Since 2012, it has been possible for private yacht owners flying the Italian flag to use their vessel for noleggio occasionale (occasional rental), allowing the owner to engage his superyacht in charter for up to 42 days per annum. With growing concerns over the lack of flexibility afforded to how superyacht owners are able to own and run their vessels, this Italian system is one of many schemes introduced by flag states to promote and encourage alternative ownership models.
Much like the Republic of the Marshall Islands’ Yacht Engaged in Trade (YET) offering, the Italian equivalent may be attractive to owners wishing to use their yacht privately, but also mitigate the cost of running their vessel by allowing it to be chartered, especially those homeported in Italian waters.
The decree, which was introduced in 2012, enables superyacht owners, be they an individual, company or leaser, in case of any prior leasing agreement, that do not plan to run their vessel as a purely commercial/charter yacht, to engage, on occasion, in the rental of their vessel. The use of these vessels for rental purposes does not constitute a commercial use of the entity. The legislation that enables this does, however, require yachts over 24m to obtain a specific license (titolo professionale).
Additionally, when entering the occasional rental scheme, owners will be required to transmit contractual responsibility for any charters to the Italian Port Authority (Capitaneria di Porto), the Italian tax agency (Agenzia delle Entrate) and the Italian social security offices (Inps, Inail). The crew must also be registered to pay a special system of social security contributions in Italy. A signed copy of the occasional rental agreement must be kept on board, along with the receipt of any received amounts and the confirmation of the previously stated transmissions.
“The restrictions of the noleggio occasionale necessitate that the yacht be engaged in charter for no more than 42 days per calendar years, that an income substitute tax of 20% be paid in respect of Italian fiscal law, full risk insurance coverage be purchased, that the vessel cannot benefit from VAT payment exemption and that fuel purchases must be subject to excise duty,” explains Antonello Vittorio Meloni, attorney at law for FLD and Head of the FLD’s Yachting Department.
“It should be noted that, at present, the noleggio occasionale represents a disputed law and is a cause of various controversies, most rightfully, having in fact deregulated the charter sector in Italy.”
The controversy stems from the fact that there are two different sets of regulations, one for commercial yachts and another for those operating noleggio occasionale, despite the activities being principally the same. There are currently ongoing legal proceedings within the Italian Costitutional Court (Corte Costituzionale) to verify whether or not noleggio occasionale constitutes alternative regulation.
“The Italian charter broker association has rightly contested the noleggio occasionale because of the two sets of regulations. However, interest from superyacht owners could create an opportunity to find a perfect compromise between the brokers, the Italian government and the yacht owners,” adds Meloni.