UPDATE, OCTOBER 18, 2013: The amendment to the law passed yesterday. Alex Chumillas Amat, managing director of the yachting division of Tax Marine Spain, explains, “This in practice means the opening of the Spanish yacht-charter market to anyone interested to operate in, avoiding the payment of matriculation tax. This tax benefit does not mean the activity can be developed itself without previous approval. Even more, carrying out the charter activity without the necessary permissions might involve very important penalties and the loss of the matriculation tax relief benefit. Therefore it is completely necessary to go for a licensing procedure. However, it is extraordinary good news, long claimed by the Spanish yachting-industry professionals.” In turn, the news is good for Spanish marinas.
The original article appears below.
The matriculation tax in Spain levied against charter yachts and megayachts seems about to undergo a major revision. The Ministry of Development has proposed an amendment that will bring the country’s law in compliance with that of the rest of the European Union.
The matriculation tax, passed in 1992, is levied against means of transport, ranging from yachts and megayachts to private planes and cars, owned by Spanish residents as well as corporations registered in Spain. It amounts to 12 percent of the item’s value and is payable when the means of transport is first registered in the country. It’s not the same as VAT; in fact, it is payable in addition to VAT and something which no other European Union country requires.
In terms of yachts and megayachts, private boats measuring 26 feet (8 meters) and larger have been required to pay the matriculation tax, and charter yachts measuring 49 feet (15 meters) and larger have been as well. Spanish officials also began applying the full matriculation tax a few years ago to foreign-flagged charter yachts. This applications stems from another part of the matriculation tax law that requires payment if the period spent in Spanish waters exceeds 183 days per year, unless the user can demonstrate tax residency in another country.
The European Union Court of Justice ruled in late 2011 that Spain was not in compliance with European Union rules, which state that member countries can only collect this type of tax if a yacht is permanently based within its territory, and that the amount should be proportionate to the duration of use within the territory. The European Commission therefore formally requested the government change its application of the tax law.
At the same time, Spain-based yachting-industry organizations and the Mediterranean Yacht Brokers Association (MYBA) began collecting data in terms of yacht registrations and charter activity in Spain. They collected the same data for Italy and France. In their report, released last summer and presenting figures from 2007 to 2011, far fewer yachts registered and/or chartered in Spain compared to its Mediterranean neighbors. Now, while the global recession played a detrimental impact, MYBA and the groups also examined where megayachts went for maintenance work, docking, provisioning, and more. The data showed that Italy and France were viewed far more favorably than Spain. MYBA and the other organizations therefore petitioned Spanish officials to modify the matriculation tax’s application: either exempt foreign-flagged yachts, or pro-rate the tax to the charter period.
Just last week, the Ministry of Development in Spain issued a recommendation that all charter yachts measuring 49 feet and larger be exempt. In a statement released on June 28, it acknowledges that the matriculation tax “represents a loss of competitiveness of our yacht-charter industry.” The Ministry goes on to say, “This causes the vessels engaged in this activity to limit their stay in the Spanish coasts and ports during the summer and winter,” simultaneously encouraging charter yachts and megayachts to take their business elsewhere. “It is hoped that this modulation of the application of tax competitiveness is improved,” the Ministry of Development states, adding that a further hope is to see nautical tourism improve as well, whether from repairs, provisioning, or other services.
Yachting-industry representatives echo the Ministry’s comments regarding nautical tourism. Norma Trease, the director of Salamanca Marine, which operates Marina Port Vell in Barcelona, says, “Spain has proved itself a leader in recognizing the vital importance and beneficial financial impact that yachting brings to the country. This will have a dramatically positive effect on the entire nautical community in the islands as well as the mainland and create many new jobs; the officials should be saluted for their forward-thinking vision.”
The amendment to the law still needs formal approval, but it is widely expected to come within the next several months. That, in turn, should mean that the revised law will take effect in 2014.
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