Chartering in Spain, temporary admission

After more than one year of conversations between Tax Marine Spain (founding member of the Barcelona Nautical Cluster) and Spanish Customs, it was recently confirmed that under the provisions of the new UCC, and more precisely the Commission Delegated Regulation (EU) 2015/2446 of 28 July 2015, yachts in Temporary Admission would be allowed to carry out commercial operations in the Spanish territory.
But what does this mean in practice and what are the restrictions in place for this modality of charter in Spain?
The Temporary Admission regime allows the use of yachts in the Customs Territory when:
    (a)  They are registered outside the EU customs territory in the name of a person established outside that territory;

    (b)  They are used by a person established outside the EU customs territory.
The fact that yachts under Temporary Admission (TA) can carry out commercial operations in Spain means that, basically, these yachts do not need to be in free circulation. In other words, it is not necessary to import them, nor pay VAT on the hull or have that VAT accounted for.
At the moment and based on the guidelines provided by Spanish customs, yachts chartering under TA would be subject to the following restrictions and formalities:
      • Unlike what happens in other Member States, yachts under TA intending to charter in Spain would not be obliged to follow any kind of particular procedure to include the yacht in a Commercial Temporary Admission period by submitting a customs declaration for the time when commercial operations take place.
      • The Spanish approach is that the commercial period would not interrupt the discharge period of the Temporary Admission regime for yachts, ie 18 months. This is not the case in other Member States.
      • At present, charters under TA would only be possible as long as both the clients and guests on board are all non-resident in the customs area. In this regard, our firm has recently lodged a binding enquiry to the Spanish Directorate-General of Taxes to confirm the possibility of permitting charterers resident in the customs area. We hope we can provide clarification soon.
      • Spanish customs advised that, although it is not currently possible to pick up charterers or guests resident in the customs area for charters under TA starting in Spain, in principle, a yacht  charter under TA with charterers or guests resident in the customs area coming from another Member State should not encounter difficulties in Spain in case an investigation took place on the basis that that particular charter would be subject to the current criterion of the customs authorities in the Member State of departure. Therefore, if those customs authorities allowed charterers or guests resident in the customs area on board, that should not be challenged by the Spanish authorities.
      • As with any other yacht chartering in Spain, VAT would be due in Spain if the charter starts in Spain. Therefore, a fiscal rep would be needed. Unlike other Member States, in principle, if the company owning the yacht is registered for VAT, even if the yacht is chartering under Temporary Admission, that should not imply a restriction on the right to deduct VAT. Therefore, in principle, VAT incurred during the charter operations could be offset.
      • The current approach is that it would not be necessary to apply for matriculation tax relief on the yacht as currently Spanish residents are not entitled to join the vessel under TA charters. This approach is based on the criterion laid down in binding enquiry V1850-14, which establishes that in certain circumstances it would not be necessary to apply for matriculation tax relief, provided there was a sporadic rental activity and the charterers were not Spanish residents. 
      • From an administrative standpoint a charter license should be granted to the yacht in order to charter in Spanish territory. Therefore, the yacht should be full commercial compliant and commercially registered.
The information and comments herein do not and are not intended to constitute legal advice to any person on any specific matter. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance on the whole or any part of the contents of this publication. Tax Marine Spain is an independent firm registered in Spain with number 42/120/408646. Registered office and principal place of business at Gran Vía de Carlos III, 94, 5º 2ª – 08028 Barcelona.

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