Tag Archives: charter

VAT on Spanish Charters

Please find below some important info to know about chartering in Spain:
As is well known, chartering in countries like France, Italy or Malta can benefit from really reduced VAT rates on charter fees. This is not the case in Spain. What is the reason why? Let’s find out what are the legal grounds on which this VAT reduction is based and what other implications this legal provision has.

Article 58 of EU Council Directive 2006/112/EC, VAT Directive, entitled “criterion of effective use and enjoyment”, provides that:

In order to avoid double taxation, non-taxation or distortion of competition, Member States may, with regard to the supply of the services referred to in Article 56(1) and with regard to the hiring out of means of transport:

(a) consider the place of supply of any or all of those services, if situated within their territory, as being situated outside the Community, if the effective use and enjoyment of the services takes place outside the Community;

(b) consider the place of supply of any or all of those services, if situated outside the Community, as being situated within their territory, if the effective use and enjoyment of the services takes place within their territory.

How does this affect chartering in the EU and more specifically chartering in Spain?

As the article lays down in its first paragraph, Member States may, which means this is an optional criterion which might be applied by each Member State or not. Having said this, we must distinguish what is stipulated in paragraphs (a) and (b).

Paragraph (a) – as it is clearly defined, the provision seeks to minimize VAT taxation applicable to certain services, among them the hiring out of means of transport (for instance charter), when part of the enjoyment takes place outside the Community. This provision or approach is in place in France or Italy which allows chartering in these countries to benefit from reduced VAT rates. However, this is not the case of Spain, which making use of its optional right, did not implement this provision in the internal Spanish VAT law. Therefore, chartering in Spain is subject to a flat VAT rate which does not benefit from any reduction even sailing beyond 12 nautical miles.

Paragraph (b) – the second part of the article seeks to subject to VAT certain services, which, although according to the rules on the place of supply can be understood to be provided outside the Community, their effective enjoyment takes place in the Community. This might be the case of a charter starting in Montenegro or Gibraltar, territories outside the Community, and visiting a Member State. There are certain countries which apply this approach, such as Italy. This is the case of Spain too. Spain implemented this provision in article 70.Two of the Spanish VAT law. Therefore, although not very well known, this rule is in force in Spain.

In practical terms, this would involve for instance that a charter starting in Gibraltar and visiting Spanish territory would oblige the yacht owning company to register for VAT in Spain and to pay to the Spanish tax authorities VAT on the length of the charter taking place in Spain.
Therefore, it cannot be said that the use and enjoyment provision is not in practice in Spain. It is, but unfortunately only the more burdensome part of the EU provision is applicable.

For further information, please email our Spanish referent Mr. Alex Chumillas to alex@taxmarine.com or send your inquiry to info@yachtwelfare.it. We are always pleased to assist you and remain at your disposal.
Thank you to our Spanish partner Mr. Alex Chumillas:

Spanish VAT Regime on Supplies

Please find below a news about the VAT regime in Spain on supplies of goods to commercial yachts, released by our Spanish referent Mr. Alex Chumillas:

Most commercial yachts based in Spanish marinas are owned by European companies, which in many cases are registered for VAT purposes in their respective countries. It is very often that local Spanish suppliers and clients end up in a conflict situation over whether the goods supplied to these yachts should be subject to Spanish VAT or not. We will try to provide here an overview of the Spanish approach to this situation.
First of all, we must remind that the term “intra-Community supply” refers to goods supplied by a business in one EU Member State to a business located in another EU Member State where the goods have been transported from the territory of one Member State to another as the result of such supply.

A VAT-registered trader in one State may apply the zero rate to the supply of goods to a business customer in another Member State if:

a. the customer is registered for VAT in another Member State
b. the customer’s VAT registration number is obtained and kept in the supplier’s records
c. this number, together with the supplier’s VAT registration number, is stated on the sales invoice, and
d. the goods are dispatched or transported to another Member State

So what is the Spanish approach on this matter and more specifically on supplies to commercial yachts?

Several recent rulings issued by the Spanish Directorate of Taxes determine the current trend and approach in Spain. Among these rulings, the following deserve special attention:

1. Binding ruling dated October 2015 which considered that the supply of spare parts to transport trucks owned by VAT registered business in other member states would be subject to Spanish VAT when the supply of such parts takes place in Spain.
2. Binding ruling dated February 2016 which considered that the supply of equipment to commercial yachts owned by VAT registered entities in other member states, when the supply of goods involves an installation or assembly of the equipment by the Spanish local supplier and such installation takes place in Spanish territory, the whole supply is subject to Spanish VAT.

