Date: 201808
Local time of day: 0601-1200
Location: LIEO.Airport, FO
Flight conditions: VMC
Light: Daylight
Aircraft: Medium Transport; Low Wing; 2 Turbojet Eng
Operator: Fractional
Operating under: Part 135
Flight plan: IFR
Mission: Passenger
Flight phase: Takeoff / Launch
ATC / advisory: Tower ZZZZ
Second aircraft: Light Transport; Low Wing; 2 Turbojet Eng
Reporter organization: Fractional
Reporter function: Captain; Pilot Flying
Reporter qualification: Flight Crew Air Transport Pilot (ATP)
Human factors: Confusion; Communication Breakdown
Second reporter function: Pilot Not Flying; First Officer
Anomaly: ATC Issue All Types; Deviation / Discrepancy - Procedural Clearance; Deviation / Discrepancy - Procedural Published Material / Policy; Ground Incursion Runway
Detector: Person Flight Crew
When detected: Taxi
Result: Air Traffic Control Separated Traffic; Flight Crew Requested ATC Assistance / Clarification
Contributing factors: Procedure
Primary problem: Procedure

Narrative: Misunderstood ATC direction for line up and wait. While waiting for takeoff behind [another aircraft]; the Tower asked if we had some traffic in sight. It was our understanding that we were to report the takeoff traffic in sight. I thought that was strange; but we acknowledged that we 'have the traffic ahead of us in sight.' It was my impression that the Tower wanted to give us an immediate takeoff behind the [aircraft]. While the [aircraft] was rolling; the Tower called landing traffic as a corporate jet 'five mile final.' We were asked if we had it in sight. We responded that we did. It appeared to me to be sufficient spacing for an immediate takeoff and this is what I was expecting. The controller then said 'Runway 23; line up and wait...' There was another word spoken after 'wait' that sounded to me like 'be ready.' The Pilot Monitoring read back 'Runway 23 line up and wait; Aircraft X [our tail number].' That's what we did. As I stopped in position; Tower said 'Aircraft X hold your position.' We read that back stating that we're in position and holding; we'd been told to line up and wait.' Tower next directed the corporate jet to go around.Well; apparently he said 'Line up and wait...behind.' The controller then told us he meant for us to wait for the corporate jet to land; then line up and wait. I've never heard any clearance like that and had not understood. We also did not get corrected on the read-back. After about 90 seconds; we were cleared for takeoff and no more was said about it.First of all; Olbia Tower should not use this procedure. It's very confusing. In the US and seemingly everywhere else; the clearance would have been 'Aircraft X; Runway 23; hold short for landing traffic.' The read-back would have been; 'Aircraft X; holding short of Runway 23.' If they are going to continue to use this phraseology; pilots; particularly pilots not familiar with this apparently 'local' procedure; should be aware of the possibility of getting a clearance like this.


Second narrative: [Report narrative contained no additional information.]


Synopsis: Fractional turbojet aircraft flight crew reported LIEO Tower issued a non-standard clearance of line up and wait after landing traffic. Flight crew misunderstood and lined up on runway causing landing traffic to go-around.