New exemptions on taxes on Charter Yachts

On October 31th the modification of the Law 38/ 92, on Special Tax, allowing Spanish flagged and foreign charter yachts of any length in Spanish waters and ports without paying the Special Tax on Certain Means of Transport, known also as the registration or matriculation tax, came into force.

The matriculation tax, which is 12% of the yacht's value, applies to those yachts of more than 8 metres in length which are registered in Spain or yachts with a foreign flag performing charter or commercial activities in Spanish waters or ports. Until October 30th, the law allowed a tax exemption for charter yachts of less than 15 metres in length as long as the exemption was applied for from the Spanish Tax Agency before starting charter activities in Spain. With the reform of the Law, it is possible to apply and receive the exemption on yachts of any length which comply with other requirements established in the Law.

Clearly, this is good news for the yachting industry, particularly for commercial super yachts because now they can operate from Spanish ports or allow clients to board in Spain without the risk of having to pay the Matriculation Tax, provided that they have applied for and obtained prior exemption.

Requirements to qualify for the exemption

To qualify for the exemption the yacht must only be used for chartering (private use is forbidden) interpreted as the lease to a third party for payment. You are also prohibited from renting the yacht to the owner, or a person linked to the owner, or to the same person for a period longer than three months in a year.

The exemption must be requested by the person or company performing the yacht's activities in Spain, whether this is the owner or not, you are obliged to register in Spain as a charter entrepreneur.

It should be noted that Spanish Tax Inspections have been very diligent in checking that those yachts enjoying the exemption meet the requirements of the law.

Particularly, those being used exclusively to charter. A significant level of fraud was detected because many owners who had obtained the exemption, failed to charter the yacht.

Operation in Spain

Operating commercial yachts in Spain, whether using a Spanish port as base or not, as we have said, enables a Matriculation Tax exemption application to be submitted, however, in one form or another, this will have implications for other taxes, such as, VAT, Income Tax, Company Tax or Non Resident Tax. Also, in some Spanish regions it is necessary to receive administrative authorization before carrying out any activities.

The management of each case is different and we recommend seeking specific advice to ensure the best results to your case . 

Javier Herrera Llamas