Sardinia Yacht Tax Takes Aim at Rich and Famous

July 13, 2007 — -- As yachting season kicks off across the Mediterranean, there are a few yachts that will probably not moor on the famous Costa Smeralda, also known as the Emerald Coast, of Sardinia, Italy.

They include yachts belonging to such American billionaires as Paul Allen, co-founder of Microsoft, and Larry Ellison, the CEO of Oracle Corporation.

Last summer, both Ellison and Allen refused to berth their megayachts, Rising Son and Tatoosh, in Sardinia's Cala di Volpe bay. (Although some Russian billionaires, including oil magnate Roman Abramovich, had no such reservations.)

Neither man commented on their reasons for doing so, but it's widely believed that their decision may have something to do with the introduction of a new "luxury tax" by the regional government of Sardinia.

The Sardinian government last year slapped a tax on all yachts longer than 46 feet. This means an annual fee of $1,377 for yachts up to 52.5 feet to a hefty $20,656 for those measuring over 197 feet. And the tax is non-negotiable, with the government insisting that even yachts mooring for less than 24 hours must pay the full amount.

Megayachts like those belonging to Allen would require the owners to pay even higher sums of money. Had Allen chosen to berth the 300-foot Tatoosh in the Cala di Volpe bay or nearby Porto Cervo harbor last summer, his tax bill would have been at least $21,000.

Even Microsoft Chairman Bill Gates, who was holidaying aboard Allen's other megayacht, the 414-foot Octopus, decided to skip his trip to Sardinia last summer, according to Italy's Corriere della Sera newspaper. Presumably, Gates thought there were better ways to spend his money than to pay the Sardinian government a whopping $30,000 in taxes.

The drop in wealthy celebrity visitors hasn't gone unnoticed by local hotels, restaurants, and yacht support companies.

In an interview with ABC News, Martin Freilinger, manager of Sardinia Yacht Services, criticized the tax, calling it "illegal."

"The European Union courts will hopefully decide that this tax is wrong," he said, adding that his company is "lobbying against it."