Under the VAT place of supply regulations laid down in the EU VAT Directive 2008/8/EC, the place ofsupply of short-term hiring of a means of transport shall be the place where the means of transport is actually made available to the customer.In the particular case of Spain,the above provisionis laid down in article 70.One.9th of the VAT law 37/1992.
Who is required to register for Spanish VAT?
· Spanish entities will be required to register and account for Spanish VAT.
· The cases where a non-Spanish entity mustcompulsorily register are:
- if ithas permanent establishment in Spain
- if itis the taxable person of a transaction in Spain (the entity liable to collect the tax), even if it does not have a VAT permanent establishment in Spain.
Applicable VAT on Spanish charters
In Spain VAT on charters, unlike other countries like France, Italy or Malta,cannot benefit from effective reduced VAT rates on charter fees. The provisions laid down in Article 58 of VAT Directive, entitled “criterion of effective use and enjoyment”have not been completely implemented in the Spanish VAT law and therefore Spanish charters are subject to full Spanish VAT rate at 21%. Therefore, chartering in Spain is subject to a flat VAT rate which does not benefit from any reduction even sailing beyond 12 nautical miles.
As part of the Spanish charter registration process, the yacht owning company will have to apply for the relief on the so called matriculation tax. This is a tax only in place in Spain, applicable on pleasure yachts at a 12% rate of their value. However the Spanish tax law stipulates a relief for commercial yachts engaged in charter activities. Any yacht intending to charter in Spain must be extremely careful in organizing this aspect before any commercial activity is conducted in Spanish waters, otherwise if the relief is not applied the tax could be enforced as it has not been abolished.
Spanish maritime authority cruising permit: Despacho
The Despacho is issued by maritime harbour master offices. Thatpermit allows sailing in the area permitted by the vessel´s certificates. The documentation required usually includes:
· Main vessel certificates: registration, safe manning, class…;
· Crew qualifications, STCW, employment contracts…;
· Insurance certificates.
· Crew qualifications: It will be requested appropriate qualifications endorsement by the flag authority, on those cases where yacht officials’ qualifications do not coincide with the vessel flag.
Regional charter license
The last step of the registration process would involve an authorization for chartering from the Government of a “ComunidadAutonoma” –the name for Spanish regions. In this sense and duet to its importance, It is particular relevant to mention the latest changes introduced by the Balearics Islands Government for 2018, which can be summarize as follows:
• The possibility of chartering yachts that are not registered in non-EU or EEA (European Economic Area) countries is maintained.
• The affidavit of responsibility regime expands its scope and is now applicable to non-EU or EEA flagged yachts too. As a result, the procedures have been simplified for these yachts as well.
• Both the affidavit of responsibility and the renewals requested after 1 January 2018 will have a two-year validity period, as opposed to the 1 year period provided for in the previous legislation.