In addition, a couple of court judgments are relevant to this matter:

3. Judgment STS 2978/2012 of the Spanish Supreme Court of Justice which consider that, in order to consider a supply of goods as an intra-community supply, the document declaring receipt of the goods by the acquirer must clearly state that the goods were actually delivered outside Spanish territory by means of a declaration or certification of the goods’ recipient.
4. Finally we consider that the ECJ Facet case is relevant, according to which intra-Community supply would imply that the associated intra-Community acquisition should be deemed to have been made in the Member State which issued the identification number. In other words the goods should have been actually delivered to the Member State where the customer is identified for VAT purposes.

The above resolutions determine the current jurisprudential trend in Spain. The intention to remove the goods from Spanish territory is not enough, but an effective shipping or exit of the goods from the Spanish territory at the time the supply takes place in Spain. Therefore, if this condition is not met instantaneously at the time the supply becomes effective, the whole supply should be subject to Spanish VAT.

For further information, please email our Spanish referent Mr. Alex Chumillas to alex@taxmarine.com or send your inquiry to info@yachtwelfare.it. We are always pleased to assist you and remain at your disposal.

2017 Rules in Croatia

Please find below a detailed update for 2017 released by our Croatian partner:

Part of our business is keeping up with the ever changing maritime laws and regulations in the region. So with the possibility of some important changes to charter tax potentially being instated this year, we’ve been keen to inform everyone in the industry. We were going to wait until the changes took effect before sending out this update, but after hearing conflicting information from many other people in the industry outside of the country, we decided to send it out early. It covers the main VAT regulations and charter activities in Croatia that are set to change this year. Of course, we will continue to release pertinent information as we learn more from the relevant authorities. The following are the changes we have been informed of that should come into force for the upcoming 2017 season.
VAT and Charter Regulation Changes for 2017:

1. VAT will be charged to all commercial yachts that start charters (embark guests) in 3rd countries, proportionate to the time spent in Croatia. For instance, if a yacht embarks guests in Montenegro and comes to Croatia for 6 days, charter guests will need to pay Croatian VAT for 6 days.
2. All non-EU flagged commercial yachts will be allowed to perform charters in Croatia, but will be required to obtain a charter license. There is no longer a limit on the yacht’s length in order to perform charters in Croatia. The license will be valid for the calendar year. The number of licenses issued might be limited based on the Croatian market supply situation. Please note from the above info, ALL non-EU flagged commercial yachts will be able to start charters in Croatia if they obtain a charter license and have a charter and VAT representative!
3. Commercial yacht owners and owning companies are allowed to perform charters in Croatia, either through charter companies / ship agents or if they open their own charter company in Croatia.
4. Commercial yacht owners and owning companies from the EU are NOT obliged to have a VAT and fiscal representative in Croatia, while yacht owning companies from non-EU countries ARE obliged to have a VAT and fiscal representative in Croatia.
5. Private yachts will still be able to embark and disembark their guests in Croatia regardless of flag. In cases where the owner and family members are not onboard, the Captain will have to have an authorized list of people with: 1) names of guests and, 2) length of time that these guests will spend on the yacht. This list of people will have to be authorized by the Captain’s signature and the yacht’s stamp.
6. VAT for charter activities in Croatia is still 13% for weekly charters and 25% for daily charters.

As soon as the administration finalizes and publishes the relevant information under points 1 and 2 above, we will inform you immediately. Meanwhile, if you have any questions, please do not hesitate to contact us at any time
Advice: if you are coming to Croatia this season and plan on having a busy charter season, you should start preparing NOW.
Thank you for your time and attention. All the best and we look forward to hearing from you soon.

Delivery / Redelivery Fees in France

Sanremo 1st March 2017.

Please find hereby the info just released by our French partner: As you are aware, it has been EASYTAX policy since July 15, 2013, when the VAT became applicable to charter hire in France, to include any Delivery/Re-delivery fees charged to the charterer into the taxable base. This approach was based on Article 267 of the French Tax Code, which considers Delivery/Re-delivery fees as an ancillary service to the main service. Therefore this ancillary service should be treated the same way tax-wise. Over the years, there has been some confusion within the industry on this matter, with various positions taken. As a result, several of our partners have asked that we seek confirmation from the French Tax Administration on this particular point – which we did.

