Sunday, 30 May 2010

Megayacht Seized for Tax Evasion

The yacht business is filled with tax-loopholes and dodges. Italian tax authorities say Flavio Briatore is caught up in one of them.

And so they seized one of Europe’s best known yachts for unpaid taxes. Armed Italian police boarded the 207-foot Force Blue near Genoa and impounded the boat, claiming the owner, Flavio Briatore, owes millions of dollars in unpaid taxes. Mr. Briatore’s wife, a Wonderbra model, was on board when the police arrived.

Fraser Yachts - Force Blue

(To see video footage of the seizure click here).

At issue is Italy’s tax treatment for chartered vessels. If a boat is a charter vessel–privately owned but occasionally rented out to others–it can register as commercial boat and doesn’t have to pay the 19% value-added tax, or VAT, on fuel, wine and many kinds of food.

When you are talking about $1,000 bottles of Dom Perignon and tank-fill ups that cost $100,000, that is big savings. (In the U.S., foreign-flag vessels can’t charter in U.S. waters).

Italian customs officials say Mr. Briatore–the flamboyant sports tycoon known for his super-model-packed yacht parties and Formula One racing teams–has been claiming commercial status for the boat to avoid taxes. But, they say, Mr. Briatore uses the boat mostly himself.

Fraser Yachts, which manages Force Blue and rents it for charter, said it is “not aware of any contravention of the legal or financial requirements, as set out by the Italian authorities, by either the owning company, captain or beneficial owner.

“As far as we are able to ascertain, this issue appears to have arisen as a result of regulations which can appear confusing and inconsistent rather than through any wrong-doing” by the owner.

Two yacht brokers told me this morning that Force Blue is scheduled to be chartered for six weeks this summer at €255,000 ($278,550) a week, suggesting it really is a charter vessel. They say Italian officials are simply making an example of the high-profile Mr. Briatore for political reasons.

“He probably just ticked someone off in government and they’re getting him back,” said one yacht broker.

Either way, the case is likely to rock a few boats on the Med this year, as yacht owners wonder how closely local officials are going to start snooping around their boat business. Brokers also say they are getting barraged with calls from worried charter clients in the Med. “When you’re paying $250,000 a week for a boat this summer, you don’t want to worry about the police jumping on board and taking the boat,” said one broker.

Do you think that yachts ought to get special tax treatment for charters?

By Robert Frank from The Wealth Report ( )

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