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Italy's Tax Crackdown Steers Away Superyachts, Business

Guy Dinmore, Financial Times
Wednesday, 26 May 2010 | 4:42 AM ET

Rome's crackdown on suspected tax dodgers has unsettled owners of super-yachts considering Italy as a summer destination following the tax police's seizure of the 63-metre Force Blue owned by tycoon Flavio Briatore.

Force Blue
Source: charterworld.com
Force Blue

Some legal advisers are telling their worldwide clients, 90 per cent of whom have their yachts under a Cayman Islands flag, to take care before venturing into Italian waters.

A spokesman for the Guardia di Finanza tax police, who intercepted Force Blue off La Spezie last week and forced Mr Briatore's fashion model wife and infant to leave their temporary home on the vessel, said that three similar cases of super- yacht tax evasion were under investigation.

He declined to give further details.

"The seizure is sending shock waves through the super-yacht community," Quentin Bargate, senior partner with the London-based law firm Bargate Murray, said in an interview.

"Our advice to clients has been to be very wary of Italy and to check carefully with advisers before engaging in charter activity there. We hear of other cases in the offing, so it just is not worth taking risks," he wrote on his firm's website.

"For Italy, they risk driving away lucrative yacht business that must be of considerable benefit to local businesses."

"The situation right now is that even a well-run and properly structured yacht business might be targeted for something as routine and normal as flying a Cayman flag."

Austerity About More Than Money
Italy approved austerity measures that include budget cuts of more than $29 billion as well as prevent hiring, freezing salaries and delaying retirement for civil servants. The austerity measures are to take advantage of the European financial situation, Luca Arnaboldi from Carnelutti said.

Many owners of super-yachts charter their vessels to themselves and others for tax purposes through companies registered in the British Virgin islands.

Tax police said Mr Briatore, former boss of the Renault Formula One team and part-owner of London's Queen's Park Rangers football club, was suspected of evading €4m in unpaid VAT on the boat and "savings" of €800,000 on fuel.

Mr Briatore was quoted in the Italian media as saying he was confident the matter would be quickly resolved. His lawyers have challenged the sequestration in court. They deny wrongdoing.

Angelo Colombo, writing for Italy's Superyacht magazine, said he believed the seizure of Mr Briatore's yacht was made in the context of a clampdown on tax evasion but he saw the measures aimed at Italian owners and not foreigners.

After months of telling Italians the country's finances were sound, the government yesterday joined Greece, Spain and Portugal in enacting a programme to slash the country's budget deficit.

Super-yacht experts said the fiscal crisis in Mediterranean countries was also being seen in increased local taxes and charges on visiting vessels.

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