Following the recent announcement from Spanish Authorities that charters starting from Ceuta, Melilla or Canary Islands will not be subject to Spanish VAT if the vessel sails into Spanish waters, Charley Anderson discusses the parameters of these new rules.
Although no Spanish VAT is applicable for the above mentioned charters, for non-EU yacht chartering companies this does not eliminate Spanish withholding tax. Consequently, the aforementioned non-EU companies will remain subject to withholding tax at 24% of the charter fee.
Charters that start outside the EU, for example Gibraltar, and sail into Spanish waters will still be required to register for Spanish VAT under the ‘Use & Enjoyment’ provisions and will still require charter licences to operate in Spain. In other words, Spanish VAT is due on any charters that start outside the EU and sail into Spanish waters with the exemption of Ceuta, Melilla or Canary Islands. It is anticipated that local taxation (IPSI) will be added to charters commencing from Ceuta and Melilla at 0.5% of the charter fee and the Canary Islands at 7% of the charter fee.
Although initially appealing, the recent announcement of charters with no Spanish VAT obligation should be approached with caution. Some of these locations are remote from mainland Spain and perhaps the lack of infrastructure could create potential issues for charter yachts to pick up charter guests and start their charter itinerary.
If any charters starting from these locations enter into another EU member’s territorial waters, they may be subject to VAT in that member state, calculated and based on the length of time spent there.
The VAT team at Equiom Tax Services Limited is well placed to advise you on how best to manage your charter notwithstanding the anticipated challenges of the forthcoming charter season. For further information please contact Charley Anderson, firstname.lastname@example.org
This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.