MYBA 2020 Cancelled (COVID19)

Sanremo, 13th March 2020

MYBA 2020 officially cancelled. Please find below an extract from the Official Communication sent by MYBA Board today and our quick view about chartering on 2020 in the Med.

Further to our communiqué dated 5 March regarding the MYBA Charter Show, we would like to inform you that the MYBA Board held a conference call yesterday to further discuss the holding of the MYBA Charter Show in Barcelona in the current environment.  The Covid-19 virus situation has evolved rapidly over the last few days and, unfortunately, developments have not been favourable. The Board therefore finds itself in a Force Majeure situation vis-à-vis its contractual obligations and considers it is best not to proceed in these unprecedented circumstances. This is undoubtedly very disappointing news, however, taking into consideration the information that is currently available and the health of our Members and all Show participants being one of MYBA’s key priorities, it is not possible to ensure the Show is organised in the safe and productive environment that we are recognised for by the superyacht industry. The MYBA Charter Show team will be sending further details to those who have already registered and working to minimise any inconvenience caused by this unfortunate development. Thank you for your patience while we were assessing the situation and we look forward to a great Show in 2021. Kind regards MYBA Board

Well, let’s take the opportunity to make a quick summary and cast some light on what is happening in Europe and around the Mediterranean coasts. We all know that the situation of Coronavirus Disease 2019 (COVID-19) wreaked havoc on our lives. Right after China, Europe faced its first major outbreak as the number of reported cases in Italy grew from fewer to thousands in just few days. Officials locked down all the Italian Regions after a cluster of cases emerged in several towns located at the very North of Italy (nearby Milan). As a result, schools closed and sporting and cultural events were canceled. France did the same after just few weeks and schools and universities were closed on 9th March. Spain will do the same too starting by 16th March.

So all the EU countries are really dealing with this matter with every effort, conscientiously, strategically and supportively. We are confident that we will get through it very soon. In Italy we have this special figure of speech for situations like this “chi ben comincia, è a metà dell’opera” which the English know as “the first blow is half the battle“.

This is to say that the virus is spreading rapidly and the Mediterranean countries will surely get out of this nightmare before any other country around the world where the virus is starting to spread right now or has not started yet. Actually Italy is already half way and even further!

This should be a reason for all the yachting industry to feel encouraged to come to the Mediterranean for the summer season.

We really look forward to seeing our warm seas and cozy ports plenty of yachts during the summer.

We remain at your disposal for any possible clarification and please keep sending your inquiries to info@yachtwelfare.it

New VAT Guide 2019

The 2019 edition of the Yacht Welfare VAT Guide is finally released. You can ask your copy by sending an email to info@yachtwelfare.it. Our Team of Lawyers and Fiscal Advisors is always available to assist you during your Charter Season in the Mediterranean Sea.

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.

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.