Spain’s General State Budget Law, passed on 4 July 2018, repealed the Tourism Registration Regime (TRR) under which vehicles and vessels owned and used by non-EU residents within the territory of the EU Customs Union were exempted from VAT and the Spanish boat registration tax.
The Special Tax on Certain Means of Transport (Impuesto Especial sobre Determinados Medios de Transporte (IEDMT)) – often known as Matriculation Tax – is an import duty that is equal to 12% of the price or value of the yacht and applies to owners or users of yachts over eight metres under the following circumstances:
- Applications for the registration of boats and cruisers for sports or leisure purposes, new or used, on the Spanish register;
- Yachts navigating or used in Spanish waters that are owned by private individuals who are tax resident or benefit from a stable establishment in Spain;
- Yachts navigating or used in Spanish waters that are owned by legal entities that are registered in Spain or benefit from a stable establishment in Spain or are controlled and managed in Spain.
The exemption under the TRR applied to vehicles and vessels that were registered in Spain as a consequence of a transfer of the residence of a foreigner to Spain. The exemption was aimed at the tourist sector and for those who wished to retire in Spain. The vehicles and vessels must have been used for at least six months prior to transfer.
The rationale for repeal was that the regime was not in compliance with the current EU Custom Code or VAT legislation. It had also failed to achieve the purpose for which it was enacted – to promote the sale of vehicles and yachts manufactured in Spain.
A transitional period has been established such that all TRR authorisations that were valid on 5 July 2018 will remain effective until 31 December 2018, but these will not be extended and no new authorisations will be issued. On 1 January 2019, the TRR will be considered finally eliminated and, therefore, the application of any tax or customs benefit will not be accepted.
This presents an opportunity for affected yacht-owners to re-domicile to Gibraltar. Gibraltar is outside the EU Customs and VAT union but complies with the EU directive in respect of Temporary Admission (or Temporary Importation), a mechanism that enables non-EU resident yacht owners to bring their vessels into European waters for a limited time and under certain conditions without having to be VAT-paid under EU regulations.
The criteria for Temporary Admission are that the yacht must be owned by a natural person or a legal person who/that is resident outside the VAT territory of the EU, and the yacht must be used privately (not for charter).
The yacht can then be used within the EU for a maximum of 18 months after its first arrival. Under certain conditions this time frame can be extended to a maximum of 24 months. The sale of a yacht whilst lying within the EU under Temporary Admission would breach the conditions of the relief.
The key steps to follow would be to incorporate a yacht-owning company in a location outside the EU VAT zone, such as Gibraltar, which would then contract to purchase the yacht, which will be registered in the name of the company at the owner’s preferred offshore port of registry, such as Gibraltar. The yacht can then be delivered to the company outside the VAT territory of the EU, from where it can then enter the EU and begin its Temporary Admission period.
All temporary importation procedures and formalities can easily be arranged from Gibraltar thanks to the proximity of the custom zone of Algeciras in Spain within only two nautical miles.
Gibraltar also has all the facilities to be a yacht destination of choice for owners and crew, including fully serviced berths – which can accommodate most vessels including some of the world’s largest superyachts – a dedicated yacht fuelling terminal, infrastructure for ship and yacht repair, and a wide-range of ship chandlers and provisioners.
Gibraltar is a Category 1 Red Ensign Group Register, the highest status that can be accorded to a ship register within the Red Ensign Group, and a well-established legal system based on British Maritime law. Gibraltar is also one of the few Mediterranean ports to have an airport located only minutes from the port with daily connections to and from various UK destinations.
As the marine division of the Sovereign Group, Gibraltar-based RegisterAYacht (RAY) registers, administers and manages yachts – pleasure and commercial – on a worldwide basis. It also specialises in the provision of ownership structures, VAT and tax planning, yacht importation, safety and technical management, marine insurance and finance, crew administration and payroll, accounting and banking, foreign exchange and international payments.
RAY offers particular expertise in corporate ownership and tax planning, as well as enjoying access to a global office network that includes Malta, London, the Isle of Man, Guernsey, Cyprus, Dubai, Singapore and Hong Kong.
For further information please contact Gabriel González, director of RAY.