On Thursday 8 November, the European Commission stepped up its actions against European countries it considers are not levying the correct amount of VAT on the leasing of yachts and aircraft. It announced that that letters of formal notice have been sent to Italy and the United Kingdom.
Readers may recall that the “Paradise Papers” revealed widespread VAT fraud in both sectors. In early March, the Commission launched the first series of infringement proceedings against Greece, Cyprus and Malta (see EUROPE 11977) and has since reported that it has received assurances that the laws will be changed.
For Italy, the formal notice concerns firstly the reduced VAT base for the leasing of yachts set out in its tax legislation. However, the Commission also sent the country a reasoned opinion over its illegal system of exemptions for fuel used to power chartered yachts in EU waters.
For the United Kingdom, the Commission is more specifically targeting abusive VAT practices for supplies and leasing of aircraft in force on the Isle of Man, considering that the country has not taken sufficient measures to tackle these practices.
A special 'TAX 3' committee of the European Parliament also intends to discuss the matter. It will visit the Isle of Man in the course of the month of November. (Original version in French by Marion Fontana)