Some time ago, we had requested for a legal ruling from the French Tax Administration Rules and Regulations Division (“Département de Legislation Française”) to confirm the taxable regime to be applied to Delivery/Re-delivery fees. Recently, we received the ruling (Ref. D2B/1500014757D) that confirmed that such fees – regardless if they are just fuel &/or “a time package” – charged in order to put a vessel at the charterer’s disposal, EITHER before the charter from one port to another OR after the charter to reposition the vessel, are indeed constitutive of an ancillary service to the main service, and therefore are taxable under the same condition.

To quickly summarize: DELIVERY/REDELIVERY FEES ARE TAXABLE IN FRANCE

1. If the charter fees are taxed at 20% French VAT, the delivery/re-delivery fees are taxed at 20%
2. If the charter fees are taxed at 20% French VAT on 50% of the charter fees, the delivery/re-delivery fees are taxed at 20% French VAT on 50%.

For any additional info please call or email us to info@yachtwelfare.it or chartermcf@easytax.fr.
We remain at your disposal for any clarifications or questions.

Temporary Admission in Spain

The temporary admission procedure laid down in article 250 of the Union Customs Code – Regulation (EU) No 952/2013, which came into force on 1 May 2016, allows non-Union goods intended for re-export to be subject to specific use in the customs territory of the Union, with total or partial relief from import duty. This procedure enables non-EU registered yachts to stay within the EU with total relief from import VAT and move freely within its territorial waters with no further customs formalities for a period of 18 months.

The relevant change compared with the existing previous situation laid down in the Community Customs Code 2913/92 and Commission Regulation 2454/93 is that it is now required for yachts arriving at an EU Port coming from an Non-EU Port to submit an oral customs declaration in accordance with article 165 of Commission Delegated Regulation 2015/2446.

There are different approaches to the situation in different Mediterranean countries, as this formality is not strictly enforced everywhere and other countries, in addition to the submission of the oral declaration, require the provision of a guarantee. Here we will provide an overview on how the process works strictly in Spain.

When an application for TA is made orally, the declarant shall submit a document as referred to in Annex 71-01 containing the following information:

• name and address of the declarant;
• description of the goods, their value and quantity;
• place of use and kind of use of the goods and means of identifying them;
• period for discharge;
• customs office(s) of discharge.

Together with Annex 71-01, the following supporting documents shall be submitted:

• Yacht’s certificate of registry;
• Passport of the yacht owner;
• Yachts owned under corporations: deed of incorporation, certificate of incumbency and passport of the company director.

When the temporary import takes place in Spain, the customs authorities will not require the provision of any security or guarantee. If the customs authorities are not satisfied that the particulars declared orally are accurate or complete, the oral declaration might be refused.
Please find below some particularities of the most relevant yacht destinations in Spain.

Palma de Mallorca – first port of arrival must be the customs port of Palma. Once the paperwork has been reviewed, the yacht can head to any other port in Mallorca. In Mallorca it is required to provide either original supporting documents or verified by a Spanish public body.

Ibiza – there is no need of arrival to a customs port. The yacht can arrive to any port and submit the declaration online to the local customs office, using the system in place in the website of the Spanish tax agency.

Barcelona – there is no need of arrival to a customs port. The yacht can arrive to any port. Photocopies of the relevant documents are usually accepted.

Although customs does not expect the submission of an export declaration to close the temporary import, evidence of having visited a non EU port will be requested in order to renew the 18-month period.

For any further information, please email us to info@yachtwelfare.it or directly contact our Spanish referent Mr. Alex Chumillas, Director or Tax Marine emailing alex@taxmarine.com.

70% of what?

Sanremo, 6th February 2017

The Convention on the High Seas (replaced by United Nations Convention on the Law of the Sea) defined “high seas” to mean “all parts of the sea that are not included in the territorial sea or in the internal waters of a State” and where “no State may validly purport to subject any part of them to its sovereignty“.

Consequently “high seas seagoing ship” means a ship other than those which navigate exclusively into the 12 nautical miles territorial waters, inland waters or in waters within, or closely adjacent to, sheltered waters or areas where port regulations apply.

