Chartering not on a short-term basis carried out in Italy by foreign suppliers
by Berardo Lanci*
Chartering of pleasure boats for a period of more than 90 days, a so-called non-short-term charter, carried out in Italy by foreign suppliers, is not VAT-relevant in Italy. It is therefore not required that the aforementioned suppliers ask for a VAT number in Italy. These conclusions were reached by the Revenue Agency in its Ruling No. 96/2023, provided following a specific request submitted by a Swiss tour operator. More specifically, in the case analyzed by the Revenue Agency, a tour operator based in Switzerland – and lacking the availability in Italy of a physical office or operators – carries out non-short-term rental services of boats moored in Italy to Italian and foreign customers.
CHARTERING OF PLEASURE BOATS FOR A PERIOD OF MORE THAN 90 DAYS, SO-CALLED NON-SHORT-TERM CHARTER, CARRIED OUT IN ITALY BY FOREIGN SUPPLIERS ARE NOT VAT-RELEVANT IN ITALY.
The aforementioned tour operator requested clarification on several issues concerning the connection of its activity with Italy, including the relevance for VAT purposes as well as the possible – and related – need to open an Italian VAT number. Based on the question posed, the Revenue Agency summarized the principles related to the relevance for VAT purposes in Italy of the activity of non-short-term rental and leasing. In particular, referring to Article 7-ter of Presidential Decree No. 633/1972 – containing the territorial assumption of ‘generic’ services – in connection with Article 7-sexies, paragraph e-bis), of the same decree – stating the territorial principles of certain services rendered to non-taxable customers – it pointed out that the VAT treatment of such services varies according to the nature of the customers as well as the place of establishment of the supplier.
In fact, in the case of customers who are taxable persons for VAT purposes, the general rule outlined in the aforementioned Article 7-ter applies, according to which VAT is due in the country of the customer who, as mentioned above, may they be Italian or foreign. In the sole hypothesis in which the customer is an Italian VAT subject, VAT is applied in Italy, but the relative fulfilments are the responsibility of the customer himself – and not the tour operator – through the so-called reverse charge mechanism. In the different hypothesis in which the customer, a VAT subject, is not Italian, VAT is not due in Italy. Therefore, in none of the possible alternatives, the tour operator is obliged to apply for VAT registration in Italy to fulfil the obligations connected with non-short-term rentals and leases made to VAT persons. In the different cases in which a customer is a non-VAT person (e.g. a private citizen acting outside the regime of a business, art or profession), regardless of the country of residence of the same, the non-short-term rental and leasing services are not relevant for VAT purposes in Italy. In this hypothesis, the above-mentioned principle outlined in Article 7-ter does not apply, but rather the derogating rules outlined in Article 7-sexies, paragraph e-bis).
In the case of customers who are taxable persons for VAT purposes, the supplier is not obliged to apply for VAT registration in Italy to fulfil the obligations connected with non-short-term rentals and leases. In the sole hypothesis in which the customer is an Italian VAT subject, VAT is applied in Italy, but the relative fulfilments are the responsibility of the customer himself – and not the tour operator – through the so-called reverse charge mechanism.
In particular, based on the principle established by the latter provision, leasing and rental services of pleasure boats, for a period of more than 90 days, are not relevant in Italy for VAT purposes in the event the operator performing the service is not established in Italy. And the same rule applies whether or not the navigation takes place in Italian waters. In the case under discussion, therefore, since the mentioned services are not relevant in Italy for VAT purposes, the tour operator, in its capacity as a supplier of leasing and chartering services, will not be required to apply for an Italian VAT number. Finally, it is worth noting that the conclusions reached by the Revenue Agency are also based on the assumption that the applicant tour operator does not have a permanent establishment in Italy, as a result of which it would otherwise become a VAT taxpayer established in Italy, with a consequent impact on the above conclusions. In this regard, the Revenue Agency recalled and cited a series of principles based on which such a permanent establishment would not appear to exist in the case at hand, without however expressing a definitive ruling on the case in question. The clarifications provided by the Revenue Agency and recalled herein are of obvious importance for all foreign entities and companies intending to carry out non-short-term leasing and renting services in Italy. In addition, it would be advisable to pay particular attention to the case in which the foreign suppliers accrue a VAT credit, deriving from the incurring of costs in Italy, which must be recovered through one of the refund procedures. It is worth underlining that all of the above applies to rental and leasing services that are not short-term, i.e., for a period of more than 90 days; for the different hypotheses of short-term rental and leasing services, the treatment for VAT purposes is different and should be specifically analyzed.
Opening photo by Guillaume Plisson
(Foreign chartering in Italy – Barchemagazine.com – April 2023)