VAT tax exemption in the case of chartering boats to members (ICC Tax Digest – Issue 2.2019)
The Italian Supreme Court ruled on an issue with met with fame on the international press, known as “Briatore case”. The subject of the case concerns the right to the VAT tax exemption regime in the case of chartering boats to members (Supreme Court, section III, 28 November 2018, No. 53319).
In this regard, the Supreme Court has established that for the purposes of the applicability of the VAT tax exemption regime to the chartering of vessels to members, the “prevalence” criterion of the use by these latter is not decisive. According to the judges of legitimacy, the benefit of the VAT exemption, provided for commercial rental activities and for the leasing of boats (article 8 bis, paragraph 1, letter a, Italian Legislative Decree no. 633 of 1972) can also be applied to the member who rents a yacht at market price. In fact, in order to qualify an activity as commercial, there is no reference to the boat use by the member as frequent or occasional, if a “standard price” is applied to the rental (Article 4, paragraph 5, letter a), dpr no. 633 of 1972).
The judges stated that even when the boat is mostly used by the member and not by a third party with a rental agreement, the exemption from VAT could still be granted, evaluating the other elements indicated by the Revenue Agency note, no. 43 / E of 29 September 2011. The Supreme Court also stated that, in accordance with the provisions of the VAT Directive n. 112 of 2006, the commercial nature of the company must be considered excluded when the economic activity is exclusively aimed at allowing the member the personal use of certain goods, even if at market value. Avv.