Italy's tax authority has confirmed that wealthy relocators can now import pleasure boats without VAT, even when held through foreign corporate entities—settling a key ambiguity for expatriates moving under the country's new resident regime. The ruling hinges on effective ownership rather than formal legal title, allowing structures like family partnerships to qualify for relief. 

RF Report

Italy’s Revenue Agency has issued a clarification on 26 May 2026 confirming that pleasure boats transferred from outside the EU qualify for VAT exemption when imported by relocating residents, even when held through foreign corporate structures.

The clarification, issued as Response no. 105 on 25 May 2026, resolves a grey area for expatriates moving under Italy’s new resident tax scheme. The ruling draws on a test case involving a UK taxpayer transferring a yacht registered in the Isle of Man to Italy, held through a limited partnership in which they owned over 99.99%.

Corporate ownership no longer a barrier

The deciding factor is not formal legal ownership but economic control. Italy’s Revenue Agency ruled that the taxpayer’s overwhelming stake and exclusive use of the boat satisfied EU requirements for exemption under Directive 2009/132/EC, even though the vessel carried corporate registration.

This interpretation aligns with established Court of Justice precedent (Case C‑170/03, 17 March 2005), which established that economic availability and effective disposal rights supersede registered title. The Revenue Agency confirmed that such economic ownership, verified through factual evidence of possession and use, qualifies for relief.

Geography and use need not be straightforward

A further complexity in the ruling concerned the boat’s Isle of Man flag versus the taxpayer’s UK residence. The Agency determined that the 1979 Customs and Excise Agreement treats both territories as a single fiscal zone, negating any distinction. Use across international waters or multiple countries, common for pleasure craft, also does not disqualify the exemption provided the asset’s primary connection remains the taxpayer’s place of residence.

The boat in question had been in the taxpayer’s possession for more than six months before transfer—a statutory requirement—and used exclusively for private purposes.

VAT relief and customs duties remain separate

The Agency clarified that VAT exemption operates independently from customs duty treatment. While the Revenue Agency oversees VAT, the Customs and Monopolies Agency assesses tariffs. An exemption from one does not automatically extend to the other, requiring separate applications or assessments where applicable.

The ruling also noted that Directive 2009/132/EC, though not fully transposed into Italian law, carries direct effect in Member States when sufficiently precise and unconditional (Case C-188/89, 12 July 1990).