Management Meeting triggers desired outcome for Spanish charter
Spain's Ministry of Development has announced that the country's Council of Ministers has approved an amendment to the much maligned Matriculation Tax, which will see commercial vessels over 15m qualify for exemption from the 12 per cent levy.…
Spain’s Ministry of Development has issued a statement pertaining to the status of the Spanish Matriculation Tax. According to the Ministry’s statement the Ministry of Finance and Public Administrations will cease the application of Matriculation Tax to vessels of 15m+ engaged in commercial activity. Prior to this legislative amendment, vessels over 15m were subject to the Matriculation Tax regardless of their status.
The government's action follows the posing of a question by EMP, Rosa Estarás to the European Commission on Tuesday 25 June regarding the time it had taken the Spanish administration to enact a reform of the Matriculation Tax. Spain's legislation had already been deemed in contravention of EU law when Ms Estarás attended the Superyacht Fiscal Management Meeting in Brussels in March 2013. Having learned of the plight of the superyacht industry first-hand, Ms Estarás has since played a pivotal role in bringing this much-needed reform to fruition.
Whilst it has been widely reported that the Matriculation Tax has been abolished in its entirety, this is not the case. The registration tax, which is equal to 12 per cent of the vessel’s value, will continue to be applied for all private vessels above 8m.
However, this is a seismic shift in the right direction for Spain’s superyacht charter market. In its statement, even the Ministry of Development acknowledged its hindrance of the market’s growth.
[The Matriculation Tax] causes vessels dedicated to [charter] activity to limit their stay on Spanish shores and in Spanish ports during the summer season, as well as avoid wintering in Spain.
It is hoped that, through this modification of the implementation of the tax, it will improve the competitiveness of the Spanish charter sector, with the consequent effect of improving the national tourist offering.
“The tax has not been eliminated – just the limit for the exemption, and the requirements for the exemption still have to be complied with. The amendment now has to processed through the normal channels and we are expecting that it will be finally approved within the next few months so that it will be applicable for the 2014 season”, Bullock explained. “Charter permits, VAT/tax numbers and registration and application for the exemption still have to be obtained as always.”
The amendment to the application of the tax comes after a prolonged period of lobbying by the Spanish industry and MEPs, which involved the posing of a series of questions to the European Commission questioning the legality of the tax under federal law. This process began in 2011 and, when speaking at the Management Meeting, lawyer and economist for Spanish firm, Garrigues, Miguel Angel Serra prophetically stated:
“The chances of success in regards to the elimination of the 15m limit are very high, because the decision of the Commission in this respect is based on the infringement of the European law in the sense that the Spanish regulation is against the freedom of provision of services."
Commenting on the removal of the 15m cap, Serra highlighted the government's acknowledgement of a key distinction he himself had highlighted at the Management Meeting. "It should be noted that the ministry press note emphasises that one of the main reasons for the elimination of this tax for charter vessels is to put on the same level the matriculation tax exemption as rented cars, which is not subject to any kind of limitation on length, power or category, or even planes, to that of yachts", Serra explained. "This argument is something that was not taken into account and something we have always defended."
The government's action follows the posing of a question by EMP, Rosa Estarás to the European Commission on Tuesday 25 June regarding the time it had taken the Spanish administration to enact a reform of the Matriculation Tax. Spain's legislation had already been deemed in contravention of EU law when Ms Estarás attended the Superyacht Fiscal Management Meeting in Brussels in March 2013. Having learned of the plight of the superyacht industry first-hand, Ms Estarás has since played a pivotal role in bringing this much-needed reform to fruition.
Whilst it has been widely reported that the Matriculation Tax has been abolished in its entirety, this is not the case. The registration tax, which is equal to 12 per cent of the vessel’s value, will continue to be applied for all private vessels above 8m.
However, this is a seismic shift in the right direction for Spain’s superyacht charter market. In its statement, even the Ministry of Development acknowledged its hindrance of the market’s growth.
[The Matriculation Tax] causes vessels dedicated to [charter] activity to limit their stay on Spanish shores and in Spanish ports during the summer season, as well as avoid wintering in Spain.
It is hoped that, through this modification of the implementation of the tax, it will improve the competitiveness of the Spanish charter sector, with the consequent effect of improving the national tourist offering.
Superyachts could be a more common sight in Spanish waters by 2014.
Network Marine Consultants’ Pat Bullock, who has played an instrumental role in bringing about these reforms, told SuperyachtNews.com, “on Friday 28 June, the Spanish Government accepted at ministerial level, the formal request for the elimination of the 15m limit to apply for the exemption of the Matriculation Tax on yachts carrying out commercial activity.” “The tax has not been eliminated – just the limit for the exemption, and the requirements for the exemption still have to be complied with. The amendment now has to processed through the normal channels and we are expecting that it will be finally approved within the next few months so that it will be applicable for the 2014 season”, Bullock explained. “Charter permits, VAT/tax numbers and registration and application for the exemption still have to be obtained as always.”
The amendment to the application of the tax comes after a prolonged period of lobbying by the Spanish industry and MEPs, which involved the posing of a series of questions to the European Commission questioning the legality of the tax under federal law. This process began in 2011 and, when speaking at the Management Meeting, lawyer and economist for Spanish firm, Garrigues, Miguel Angel Serra prophetically stated:
“The chances of success in regards to the elimination of the 15m limit are very high, because the decision of the Commission in this respect is based on the infringement of the European law in the sense that the Spanish regulation is against the freedom of provision of services."
Commenting on the removal of the 15m cap, Serra highlighted the government's acknowledgement of a key distinction he himself had highlighted at the Management Meeting. "It should be noted that the ministry press note emphasises that one of the main reasons for the elimination of this tax for charter vessels is to put on the same level the matriculation tax exemption as rented cars, which is not subject to any kind of limitation on length, power or category, or even planes, to that of yachts", Serra explained. "This argument is something that was not taken into account and something we have always defended."
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