Force Blue, which contrary to the widespread reports circulating in the media valuing it at £68.2 million was sold in 2009 at an asking price of £24.1 million, was allegedly used by Briatore for personal use despite being listed for charter and reaping the VAT-free benefits commercial registration affords. The accusation being levelled by Genoa’s prosecutor’s office therefore, also extends to Briatore’s ‘false registration’ of the vessel ‘as a charter boat’ under the Cayman flag, although there is no implication of duplicity on the part of the registry.
The high profile nature of this case could actually stand to serve the Italian industry well, providing important clarification on fiscal matters against a backdrop of confusion and obfuscation.
Ezio Vannucci, who is a partner at Italian law firm Moores Rowland Associati says cases such as these are indicative of an Italian customs regime that has abjectly failed to communicate what is expected of superyachts operating in Italian waters.
Historically, Vannucci says, “commercial yachts could undertake their bunkering free from VAT and excise”. But local authorities have now, “changed their interpretation that these yachts have to be considered private vessels. This new interpretation is not right in the context of Italian law.”
The ‘right’ answer, in an Italian context, is not clear, he says. But what is apparent, and a fundamental facet of VAT, is that “VAT cannot be applied when it can be proved that the means of transporting the vessel is being used for commercial activity.”
The problem that Briatore faces is that his alleged private use of the vessel and the purchase of duty-free fuel are irreconcilable.
What is both clear and irrefutable, Vannucci says, is that superyachts classified as charter vessels operating in Italian waters must do so only with possession of a charter contract. This rule also encompasses private use so, to use Force Blue as an example, if Briatore wanted to use the vessel himself he would have to enter into a charter contract with the holding company as a third party, despite being the beneficiary of the charter fee.
“In the case of commercial vessels,” Vannucci adds. “Private use by the beneficial owner cannot be the principal use and the owner is entitled to use the vessel under a charter contract.”
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