The cost to enjoy a Balearic Island yacht charter vacation should soon be going down. The Spanish government announced that they have ceased implementation of the IEDMT (Impuesto Especial sobre Determinados Medios de Transporte). In other words, better known in the yachting industry as the Matriculation Tax.
COST OF TAX
First introduced in 1992, the tax equaled up to 13.7% of a vessel’s value. It applied to all yachts over 15 meters used commercially. For instance, charter vessels.
In addition to the standard VAT imposed on charters, the cost to own a superyacht or rent a yacht in Spanish waters became prohibitive. This is when compared to other European Union countries.
PROTESTS BY THE MARITIME INDUSTRY
Protests by the Spanish and Mediterranean maritime industry have been ongoing ever since. Numerous reports outlined how the tax was causing economic harm, not benefit, to employment and economic activity in Spain. Some studies showed losses to the economy of 10 million euro per weekend alone, in high season.
RESCINDING THE TAX
For years, Spain ignored the calls to rescind the matriculation tax . In 2011, the European Union Court of Justice declared the Spanish Boat Tax an “unlawful practice,” yet Spanish authorities ignored the guidance laid down by the EU.
Fortunately, the Spanish government finally listened.
THE MINISTRY COMMENTS
According to a statement released by the Spanish Ministry of Finance and Public Administrations in July, the Ministry will, “…cease the application of Matriculation Tax to vessels of 15m+ engaged in commercial activity.”
While the news is widely heralded as positive, many hurdles remain before chartering in Spanish waters becomes competitive with other regions in the European Union.
“Spanish IVA (VAT) remains at 21% – nearly double the typical fees found in other EU countries,” states Jana Sheeder, President of SailAway Yacht Charters and 1-800 Yacht Charters. Sheeder adds, “A myriad of permits and registration requirements makes it difficult for charter vessels to commit to cruising in Spain.Without Spanish registration, these yachts cannot begin and end a charter within Spanish waters. So the combination of administrative burdens and high IVA keeps most charter yachts out of Spain.”
THE TAX REMAINS
It should also be noted the matriculation tax has not been eliminated.
“The tax has not been eliminated. The Ministry was careful to use the words, ‘Ceased to be applied.’ While we expect the Spanish Parliament to vote in favor of the Ministry’s position on the matriculation tax, there is no guarantee that a future administration won’t vote to reinstate it.”
STEP IN THE RIGHT DIRECTION
Still, the abolishment of the matriculation tax is a step in the right direction. Parliament’s approval is expected within the next few months and the new exemption should be in place in time for the summer 2014 charter season.
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