Charter, VAT and its accrual in international waters

Based in Palma de Mallorca, Spain, Miguel Ángel Serra is the founding partner of Llegalley+ and currently serves as tax advisor of the Spanish Yachting Association (ANEN).

To strengthen Spain as a Mediterranean reference in the field of international charters requires modernisation of the applicable fiscal framework, particularly with respect to value added tax (VAT). The comparative experience shows that adopting certain technical measures, fully compatible with EU regulations, contributes decisively to improving the competitiveness of the industry, attracting specialised investment and consolidating an economic activity of high added value for the whole state.

In this context, it is a priority to incorporate into domestic legislation the faculty provided for in Article 59 bis of Directive 2006/112/EC, which allows the exclusion from VAT taxable income of that part of the charter fee that occurs (pro rata temporis) in international waters. This discretionary option has been exercised by countries in our competitive environment– among others, France and Italy – becoming a differentiating element in their yachting offerings. The absence of this provision in Spanish legislation results in the application of the general rate of 21 per cent to 100 per cent of the charter fees when the vessel is made available in national territory, regardless of the final itinerary.

From a legal perspective, it is important to emphasise that the Spanish regulations, and in particular Article 70.One.9.º of the VAT Law already establishes a clear criterion for the location of short-term leases – a category that includes the entire nautical charter – based on the place where the yacht is made available to the client. The application of the aforementioned article 59 bis does not call this rule into question but introduces a tighter delimitation of the taxable base, in line with the possibilities offered by Union law. This is therefore an adaptation consistent with the current tax architecture and with consolidated practices in the main European markets, our largest competitors.

Likewise, the practical implementation of this measure has full operational feasibility. The industry has advanced satellite geolocation solutions that enable certification, with objective accuracy, of the percentage of navigation time spent in international waters. These tools guarantee the traceability of itineraries and provide sufficient legal certainty for administrative control and are consistent with other assumptions of territoriality already accepted in the Spanish system.

The foreseeable fiscal impact of the reform would be very limited, given that most of the charter sailing in Spain takes place within territorial waters, especially on cabotage or coastal navigation routes.

However, its positive effect on competitiveness would be significant: it would align the Spanish offer with European standards, strengthen the confidence of international operators and contribute to consolidating a strategic industry due to its ability to generate qualified employment, boost regional economies and promote sustainable tourism with high added value.

In sum, the incorporation of the faculty provided for in Article 59 bis of Directive 2006/112/EC represents a technically solvent, legally sound and strategically necessary measure to advance the consolidation of Spain as a leading destination in the international charter industry, particularly in the superyacht segment.

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