Category Archives: Spain

Superyacht rules change in Spain

Rule changes ease charter market in Spain

p1170018Joaquin Fernandez-Davila takes a call on his smartphone. Lady M, a 64-metre superyacht launched this year, wants to take on 20,000 litres of fuel in the Marina Davila Sport in Vigo, northwest Spain. The yacht’s captain asks whether the marina has sufficient depth. “No problem,” says Mr Fernandez-Davila, the marina’s megayacht co-ordinator, who has the ideal berth alongside a 230-metre pontoon.

The yacht docks in the evening, but departs the following day. Yachts this size are a rare sight in Spain. “I would like them to stay longer, to show them what our region has to offer,” says Mr Fernandez-Davila, who longs for the day when big yachts will charter from Spanish ports, as they do from the French Mediterranean resorts. Now, after persistent industry lobbying within the European Union, that day may not be far away.

The Spanish government in July accepted a bill that will allow an exemption from the matriculation tax of 12 per cent for visiting charter yachts in Spanish waters. The tax, which predates Spain’s entry into the EU, is imposed on all luxury goods, including large yachts. When added to VAT it means Spanish nationals pay a 33 per cent tax on luxury goods.

At present the Spanish tax authorities allow a tax exemption for all privately-owned boats in Spain up to eight metres in length, and charter boats up to 15 metres in length.

The new law, part of a package of tax measures put before the Spanish parliament, will not change the matriculation tax, but it will remove the 15-metre limit on exemptions for visiting charter yachts.

It means that superyacht charters will be able to use Spanish waters and ports without becoming liable for the tax. “Just now if you bring your $100m charter boat into Spain you saddle yourself with a $12m tax liability. That will go when these measures become law,” says Patricia Bullock, tax specialist at Network Marine Consultants.

The tax change, which should be in place before the 2014 charter season, has been welcomed by a Spanish yachting industry that has been struggling for business.

New interpretations on the way VAT is applied on big yacht charters in France and Italy are also beginning to level charter fee structures in the Mediterranean. A French VAT exemption was recently dropped, reducing the tax anomaly that had contributed to its flourishing charter business.

“We are hoping now that the VAT position is going to be clearer and fairer for everyone,” says Carla Bellieni, a Genoa-based tax specialist. “The way VAT has been interpreted in different countries has been the problem. A uniform interpretative line will allow charter companies to choose a location because of the appeal of the country and its coast, not because of VAT law provisions.”

Ahead of these changes, a number of boat builders in Vigo have been equipping themselves in the hope of winning a slice of the superyacht industry.

Freire Shipyard, a builder of offshore exploration support vessels, expanded recently into luxury yachts with the launch of Pegaso, a 74-metre oceanographic yacht with a 10,000-mile range and its own mini-submarine.

“We were able to marry our expertise in building support vessels for the offshore oil industry to the superyacht skills of our yard in Majorca. We brought those skills over to Vigo for this project,” says Marcos Freire, one of the company directors.

Atollvic Shipyard, based in neighbouring Pontevedra, has extended its yacht build and refit capacity in the past few years. But with Spain’s economy in a prolonged downturn, business has been slow. “It has been hard in the past year. We hope this taxation change will repay our investment,” says Diego Gomez, Atollvic’s commercial and marketing director.

Freire, meanwhile, has just won an order to build a training yacht for the Indonesian navy. The vessel will take 200 passengers and crew, and will double up for Indonesian government use on state occasions and trade missions.

Galicia is a long way from the Balearic Islands, which can expect to pick up the lion’s share of new charter business resulting from the Spanish tax change. Yet that has not stopped the port of La Coruña extending its marina in anticipation of a market upturn.

“We have a beautiful old town with so much history,” says Jesús González-Aller Lacalle, director-general of Marina Coruña. “The food and the wine of this region and the Rias – our small fiords – make it perfect for cruising.”

One of Galicia’s wealthiest sons, Amancio Ortega, founder of the Zara clothing chain, is known to cruise the area, but the biggest yachts are not often seen on the Spanish coast, where 80 per cent of boat ownership is concentrated on yachts of less than eight metres.

Of the Mediterranean charter fleet, numbering some 840 yachts over 24 metres, no more than 14 are working in Spain, and most are older vessels.

For years, Spanish yacht builders, owners and marina owners have watched the superyacht industry expand elsewhere in frustration at a tax that has strangled their ambitions.

The tax changes cannot come too soon for Salamanca Group, the banking and risk management business that has invested in expanding Barcelona’s Marina Port Vell to provide 167 berths for yachts from 10 to 180 metres long.

“The tax changes will make a significant difference,” says Martin Bellamy, Salamanca chief executive. “We will be taking large vessels from this autumn and are very excited about the prospect. Our marina has the potential to be the number one superyacht marina in Europe.”