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Bareboat Charters: What you need to know  

Bareboat Charter: How do bareboat charters work? 

The Bareboat Charter represents a form of rental having the characteristic of seeing delivered the boat equipped with everything needed for navigation, including fuel, consumables to tackle the journey, etc., but all without crew.

Generally, the bareboat charter is purely for recreational purposes.

The tenant is required as the shipowner to hire the crew and appoint the commander.

This form of rental differs from the one where the boat is delivered with crew and captain, previously hired by the owner of the ship, which is called "leasing of fitted-out and equipped ship".

The personnel, in the latter case, only temporarily becomes the employees of the tenant, by virtue of the transfer of recruitment contracts.

According to the usual practice, the bareboat charter is more frequently used, even if very often the apostille is placed in the contract that makes the appointment of the captain by the tenant subject to the consent of the shipowner.

Bareboat charter: What is the difference between time charter and bareboat charter? 

The difference stated above between bareboat charter and fitted-out and equipped ship is not present in the Navigation Code. Indeed, it is mostly the result of the custom that sees the first form most used in the commercial field, while the second is typical in the yachting sector.

In both cases, the tenant becomes the owner, who manages the ship independently, subject to payment to the lessor who offers the ship for use.

The definition of rental is well traceable in Article 384 of the Navigation Code, which also regulates the sub-categories of travel and time rental.

Accordingly, the renting ship tenant, upon payment of an agreed freight, undertakes to make the journeys ordered by the renter with the ship.

The presence of the category of "time charter and lease" very often causes confusion when it comes to distinguishing between rental and leasing, which is unravelled by the indisputable fact that in the lease there is the delivery of the ship and the shipowner fulfills his charges by delivering it; in the rental, however, the object of the contract is not the ship but the service, or rather the trips to be made, where the boat has only an instrumental function.

Bareboat charter: tonnage tax regime 

The "Tonnage Tax" represents a tax relief aimed at shipowners who can, thanks to the latter, determine the income deriving from the economic activities obtained from the use of ships at a flat rate, thus cancelling the taxation on the income of shipowning companies and subjecting them to a tonnage tax.

The option for joining the regime under examination must be communicated to the Revenue Agency within 3 months from the start of the tax period, from which the lighter regime is to be used.

In June 2020, the European Commission approved the extension until the end of 2023 of various Italian measures to support maritime transport under the "International Register" regime.

Thanks to the "International Register" regime, shipping companies are granted reductions in corporate tax and other concessions.

Following the changes that Italy has committed to invest, the special reduction in corporation tax for shipping companies will be applied to:

- main revenues deriving from maritime transport activities;

- some ancillary revenues relating to maritime transport activities;

- revenues from towing and dredging, under certain conditions;

- bareboat chartering and time and / or voyage charter activities, subject to a series of conditions.

Bareboat charter: How can we help you?

The Arnone & Sicomo International Law Firm has an internal maritime and navigation law department. We assist Italian and foreign clients in the stipulation and signing of Bareboat charter contracts.

Are you looking for Admiralty and Maritime Lawyers and Law Firms in Italy? Contact us.