Tag Archives: taxation

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.