We take a look at the conditions for granting temporary import tax status in Italy to yachts from outside the EU
by Federico Santini*
According to EU Regulation 952/2013 which contains the Union Customs Code (“UCC”) and which replaced the European Customs Code (EU Regulation 2913/92) on May 1st 2016, pleasure yachts registered outside the EU are free to sail and remain in EU territorial waters under the a “temporary admission” procedure. This gives full relief from VAT and customs duties, for a maximum of 18 months, provided that the following conditions are satisfied: 1) the yacht is flagged in a country outside the European Union; 2) the yacht is registered in the name of either a person or company that is not EU resident; 3) the yacht is exclusively used for leisure by individuals residing outside the Union’s customs border.
As already noted, the temporary admission regime is limited to a maximum of 18 months, known as the “period of discharge” and it is worth mentioning that the new UCC has removed the option of suspending the period while yachts are stored on shore, and only provides for a temporary extension for maintenance or refitting programmes. Yachts must leave EU territorial waters and reach a port outside the Union before the 18-month period expires, although they can return and again benefit from temporary admission for a further 18 months.
There is no limit to the number of periods of temporary admission from which the yacht can benefit. However, owners should be extremely careful to respect the 18-month limit, and to keep sufficient documentation on board to show when temporary admission began. Owners are obliged to definitively import the yacht once the 18 months have elapsed (and consequently pay VAT and customs duties), or to apply for a different customs regime.
The Italian Customs Agency has established that “for a pleasure yacht flagged in a non-EU country, a request to make an oral declaration is to be considered an “option” rather than an obligation given that simply crossing the EU borders triggers the start of the temporary admission regime”.
If the yacht has not exited EU territory or a different customs regime is not applied for by the end of the period of discharge, the owner is automatically guilty of smuggling, which is a criminal offence under art. 216, paragraph 2, of the UCC. In other words, violating the 18-months term (unless the unpaid VAT is below certain amounts) is considered a criminal offence and – in Italy at least – extremely harsh penalties are incurred by yacht owners (we shall look at these penalties in the next issue). In this article we will focus on the documentation which proves the date when temporary admission begins. The main document is the oral statement of temporary admission to be filed with the customs office of the first port of call upon arrival in the European Union.
ONCE THE 18-MONTH PERIOD HAS ELAPSED, THE OWNER IS OBLIGED TO DEFINITIVELY IMPORT THE YACHT (AND CONSEQUENTLY PAY VAT AND CUSTOMS DUTIES) OR TO APPLY FOR A DIFFERENT CUSTOMS REGIME.
The Italian Customs Agency specifies that “for a pleasure yacht flagged in a non-EU country, a request to make an oral declaration under art. 136 of the UCC to prove the date of entry into the Union’s customs Territory is to be considered an “option” rather than an obligation given that simply crossing into the EU (in this case into the Union’s territorial waters) triggers the start of the temporary admission regime”. If however, the owner choses to file an oral statement in order to obtain confirmation of the date of yacht’s entry into the EU and the consequent start of the temporary admission period, they can use Annex 71-01 to the UCC. This is a form whose first section requires information to be filled in by the owner: information about the owner and the yacht, including the yacht’s description, listing the name of the model and its length, value, flag and official number, IMO identification number if it has one, a statement that the yacht is used for leisure only, and the 18-month period for discharge and its expiry date. The second section is reserved for the Customs Agency.
In the absence of – or as an alternative to – the oral customs declaration, the date of entry into the Union territory of a non-EU yacht can be proved with the so called “Costituto d’arrivo” (official arrival form) issued by the maritime authority (Harbour Master’s Office) at the first port of call in Italy. However, the validity of this document is limited to 12 months, so less than the validity of the temporary admission regime (18 months). Consequently, when a non-EU yacht in present in EU territory any longer, the owner should apply for a new “Costituto d’arrivo” to replace the one which is going to expire. A “Costituto d’arrivo”, and any replacement, shall be returned to the maritime authority at the last port of call when leaving EU territory. If the owner neither files the oral customs declaration nor applies for a “Costituto d’arrivo”, the burden of proving compliance with the temporary admission regime lies with the owner, and the only evidence admissible will be official documentation (custom clearance, bunker or berth invoices) proving the yacht’s latest arrival in a non-EU port.
(Temporary import – Barchemagazine.com – January 2022)