EU VAT changes
Encouragingly, more recently Spain has made great strides in relaxing restrictive legislative barriers however some of their rules remain somewhat draconian.
One of the major issues facing would be charterers lies in the fact that Spain makes no provision for a reduced VAT rate for charters commencing in Spain but cruising outside EU waters. Not so beneficial as neighbouring France whose regime provides for an effective 50% reduction of the VAT burden if it can be proved the yacht in question entered International Waters.
Commonly referred to as ‘use and enjoyment provision’, Spain’s decision to not adopt this principle solely when commencing a charter from Spain (regardless of their subsequent itinerary) thus exposing yachts to the headline Spanish VAT for the full charter period, is somewhat shortsighted given their contrary position should the charter start elsewhere.
Should a yacht commence their charter in non-EU waters then enter Spain, VAT is calculated for a prorated period whereas starting in other EU countries, they are subject to more favourable VAT conditions.
No wonder the issue of chartering stems confusion. It appears the cherry picking of legislation can only be designed for one purpose; revenue generation! With EU economics still in fragile state, we can only really see this ‘cash grab’ getting worse, not better. Perhaps its no wonder clients are lured further afield for their cruising grounds.
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This post was written by Declan O'Sullivan