The Revenue Agency clarifies the 'high seas' VAT exemption for major refits.

Contribution by Ezio Vannucci *

* Partner at Moores Rowland Partners – Yachting Desk

The "high seas" VAT exemption regime also applies to yachts undergoing refits aimed at changing their use from private to commercial.

The Revenue Agency has clarified in Interpello No. 1/2025 that for private yachts stored in a shipyard for a long period of time for major refitting to change their use from private to commercial, the VAT exemption regime pursuant to Article 8 bis can be applied during the refitting phase by submitting the so-called "high seas" declaration in advance.

To clarify the reasons for this possibility, it should be noted that a major refit is the structural transformation of a ship so that it can be equipped and registered as a commercial vessel used for passenger transport. Therefore, these interventions are essentially similar to a new construction.

Such work must be carried out under the constant supervision of the relevant authority (certification register) and will be aimed at issuing the relevant on-board certifications attesting to the existence of the class and safety requirements (class certificate and safety certificate) required for commercial vessels, which will be added to the standard certifications.

The Office also clarifies that verification of the high seas navigation conditions required for the application of the aforementioned VAT exemption regime may be carried out at the end of the calendar year of the vessel's first actual use, following the completion of the refitting work, rather than in the calendar year in which the declaration is submitted.

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