Not taxable VAT for vessels used for navigation on the “high seas”
Here are the clarifications provided by Resolution 6/E of the Revenue Agency
After the publication of Resolution 6/E of January 16, 2018, we return to treat the issue of "high seas" navigation for the application of non-taxability for VAT purposes.
In fact, this Resolution provides further clarifications on the application of this VAT regime for vessels used for navigation on the high seas, through additions and clarifications compared to what was already expressed in Resolution 2/E of 12 January 2017.
The first point clarified by Resolution 2/E relates to the notion of "vessels used for navigation on the high seas" for the applicability of the VAT non-taxability regime required by article 8-bis, letter a) of DPR 633/1972, according to which, in order to be "used for navigation on the high seas", the vessel must have made more than 70% of journeys on the “high seas”, that is over twelve nautical miles measured from the baselines in accordance with international sea law (article 3 of the Montego Bay Convention on the Law of the Sea).
With Resolution 6/E, clarifications are provided on the concept of "journey", meaning any shift "between ports (Italian, EU or Extra UE) that the vessel performs to make a passenger carriage or for commercial purposes, in which loading and unloading of cargo or boarding and disembarking passengers are carried out". The movements between shipyards or ports carried out for technical reasons are not considered journeys. For this reason they cannot be included in the determination of 70% threshold.
It is also specified that the "high seas" condition occurs when twelve nautical miles are exceeded during the journey both when the journey is between two landing points and when it is from and to the same landing point, regardless to the route followed.
Furthermore, this condition must be checked for each tax period, taking as a reference the previous year compared to the one in which non-taxability is required.
With Resolution 6 / E further clarifications to demonstrate the prevalence of journey carried out on the "high seas" regarding the "official documentation" are provided, meaning "any documentation that comes from the ship-owner or the person having responsibility on the vessel and who is able to indicate the maritime routes made by the vessel".
As already highlighted in our previous speech, such documentation includes:
- the navigation log or logbook kept by the ship captain, on which all data relating to navigation are recorded;
- the mapping of travel, data and information extracted from any satellite navigation or transponder systems (for example, data provided through the A.I.S. "Automatic Identification System" for the boats that adopt it);
- commercial agreements, invoices and related means of payment.
Furthermore, the Resolution states that "where the supplier is able to acquire these official documents, it means that the supplier has checked in a suitable way that the vessel is actually and mainly used for navigation on the high seas".
Otherwise "where the purchaser is unable to provide the supplier with such documentation, for example because it cannot be documented, the ship-owner or the master of the vessel or the manager in charge can make a declaration to certify to the supplier that the vessel is actually and mainly used for navigation on the high seas". This declaration must include the declarant's personal details, the legal status of the declarant, the period to which the same declaration refers and the reasons why was not possible to show probative documents from which the fulfilment of 70% threshold could be found.
In addition to the case of vessels under construction, as already anticipated by Resolution 2 / E, with Resolution 6 / E the provisional application of the VAT non-taxability regime is extended to all those cases in which an "objective discontinuity" in the use of the vessel occurs (as in the case of change of ship-owner or owner).
A further important clarification, provided by the Resolution, concerns the responsibility of the supplier, who is subject to controls by the competent authority. In fact, it is specified that, in the event that the supplier has had a diligent behaviour, he will be subject to tax and interest, but not to the payment of penalties.
The indications provided may apply starting from January 12, 2017, the date of publication of Resolution 2 / E.