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 Again the Spanish Matriculation Tax

The European Commission understands the Spanish Special Tax On Certain Means of Transport, known as Matriculation Tax, is not illegal in relation to the European Unión legal framework. However, its application to European flag charter vessels used temporarily in Spanish waters, if it is, shall be in relation to such period.

The registration in Spain of recreational vessels over 8 metres in length or their use in Spanish waters by residents is subject to the Matriculation Tax (MT). Established by the Special Tax Act in 1992, the tax is 12% of the yacht value or price, and also affects commercial yachts with foreign flags with a base in Spain or used temporarily by Spanish residents in territorial waters.

The Special Tax Act allows the exemption from paying the tax on chartered yachts up to 15 metres in length. This exemption does not allow private use, or beneficial owner use even paying for the service, and shall be recognized by Tax authorities before the activity starts. The limit of 15 metres is considered short for national and international charter companies, which understand no limit shall be established. That is, yachts of any length shall have the option to apply for the exemption. Charter, seen as a way of sharing a vessel, is a solution to avoid the need for more marina facilities, today plenty of moored and few used yachts. On the other hand, the increase in the length of chartered yachts could be a source of job creation, very important to Spain today.

Last February, our firm issued a report on we discussed about a press notice submitted by the Spanish Maritime Directorate ( Dirección General de Marina Mercante) supporting the none application of MT to yachts registered in the REBECA. The REBECA is a second Spanish vessel registry located in the Canary Islands, created in 1992, offer best tax condition than the Spanish ordinary registry . Are eligible to be registered in REBECA commercial yachts over 100 GT and is necessary have legal representation in the Canary Islands.

The Maritime Directorate notice was important news, not in terms of an exodus of large yachts to the REBECA, but in agreeing with European legislation, their legal opinion could be an open door to all yachts registered in EU countries. The European law rejects discrimination and such provision is a clear discrimination in favor of yachts registered in the REBECA. That is, a European flag yacht performing the same activities as other registered in the REBECA, cannot be taxed only because it is registered in a different jurisdiction.

Unfortunately and astonishingly, the opinion of the Maritime Directorate lawyers is not shared by Tax agents of AEAT ( Spanish tax agency), who have the responsibility of collecting the tax, and at this time the issue is in on hold. It means that yachts registered in the REBECA are enforced to pay the tax and the loophole is closed.

On the other hand, last July, a group of European MPs from Spain, submited a question to the European Commission regarding the legality of the Spanish matriculation tax application to foreign yachts sailing in Spain under lease agreements in the framework of the European Treaties.

Briefly, the Commission´s response was:

1) Not being a harmonized tax, the application of a tax on the matriculation or circulation of means of transport or yachts is not against European law.

2) If the yacht is already registered in a European member state and the circulation in Spain is occasional, the tax shall be enforced proportional to this time.

Considering the Commission opinion is supported by repeated resolutions of the ECJ, there are few options of being successful in a legal action demanding the tax abrogation. It is necessary to await Spanish MPs to do their job and change the rule. Allowing the tax exemption for yachts of any length (now only to yachts up to 15 metros) could be a good solution for the charter industry.

In relation to the tax application to chartered yachts used occasionally in Spanish waters, is necessary to await the Spanish authorities answer and solution. The issue could finish in a lawsuit in front of the ECJ.

In our opinion, the remedy could be through the interpretation of the first additional provision and article 65.1.d of the Special Tax Act. The named articles provide that the yacht users will be liable to the tax after 30 days of starting to use the yachts in Spanish waters if them do not apply for the Spanish flag. Allowing 30 days chartering if the yacht leaves Spanish waters within this period could be an acceptable solution for charter´s companies. If any payment is required the status quo will not change.

Remember, you are only liable to pay the tax on commercial yachts with a base in Spain or leased to a residents.

August 2011

 Yamandu R. Caorsi
Lawyer at Blas de Lezo Abogados
Yachting tax and legal consultant in Spain
www.nauticalegal.com



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