Summary of the Decision (Italian Tax Court of Appeal – Liguria, Judgment No. 200/2026)
The Italian Tax Court of Second Instance (Liguria) upheld the taxpayer’s appeal against a first-instance decision concerning import VAT (€583,000 plus interest) assessed by the Italian Customs Authority.
Background
The case involved the owner of a yacht accused of breaching the temporary admission regime under EU customs law. Authorities claimed the vessel remained in EU territorial waters for more than 18 months without properly resetting the period, thus triggering import VAT liability.
The first-instance court held that merely sailing into international waters was not sufficient to interrupt the temporary admission period. According to that court, a proper “re-export” required reaching a non-EU country.
Key Issue
Whether exiting EU territorial waters (i.e., entering international waters) is sufficient to:
- interrupt the temporary admission period, and
- restart a new 18-month period upon re-entry.
Court’s Findings
The appellate court rejected the first-instance interpretation and ruled that:
- Exiting EU customs territory (by entering international waters) is sufficient to interrupt the temporary admission period.
- There is no legal requirement under EU or national law to reach or dock in a non-EU country.
- EU customs provisions refer simply to crossing the EU customs border, not to entering a third country.
- Supporting guidance:
- EU Commission guidelines (“Rules for private boats”) confirm that it is sufficient to “sail the yacht out of the EU.”
- Italian Customs Circular No. 14/D states that export is proven by crossing the 12-mile सीमा (international waters).
The court also clarified that payment of the assessed amount does not imply acceptance of the tax claim, as it is an enforcement measure.
Outcome
- The appeal was granted.
- The contested tax assessment and payment order were annulled.
- Legal costs were offset due to the complexity of the case.
Commentary
This ruling settles a practical question that had long created uncertainty for non-EU yacht owners sailing in European waters: does a vessel need to reach a non-EU port to reset the 18-month temporary admission clock, or is crossing into international waters enough?
The answer, according to the appellate court, is clear: crossing the 12-nautical-mile EU customs boundary is sufficient. No non-EU port call is required. This follows directly from the text of the Union Customs Code (Regulation (EU) No. 952/2013) and its delegated regulations, which tie both the start and end of the temporary admission period to the crossing of the EU customs border — nothing more.
The first-instance court had reached the opposite conclusion by relying on what it called “common sense,” rather than on any specific legal provision. The appellate court rightly rejected this approach. In customs and tax law, rules must be interpreted strictly and applied as written. Importing additional requirements that the legislation does not contain is not a matter of common sense — it is an error of law.
There is a further irony worth noting. The Italian Customs Agency’s own Circular No. 14/D explicitly states that exit from EU customs territory is proved by reaching international waters beyond the 12-mile limit. The Agency’s field office was therefore pursuing a claim that contradicted its own headquarters’ guidance — an inconsistency the Court did not overlook.
It is also worth remembering — as this case illustrates — that paying a customs demand under enforcement pressure does not amount to accepting the underlying assessment. The right to challenge it in court remains fully intact.
That said, it should be noted that this judgment is not binding on other courts dealing with the same issue, nor on other offices of the Italian Customs Agency. It is therefore to be hoped that future courts — including higher ones — will confirm this interpretation.