VAT rules in EU
What is VAT? Value Added Tax (VAT) is a consumption tax that is applied to nearly all goods and services that are bought and sold for use or consumption inside of the European Union (EU). The EU has standard rules on VAT, but these rules may be applied differently in each EU country. In most cases, you have to pay VAT on all goods and services at all stages of the supply chain including the sale to the final consumer. This includes from the beginning to the end of a production process, e.g. buying components, transport, assembly, provisions, packaging, insurance and shipping to the final consumer.
When is VAT charged? For EU-based companies, VAT is chargeable on most sales and purchases of goods within the EU. In such cases, VAT is charged and due in the EU country where the goods are consumed by the final consumer. Likewise, VAT is charged on services at the time they are carried out in each EU country.
Is VAT charged on export of goods to non-EU countries? No. VAT is not charged on exports of goods to countries outside the EU. In these cases, VAT is charged and due in the country of import and you do not need to declare any VAT as an exporter. However, when exporting goods, you will need to provide documentation as proof that the goods were transported outside the EU. Such proof could be provided by presenting a copy of an invoice, a transportation document or an import customs record to your tax authorities. You will need to provide this proof to be able to fully deduct any receivable VAT that you have paid in a previous related transaction leading up to the export.
Insufficient documentation may mean you won’t have the right to a VAT reimbursement when exporting goods.
Is VAT charged on Charters? Yes, it is. The charter of yachts is a commercial activity subject to VAT. This VAT is due in the Member State where the commercial activity has its fiscal relevance (e.g. the Member State where the charter depart from).
What about Italy? The Italian Tax Revenue Office (Agenzia Delle Entrate) has decreed to implement VAT on charters year ago. Therefore, the charter of yachts within Italian Waters that are registered as Commercial Vessels and are used exclusively on “Charter” (Short-Term Hiring of a Yacht, not exceeding 90 days) cannot legally be exempt from the VAT.
How to comply? In Italy, in order to comply with the legislation, companies owning yachts (that need to execute charter activity with fiscal relevance into the Italian territory) must be registered for VAT directly or appoint a Fiscal Representative to manage the tax on their behalf, as per DPR 633/72 Art.17. In both cases the opening of a Italian VAT position is required. The appointment of a VAT / Fiscal Representative or the direct identification became obligatory starting by year 2011 as per Circular 43/E – 29th September 2011. The Fiscal Representative activity requires several important duties and formalities which YACHT WELFARE has the highest requisites to perform systematically. YACHT WELFARE is qualified to complete all the necessary tax formalities and fiscal operations.
YACHT WELFARE is suitably structured to fulfil the VAT tasks on your behalf and to shoulder every responsibility to comply with the Italian law. If you need more info and/or to appoint YACHT WELFARE as your Fiscal Representative for Italy please contact us to email@example.com. By sending us an email to firstname.lastname@example.org you will be able to obtain a copy of the Contract Agreement and the required Annexes to obtain your IT VAT Code and comply with the Italian laws and regulations.