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European Commission - Press release

Taxation: The Commission takes Italy to Court over its VAT exemption for ships

Brussels, 24 November 2011 – The European Commission has decided to refer Italy to the Court of Justice for the VAT exemption it grants to ships.

Under the VAT Directive, a VAT exemption can be granted, subject to certain conditions, to supplies for fuelling and provisioning of vessels used on the high seas. A VAT exemption can also be granted for the supply, modification, repair, maintenance, chartering and hiring of such vessels.

However, the exemption in the Italian legislation is not in line with what is allowed under the Directive. On the one hand it goes further than what is allowed, by granting a VAT exemption to commercial vessels not sailing on the high seas and vessels intended for public bodies. On the other hand, it excludes some services that should be covered by the exemption such as for example the loading and unloading of vessels sailing on the high seas.

The rules on VAT exemptions must be applied correctly and uniformly. If one Member State extends the application of exemptions, as Italy is doing in this particular case, it creates a disparity between the Member States, which leads to distortions of competition in the Internal Market. Moreover, if Member States extend the scope of exemptions beyond what is allowed under EU legislation, the share of VAT that goes into the EU budget (known as ‘own resources’) will not then be collected as it should.

The matter is therefore referred before the Court of Justice.

Background information

A letter of formal notice was sent to Italy in May 2009. As Italy did not align their VAT treatment of vessels to the VAT Directive it was followed by a reasoned opinion in May 2011.

For the press releases issued on infringement proceedings in the area of taxation or customs see:

For more information on EU infringement procedures, see MEMO/11/824

For the most up-to-date general information on the infringement proceedings initiated against Member States, see:

Contact :

Emer Traynor (+32 2 292 15 48)

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