Industry Leaders React to Spanish Tax Reform

As news of Spain's course-change on the much-maligned Matriculation Tax on yachts circulates, key industry leaders and analysts provide SuperyachtNews.com with their exclusive reaction.

Miguel Ángel Serra Guasch, Spanish tax attorney and economist We must be cautious and careful until we have some additional information as to when this measure is going to take effect, how will this be implemented (elimination of maximum 15 meters length of vessels, new tax exemption, etc..) and conditions or requirements to be met in order to obtain the tax benefit (one of those would be more than probably the exclusive use of the vessel for charter activities).

On the other hand, the press note only refers to the removal of the tax on the first registration/matriculation of charter vessels in Spain but it is also expected to be applicable to the use or circulation in Spain of EU charter vessels (also taxable event jointly with the first registration/matriculation in Spain) as far as the contrary would be very hard to fit with EU market principles.   Logically, this announcement has much to do with the infringement proceeding commenced in October 2011 by the European Commission in Brussels when they formally requested Spain to change the way in which they tax charter yachts from another Member States so as to ensure their rules comply with EU legislation. The European Commission considers that Spain cannot levy the full amount of matriculation tax on charter yachts from other EU countries, as they currently do, because this provision is contrary to EU rules on freedom of establishment, a fundamental principle of the EU's Single Market. Thus, Spain shall only levy the tax in proportion to the duration of the use of the yacht in Spain.

This could mean a great competitive improvement for Spanish charter, the associated yachting industry (shipyards, marinas, berths, maintenance, refit, etc.) and economic activity and employment in general. It would also avoid the image of legal uncertainty in Spain, eliminate economic costs (both real and in terms of opportunity) and help diversification, deseasonalisation and deconcentration of traditional tourism.

Gabriel de Sandoval, general manager, Marina Port Vell This is excellent news for the entire Spanish marine industry and will certainly help Marina Port Vell to become one the of top superyacht destinations in the world.  Spain can now be considered as a safe cruising destination and we hope that these are just the first steps to reduce taxes affecting the sector.

Adolfo Romagosa, President of Port 2000, Barcelona I want to take this opportunity to thank and congratulate all those who have worked, discussed, argued and fought to achieve this result. From today, recreational boating in our country is much more competitive. This is great news for the future of the Barcelona Nautical Cluster.

Patricia Bullock, Network Marine Consultants On Friday, 28th June, the Spanish Government has accepted at Ministerial level the formal request  presented for the elimination of the 15 meter limit to apply for the exemption of the Matriculation Tax on yachts carrying out Commercial Activity. As far as I know, the tax has not been eliminated – just the limit for the exemption (15mts), and the requirements for the exemption still have to be complied with.

We will not know more until full details are published in the official Parliamentary Bulletin, hopefully later this week.

The amendment now has to processed through the normal channels and we are hoping that it will be finally approved within the next few months so that it will  be applicable for the 2014 season.

Charter Permits, VAT/Tax Numbers and Registration and application for the exemption still have to be obtained as always.

Benjamin Maltby, principal tax consultant, Matrix Lloyd “Our advice to our owner-clients is going to be to consider chartering in Spain if they wish – once their vessels meet the required standards and are certified and insured accordingly – but we would advise them to look beyond the Matriculation Tax itself, and consider the broader fiscal risks posed by officious, and occasionally misguided, Spanish tax authorities. In Spain, what matters, as one local lawyer succinctly (if misogynistically!) put it to me, is “who has the cigar in his mouth?”; in other words, who is the beneficial owner over and above any clever offshore ownership structure. In particular, the Spanish do not readily recognise the concept of ownership in trust. They look at the human owner, what his (or her) private and business interests in Spain and the European Union are, and so what his personal tax status is.   The move will certainly change the fortunes of the yachting industry in Spain. There will be a positive economic impact in and around Spanish ports, in particular Palma de Mallorca where marinas (currently half-empty in summer) fill with charter yachts visiting and reprovisioning. Underutilised facilities in and around Valencia should also benefit. Whether Spanish politicians see these benefits, however, depends on whether they can look past the chips on their shoulders.”

Antonio Zaforteza, managing director, Ocibar and member of AEGY The Spanish Association of Superyacht companies (AEGY)   has been leading this process for many years.The result of all this work has materialized lately as we have been able to explain to our politicians the value of the industry. A key matter was a visit to busy shipyards during the winter months. We were expecting this change.

The process now is that a new law will be passed through the Spanish legal system, it should be ready by early 2014.

I am sure it will have a direct impact for the industry in Spain as we all know of yachts that leave our country during the Med charter season, some of them don't come back... Spain is ideally suited for chartering and therefore we expect a good share of that market in the next few years.

It's very important to note that this change makes it easier for the whole industry: it should benefit everyone. Ideally in the future there shouldn't be any differences in taxes all over Europe, and that should help expand the entire market.

Alex Chumillas, Tax Marine This is excellent news for the entire Spanish marine industry. This is the result of so many peoples' efforts involved that have been working behind the scenes for many years.

Definitely it will help to activate charter business in Spain. We must remember though that the tax has not been removed and that commercial yachts will have to apply in the appropriate time and form in order to benefit. On the other hand and in order to operate in Spanish waters it will be necessary to register for tax purposes in Spain and apply for a charter permission issued by the Spanish Marine authorities among other formalities. In any case we should congratulate ourselves as this announcement has been a long time coming.

Ignacio Erroz, general manager of Vilanova Grand Marina As you can imagine, we are extremely pleased with this announcement. Of course we will still have to wait for the law to come into force, which can take a while, but we sense this could be a definite turning point for the charter industry in Spain.   The double tax policy that the charter activity had to endure was outrageous and acted as a real burden for the growth of the industry. Without the matriculation tax, we gain competitiveness as we start matching our neighbouring countries. International charter players can finally see Spain as an option worth taking into account, not just for chartering but also as a base for their activities.   Our business will hopefully benefit from it since more yachts mean more demand for berths. And we believe what we have to offer can meet the expectations of every superyacht, based on our main strengths that are specialisation, location and accessibility.  

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