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Italian police search yachts for fuel bunkering violations

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In late January, one day after rogue waves pounded Portosole marina in Sanremo, about 30 agents from the Guardia di Finanza armed with search warrants boarded and searched at least six yachts in Sanremo. 

 

The officials targeted foreign-flagged vessels and asked for fuel tax-related documents, including charter contracts, oil record books and bunkering agreements.

 

Apparently, according to several captains whose yachts were searched, the officers were trying to identify foreign vessels that have bought duty-free fuel in the past five years.

 

Commercially registered vessels are permitted to buy duty-free fuel with a valid charter agreement, according to Italian law 504.

 

Last year, however, some customs officers argued that non-EU-flagged vessels that do not have an Italian fiscal agent cannot pay VAT on the charter because they aren’t registered in the Italian fiscal system and therefore are not entitled to duty-free fuel.

 

“This is a hallucination of some custom officers,” said Silvio Rossi, owner of the Savona, Italy-based fuel bunkering company Rossmare. “Law 504 does not state that allegation.

 

“Unfortunately, the technical government that succeeded the Berlusconi government in late 2011, while imposing VAT on charters in Italian waters, did not gave the right direction to the administration offices in order to avoid confusion, especially toward the foreign operators in the yachting industry.”

 

Italian law on duty free fuel has not changed, he said. It’s just unclear.

 

“Italian law 504/95 says that all the vessels sailing in EU waters, except private pleasure boats, are exempt from paying duty on fuel,” Rossi said. “The difference between a private pleasure boat and a yacht in commercial use is that the passengers, also called guests, pay a fee to cruise on the yacht but management of the yacht belongs to the yacht owner. Basically, there is a separation between who provides the yacht and who enjoys the yacht.”

 

Traditionally, a charter contract has been enough to prove that distinction.

 

What happened in Sanremo in late January has to do with police investigation surrounding the libretto di controllo, a fuel log book, which all Italian and EU vessels from fishing craft to barges are required to carry and complete. It is stamped by the capitanerie of the local port and permits the vessel to obtain duty-free fuel.
Non-EU vessels cannot obtain one of these book and must show a valid charter agreement to purchase duty-free fuel.

 

“We do not know details of this operation, but we can say that it was not aimed at raising doubts on duty-free gas availability for non-EU vessels,” said Riccardo Ciani, head of the ship’s agent company Med Yacht Services in Sanremo. “Police are targeting Italian individuals who reportedly issued phoney libretto di controllo so vessels could buy tax-free gas even while operating for private purpose.”

 

Apparently dozens of these books have been issued by Italian individuals to recipients who did not have the legal requirements to carry them.

 

His company recommends that charter yachts in Italy this season keep their logbooks, fuel invoices and charter agreement accessible so they can prove at any time that duty-free fuel was purchased for chartering purposes.

 

“There might have been some fuel log book monkey business going on,” Rossi said about the search warrants and boardings in Sanremo in late January. “Since the law is clear, if someone obtained duty-free fuel without a charter contract and a charter company owning the yacht, the supply was illegal.”

 

Although the two captains whose yachts were searched in Sanremo are confident they acquired their fuel lawfully, being visited by Italian authorities was still unpleasant. Generally, the search and the paperwork took in excess of six hours.

 

The officials boarded the yachts in Sanremo in groups of four or five and said they had the authority to search the boat and, if they wished, to remove computers, hard drives and smart phones that could help in their investigations. One captain said they were not in uniform.

 

“It is quite intimidating when these people come on board,” said this captain, skipper of a yacht of less than 50m, who asked not to be identified for fear of harming his upcoming charter season. “They will not show any identification nor give you their names. I feel that they should at least be in uniform and without doubt, should properly identify themselves.

 

“I also feel that since they are deliberately targeting non-Italian boats, they should have with them at least one person who speaks English,” this captain said, adding that they did not, for the most part, speak English.

 

According to the chief engineer on another yacht that was searched, all contractors and workers were escorted off the vessel and the crew were told to remain below while the officers searched the yacht. One crew member was able to accompany the officers, as was the ship’s agent. Several captains and crew expressed concerned about having to relinquish their original log books and other documents. When one engineer asked when they might be returned, he was told when the case was closed. The officers could not give him a date.

 

Both captains said their vessels were thoroughly searched, including each drawer and locker, and officers demanded to see inside any safes they found. One captain noted that the officers were persistent in their questions about the owner, whether the owner had any personal belongings or clothes onboard, and also asked if the captain lived ashore.

 

“For any yachts heading back to the Mediterranean from the Caribbean, if they are non-EU flagged, and if at any time in the last five years they have bought fuel duty-free in Italy, I would strongly suggest that they think seriously before venturing into Italian waters until the court cases have been heard and we see what are the consequences,” one captain said.

 

Lucy Chabot Reed is editor of The Triton. Comments on this story are welcome at lucy@the-triton.com.

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