Ciris Capital BV

VAT savings via Leasing

Between 2000 and 2002, the Italian Government issued various guidelines on how VAT should be applied when yachts are financially leased. Under the terms of a leasing agreement, the lease company –Ciris Capital Leasing S.r.l. – buys the yacht from the seller and leases it to the client. These allow the leasing company to charge VAT on a reduced portion of the leasing installments, based on the type and length of the yacht. Your savings can be significant: On a 20 m motor yacht, for example, you only pay eight percent VAT on the cost price.

At the end of the lease period, you have an option in the lease agreement to purchase the yacht. The final purchase option price is subject to 20% VAT.

The following table quantifies the tax burden for Italian leasing pursuant to the Italian Revenue Agency’s circular 49/E/2002.

(1) the equivalent VAT rate is the effective one obtained applying full VAT (20%) only to the portion of the installment subject to it (2nd column).

The above guidelines offer VAT reductions on financial lease installments that significantly reduce the overall costs of financing the purchase of a yacht. Moreover, in addition to benefiting from a lower VAT, the remaining VAT will be paid during the term (VAT postponement) rather than prior to delivery (which is the case with an outright purchase). The following rules apply to Italian Lease:

• The minimum term of the lease is 36 months
• The minimum purchase price of the yacht is EUR 500,000 ex VAT
• The maximum down payment on the yacht is 50%, the minimum 20%
• The leasing contract can be in the name of an individual or a company (the lessee)
• A wide variety of yacht registration countries are allowed (subject to approval of the leasing company)
• The yacht will be bought and owned by the leasing company (the lessor) and registered in its name