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An analysis of the grounds upon which yachts, registered under foreign flags and navigating in Spanish waters, are subject to the Special Tax on Certain Means of Transport, otherwise known as Matriculation Tax.

Spain's Impuesto Especial sobre Determinados Medios de Transporte or Special Tax on Certain Means of Transport which includes recreational yachts, under certain circumstances, is forcing owners to take extra precaution for fear of potential tax liabilities.

According to the terms of the Special Taxes law 38/1992, 28th December, registration tax is equal to 12% of the price or value of the yacht, hardly insignificant considering the levy applies to owners or users of yachts over 8 metres under the following circumstances:

a) Applications for the registration of boats and cruisers for sports or leisure purposes, new or used, on the Spanish register, general or special, (the law apparently refers to the Special Registration for the Canary Islands).
b) Yachts navigating or used in Spanish waters by a private individual or legal entity classed as resident or proprietor of an establishment in Spain.

Consequently, as far as we can see, the registration tax applies when the person concerned, yacht proprietor or otherwise, voluntarily applies for registration under the Spanish flag and when the yacht is intended for use in Spanish waters by a private individuals or legal entities classed as Spanish residents or non residents with an established business. Authority to use the yacht is understood to be by a private individual, legal entity or company.

Since 2011, owners obliged to pay the tax on account of the yacht's presence in Spanish waters correspond to category b. Despite the tax levied upon owners by the Treasury, there is no obligation to register under the Spanish flag, undoubtedly an advantage when we consider the administration procedures involved in registering the yacht under a different flag, not to mention the arduous process of qualifying for a Spanish licence known as the titulo de patron.

In either case, if the tax authorities, usually the Guardia Civil or Vigilancia Aduanera, custom patrols, detect the use of a foreign registered yacht by Spanish residents or business, the power is there's to immediately immobilise the yacht until such time as the situation is resolved, in other words, until the tax demand is paid or guaranteed. Naturally, the owner has the right to appeal against the demand, either through the appropriate channels or before a court of law.

The concept of resident or established

It's important for foreign yacht owners to be aware of the circumstances upon which they could be classified as a Spanish resident, which are:

a) When an individual spends more than 183 days per year on Spanish territory.
b) When the main business interests or activities are centred in Spain directly or indirectly.

Those living aboard in a Spanish port need to be particularly aware of the 183 day proviso.
As regards legal entities or companies– trading corporations, for example – Spanish residency is classified as follows:

a) The business has been established in line with Spanish regulations.
b) The company's registered office is located in Spain
c) The company's head office is located in Spain, classified as the control and management headquarters for company's main business activities.

As regards establishment title holders – as stated in the first additional regulation – in Spain, this refers to a permanent establishment, applicable only to companies or legal entities. Applicable to a company with permanent business premises in Spain from where all or part of the company's business activity is carried out. Decisions made through tax inspections also indicate companies owning and using yachts for commercial purposes from a Spanish port are also considered to be established.

Registration Tax exemption

Those exempt from registration tax are as follows:

Owners of boats or yachts who move to Spain and fulfil the following requirements:

a) Their permanent residence must be outside Spanish territory for at least twelve consecutive months prior to moving to Spain.
b) The yacht has been purchased or imported according to the tax regulations in the country of origin or point of departure
c) The yacht must have been used by the person concerned in their former residence for at least six months prior to the date of leaving the country.

It's important to remember that to qualify for tax exemption due to moving, an application must be made within 60 days of establishing residency or bringing the yacht into Spain.

Owners of yachts up to 15 metres used solely and specifically for charter must fulfil the following requirements:

a) As stated, the use of the yacht must be exclusively for charter.
b) The yacht is not to be rented by owners or persons connected.
The application for tax exemption must be made prior to commencing the activity. In other words, if a foreign registered yacht is hired to Spanish residents or from a Spanish port before the application for tax exemption, the yacht will be subject to registration tax.

Taking into account the information above and the regulations established by the Government and Courts of Justice, we can make the following conclusions:

a) Owners or users of recreational yachts over 8 metres, resident or established in Spain, who use the yacht in Spanish waters must pay registration tax.
b) If a recreational yacht registered under a foreign flag is used in Spanish waters by a non-resident or non-established, private individual or company, Spanish registration is not required.
c) Legally, there are no restrictions on the time a yacht registered in an EU country is allowed to remain in Spanish waters. The factor which determines the obligation to register in Spain is the length of time the user remains in Spain, 183 days per year, not the yacht
d) Living aboard a yacht moored in a Spanish port for more than 183 days per year can be considered to be resident in Spain and obliged to pay the tax as a consequence.
e) Crew contracted to work aboard the yacht can be resident in Spain given that the obligation to pay the tax is determined by the yacht owners residency status, not that of employees.
f) Owners who move to Spain or use the yacht for charter purposes are exempt from the tax providing the owner complies with certain conditions and the application is made within the specified time period.

Authors note: this article, based on law, presents a general and illustrative evaluation of the topic in question. The author disclaims responsibility for any consequences arising from the use of the content of this article in real cases, in the event of which you are advised to seek legal advice.
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Yamandú R, Caorsi
Lawyer specialising in Shipping and Maritime Law
C. Paris 162, 4º, 1º 08936 – Barcelona
Tel. 0034 934192489 Fax 0034 4193611
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