Spanish VAT on chartering. Matriculation tax
Spanish matriculation tax is an additional indirect tax obligation on boats purchased or used in Spain. It is foreseen only for private individuals or businesses not using the boat for commercial purposes. This tax is important for foreign chartering companies because of a high tax rate of 12% and the lack of certainty on the position of the authorities about foreign businesses operating in Spain.
Matriculation tax is regulated outside the Spanish VAT law. Spain has a special indirect tax on sales of certain means of transport. Matriculation tax covers the first matriculation of vessel and recreational ships new or used, that have more than eight meters of length in the vessel registry.
The tax base of the matriculation tax is determined according to whether the vessel is new or used. In case of new vessels, the taxable base will be equal to the amount due on the acquisition of the vessel. In case of used, the taxable base will be the market value at the moment of paying the tax. The tax rate is generally 12%.
Exemption on Spanish Matriculation Tax
The exemption scenarios in the matriculation tax are included in article 66 of the Matriculation tax law. According to this article, the vessels that are wholly and exclusively used for chartering business activities will be exempt from the matriculation tax in Spain.
Self-supply of chartering services is not considered as business activities for the purposes of the matriculation tax exemption. Also, where the same client receives chartering services for more than 3 months within 12-month period, these services will also not be considered when applying the exemption.
The definition of self-supply is included in Article 79 of the VAT law. In the field of hiring recreational vessels, it is understood that there is self-supply when the client is a relative, couple or other close family member. This self-supply requirement only applies to Spanish resident individuals and businesses established in Spain.
Matriculation tax for non-established companies
According to the Matriculation tax, vessels must be subject to matriculation tax in Spain when they are used in Spanish territory by individuals or entities that are resident in Spain, or own establishments located in Spain.
In this respect, a vessel is not subject to matriculation tax in Spain if it is used by non-established businesses, or by individuals who do not own an establishment in Spain (see binding ruling COSG-2011-044-DMji).
Definition of "establishment" for matriculation tax
The law does not have a definition of establishment for matriculation tax purposes. Because of this lack of legal provision, the concept must be determined according to interpretation of tax rules and case by case decisions of the Spanish tax authorities.
In this sense, according to Binding ruling V1722-14, the place form where all or part of an economic activity is performed will be considered permanent establishment. This ruling provides some light over what is in our out of this definition:
“(…) a dock in Spanish territory, in which a vessel property of a non-established person in Spain, is not considered permanent establishment since it is not considered a fixed place from where economic activity is performed”.
Also, Binding ruling V1722-14 adds that the mere navigation on Spanish waters, directed by professional captain resident in Spain, linked by a contract to the non-resident entity owner of the vessel will not create an establishment in Spain.
Nonetheless, the Spanish tax authorities on certain occasions such as the Binding ruling V 1850-14, interpreted that an establishment exists where chartering activities are regularly carried out in Spain.
In our experience, the definition of establishment for Matriculation tax purposes is not made sufficiently clear by the legislation or the available biding rulings. There can be ambiguous or even contradicting circumstances in which the tax authorities hold a different position form its common practice.
- Vessels used in Spain that are over 8 meters in length, by individuals or businesses established in Spain must pay matriculation tax at 12% on the value of the vessel.
- Chartering companies using the vessel wholy and entirely for commercial activities are exempt from matriculation tax on such vessel.
- Spanish matriculation tax does not apply to businesses or individuals who do not have an establishment in Spain.
- In the event that chartering activities are done regularly, there is a possibility that the tax authorities consider that there is an establishment in Spain from which all or part of the activity is carried out, and in consequence, this means the vessels is subject to matriculation tax in Spain. Foreign companies must evaluate the possibility of asking for the exemption from matriculation tax even if they consider their business as non-established in Spain.
How can we help you?
We are specialist on indirect taxes in Spain and all other European countries. Together with our local partner Marine Consultants, we provided a holistic service for your chartering activity in Spain.
We will evaluate your expected activity in Spain to determine if you are subject to Spanish matriculation tax. We will also handle your VAT registration and all related VAT obligations in Spain, Italy or France.
Please contact our specialist Ana Portabales for more information about our services.