Resolution No.2/E, released by Agenzia delle Entrate (Italian Tax Office) on 12th January 2017, gives a clear interpretation of “high seas” not only in relation to the technical nature of the ship but also to its fiscal aspects. In accordance to the provisions of said Resolution, a ship can be qualified as a “high seas seagoing ship” if she has performed more than 70% of the voyages sailing the “high seas” in the past calendar year.

If the ship effectively met this specific condition (voyages > 70%), she is qualified to benefit of the VAT exemption according to Article 8-bis, which meets the provisions of Article 148 points a), c) e d) of the EU Directive 112/2006/CE, stating that the VAT exemption regime can be applied to those commercial operations done by vessels “used for navigation on the high seas and carrying passenger for reward or used for commercial purposes (including the Charter activity), industrial or fishing activities”.

Official proofs and documents needs to be provided to attest that the ship really performed more than 70% of the voyages sailing the “high seas”.

Therefore Italy really seems about to follow in the footsteps of France with its law from 12th May 2015, better known to all as BOFiP (the French regulations governing VAT exemption).

For what is closely related to the Yachting and Charter industry, the hereinbefore mentioned commercial operations can be quickly summarized in the following points:

a. purchase of goods and provisions
b. purchase of fuel and lube oil (bunkering)
c. purchase of spare parts, machineries and equipment in general
d. repair and maintenance works on board

Despite the Italian Tax Authorities have provided clear information they didn’t provide complete ones. In fact there’s still plenty of grey areas and perplexities such as the way to calculate the 70% (time or number of voyages?), which documents and proofs can be considered as “official”, etc.
The most involved Italian fiscal representatives are now working hard to collect all the necessary info which will be shared with you as soon as possible.

For any additional info please call or email us to info@yachtwelfare.it. We remain at your disposal.

 

DOWNLOAD

Resolution-2E (Original)
YW News 2017-01 (pdf)

How to Invoice APA Subject to VAT

Sanremo, 1st July 2016

Given the new ruling by MYBA in regards to the APA (for more info see also here www.yachtwelfare.it/clarifications-on-apa-june-2016) the VAT collected on the expenses to meet navigation requirements, such as fuel and oil for the engines and on-board systems, needs to be remitted to the Italian Revenue Office along with the VAT collected on the Charter Fee.
To that end the amount of VAT raised by such expenses is to be immediately wired to Yacht Welfare at the end of the charter.

Yacht Welfare, on behalf of the yacht’s owner, will issue a separate invoice for APA which is required to regulate the hereinbefore mentioned operations.
For this reason there is undoubtedly a need to receive the APA report, duly fulfilled by the yacht’s Captain and countersigned by the Charterer, within the shortest time right after the disembarkation of the charter.

For the sake of clarity Yacht Welfare hereby informs all its Clients that penalties and delay fees will always apply for any late remittance of VAT raised by the expenses paid with APA.

For any additional info please email us to info@yachtwelfare.it

Download the full notice here YW_News_03_2016

Reduction of Taxes for Berth in Italy from 22% to 10% only

The Italian government’s Gazzetta Ufficiale, which lists newly enacted laws, published no. 300 ‘legge di Stabilità’ on 30 December 2014. Article 1 clause 237 stated that temporary berthing and mooring in Italian waters would now incur a duty of 10 per cent, as opposed to the 22 per cent rate that had been castigated by the Italian yachting industry for its detrimental effect on business. This however, will not apply to permanent berth purchases. For more info please see also http://www.ucina.net/en/component/k2/item/304-il-senato-ha-convertito-con-la-fiducia-il-decreto-legge-sblocca-italia.

No taxes on fuel, food&drink provisioning, deck supplies and repair works

with specific regards to the yacht’s provisions (fuel,  lube oil, food, drinks, spare parts, deck supplies, etc.) and maintenance works on board, for and during a charter subject to the Italians laws and rules, we hereby inform you that from 22nd April 2014, as per our Official Petition 903-13/2014-Art.11, law 27th July 2000, No. 212, filed with the Agenzia Delle Entrate (Italian Revenue Office) on 23rd January 2014, it became official that PROVISIONING is not taxable as per Art. 8-bis, paragraph-1, letter-d) of DPR 633/1972 (Presidential Decree). All the suppliers must head the invoices for PROVISIONING tax free under the ship’s owner company’s name with the Italian VAT code collected by the Fiscal Representative. After, therefore, the charterer is allowed to use APA to refund the ship’s owner company for the PROVISIONING costs. Please send an email to info@yachtwelfare.it for more detailed info.