular, to the activity carried out by the beneficiary company, the clarification provided by Circular Letter No. 33/E herein under comment is of relevant importance, especially regarding leasing contracts of pleasure yachts. In particular, the Revenue Agency clarifies that contracts that leave the responsibilities and risks connected to navigation in the hands of the company that purchased the pleasure boat to be leased or chartered do not entail the forfeiture of the Bonus entitlement. Given this principle, the use for “commercial purposes” of the yacht through the stipulation of a leasing – or even chartering – contract is physiological for the investment made and, therefore, does not entail an interruption of the functional link with the operating structure. This provided that – notwithstanding the absence of the declaration of shipowner on the part of the user client (lessee or charterer) – there is not, based on specific contractual provisions, an actual transfer of the risks and liability connected with navigation to the user himself, such as to make him take on a capacity substantially analogous to that of shipowner.

Finally, as already mentioned, it should be noted that the tax credit under discussion herein is no longer available for investments made on or after 1 January 2024. However, for the latter, the benefits outlined in Decree-Law No. 124 of 2023, establishing the new special economic zone in the South of Italy, the so-called ZES, will be applicable. At the time of writing this article, the rules for the operation of this new benefit are being finalized and will therefore be commented on in a forthcoming article.

(Bonus for yacht lease – Barchemagazine.com – March 2024)