INTRODUCTION
The construction and purchase of yachts in Italy is a rather complex procedure from a legal and fiscal point of view. For this reason, in order to ensure the best possible experience, it is advisable for the buyer to be assisted by experts in Italian maritime law and taxation in order to minimise the risk of problems arising during or after the purchase of the vessel.
As a matter of fact, the construction and purchase of yachts in Italy is governed by the following legal sources:
■ Navigation Code;
■ Certain provisions of the Code of Civil Procedure (e.g. those relating to shipbuilding contracts);
■ Yachting Code;
■ International Conventions;
■ Sources of primary and secondary European law.
In addition, the purchase of a yacht is subject to the relevant administrative authorities. For this reason, experience in dealing with the following authorities is recommended:
■ The Ministry of Infrastructure and Transport;
■ The General Command of the Harbour Master’s Office, which depends on the Ministry of Infrastructure and Transport and is responsible for the administrative system;
■ The Maritime Director;
■ The local Harbour Master’s Office;
■ The Customs Agency;
■ The Revenue Agency.
In addition , it is very important that the terms of the relevant shipbuiding/purchase contracts are properly negotiated in order to avoid future inconvenience to the buyer, both in the case of pre-owned and new yachts.
MAIN LEGAL PROFILES
The first thing to note is that there are significant differences between the purchase of a new yacht (in which case a shipbuilding agreement needs to be drafted, although in some cases it could include some elements of a purchase agreement) and the purchase of a pre-owned yacht (generally a purchase agreement).
New Yacht: Shipbuilding Agreement
If you decide to buy a new yacht, it is advisable to carry out prior due diligence on the legal, technical and financial aspects of the shipyard in order to avoid unpleasant surprises due to possible insolvency or even bankruptcy of the shipyard. It should be noted that technical due diligence means verifying that the shipyard is actually capable of building and delivering the yacht by the date specified in the shipbuilding agreement. The construction of a yacht is usually a two or three year process, depending on its size. If you are satisfied with the shipyard you have chosen, you can proceed with the contract negotiations (Article 241 of the Navigation Code). You will need to take into account, among other things:
■ Warranties For Defects;
■ The Financial Guarantees that the shipyard can offer;
■ The Applicable Law and Jurisdiction. If you choose to apply a foreign law, please note that in some cases Italian law will automatically apply, for example in the case of arrests of yachts located in Italy. In addition to the contractual provisions, problems may arise in relation to the ownership of the yacht under construction. Unless otherwise agreed in writing by the parties, the shipyard is the owner of the yacht during construction. The transfer of ownership to the buyer shall be recorded in the Registry of Vessels Under Construction, held by the relevant Harbour Master’s office. This is essential in the event of the shipyard’s insolvency, as it will enable the buyer to prove ownership of the yacht. In addition, one of the greatest risks that the buyer may face is the insolvency of the shipyard before the delivery of the yacht. In particular, in Italy, if the shipyard becomes insolvent, the yacht may be subject to a bankruptcy proceeding. For this reason, it is advisable to negotiate financial guarantees (i.e. refund guarantees) from the shipyard, specifying that the chosen bank or financial institution is obliged to pay the agreed amount in certain cases, such as bankruptcy or other insolvency proceedings and/or loss of ownership of the yacht by the buyer.
It should also be noted that in Italy it is possible to register a commercial yacht in the International Registry, introduced by Law no. 30/1998, in order to benefit from a more favorable and flexible regime, with special reference to the provisions on crew, applicable taxes and social security contributions.
Buying and selling pre-owned yachts
After having analyzed the relevant construction issues, it is necessary to highlight the legal aspects involved in the purchase of a pre-owned yacht registered in Italy. Even in this case, it is advisable for the buyer to carry out prior due diligence regarding the seller and the yacht. In particular, if the seller is a natural person, it is necessary to check his marital status for the risk of possible community of property and their financial situation, assessing certain risks, such as if the seller is an entrepreneur. In the case of a legal entity, the relevant corporate documents shall be obtained. It is good practice to check that the yacht is free from any encumbrance and to verify the previous transfers of ownership, particularly for VAT purposes. Once all the necessary checks have been made, the contract may be negotiated. A Memorandum of Agreement (MOA) is normally executed. The MOA usually includes sea trials and survey. If the sea trials and survey are unfavourable, the buyer may terminate the MOA. It should be emphasized that the MOA often contains a “as she lies” clause, which means that the buyer, after the sea trials and the survey, accepts the yacht as she is, excluding any warranty for defects, unless the defects are apparent with normal care and are not disclosed in bad faith. In such cases, it is advisable to negotiate a personal warranty with the seller. Finally, it is advisable to make sure that the seller will cancel the yacht from the relevant Flag Registry. This procedure varies depending on whether the yacht is for pleasure or commercial use. In conclusion, building and buying a yacht may be both fascinating and complicated. Therefore, in light of the various legal implications described above, it is important to ensure that everything is done with the utmost care and caution.