High net worth individuals considering a move to Italy under a preferential tax regime who own a pleasure yacht abroad will often face a straightforward but consequential question: is VAT payable on bringing the vessel into Italy?
The Italian Revenue Agency (Agenzia delle Entrate, hereinafter “AdE”) has addressed this question in Ruling No. 105/2026. The answer, subject to the conditions set out below, is no.
The Facts
A UK-resident individual intends to relocate to Italy in 2026 and to elect the favourable flat-tax regime for new residents under Article 24-bis of the Italian Consolidated Income Tax Act (TUIR). For more than six months prior to the proposed transfer, the individual has owned a large pleasure yacht registered under the Isle of Man flag. The vessel was not acquired directly but through a limited partnership incorporated in the Isle of Man, in which the individual holds an interest exceeding 99.99% of the capital. The individual wishes to import the yacht definitively into Italy and to treat it as a personal belonging accompanying the change of residence, thereby benefiting from the VAT exemption available under EU law.
The Applicable Legal Framework
Council Directive 2009/132/EC grants a VAT exemption on the definitive importation of personal belongings — a category that expressly includes pleasure yachts— by individuals transferring their normal residence from a third country to a Member State of the European Union. Article 4 of the Directive imposes two cumulative conditions: the goods must have been in the possession of the person concerned and, in the case of non-consumable goods, must have been used by that person at the place of his or her former normal residence for a period of at least six months prior to the date on which he or she ceased to be normally resident outside the EU.
Italy has not enacted dedicated implementing legislation for Directive 2009/132/EC. The AdE confirms, however, that the Directive’s provisions are directly applicable in Italy, being unconditional and sufficiently precise within the meaning of settled EU case law (CJEU, 12 July 1990, C-188/89). The Ministerial Decree of 5 December 1997, No. 489 — adopted to implement the repealed predecessor Directive 83/181/EEC — continues to apply by analogy to the extent compatible.
Two Interpretive Issues — and How the AdE Resolves Them
On possession: the yacht is not held in the individual’s own name but through a multi-layered corporate structure. Relying on CJEU case law (judgment of 17 March 2005, C-170/03), the AdE clarifies that “possession” within the meaning of the Directive denotes effective economic control over the asset, regardless of formal legal title. Given that the individual is the sole person authorised to deal with the vessel and has been its only actual user, the AdE takes the view that the possession requirement is, in principle, satisfied.
On the place of use: the yacht is registered in the Isle of Man, a jurisdiction distinct from the United Kingdom where the individual resides. The AdE resolves this point by reference to the Customs and Excise Agreement concluded in 1979 between the Isle of Man and the United Kingdom, Article 13 of which treats the two territories as a single area for VAT and customs purposes. The AdE further holds that the vessel’s use in the waters of third countries other than the United Kingdom does not bar the exemption. Both circumstances are characterised as “exceptional cases justified by the circumstances” within the meaning of the Article 4 carve-out, rather than as full compliance with the primary condition.
Three Practical Points to Keep in Mind
First: this ruling addresses VAT only. Customs duties fall within the exclusive competence of the Italian Customs and Monopolies Agency (Agenzia delle Dogane e dei Monopoli, ADM), and the ruling has no binding effect in that regard.
Second: for registered movable assets — a category that includes pleasure yacht — possession and use cannot be presumed. They must in all cases be established by documentary evidence, and it is the Customs Authority that will carry out the factual assessment at the time of importation.
Third: any commercial use of the imported asset within twelve months of the date of definitive importation — including letting on charter or any other form of hire — will result in the forfeiture of the exemption and trigger recovery of the VAT together with interest and administrative penalties.