Yacht sector claims tax man is limiting charter development in Balearics

THE yacht charter firms based in the Balearics complain that fiscal treatment is limiting their development in the islands, in favour of other destinations in the Mediterranean basin. The claims were made by the nautical division of Pimem (small and medium sized business associations) and APEAM, the Provincial Association of Maritime firms. They claim that when they act as “brokers”, chartering boats which they do not own to third parties, even though the yachts are from European Union countries with current licence and insurance, they are obliged to pay a registration tax equivalent to 12 per cent of the yacht's value when it left the shipyards. This, the associations claim, does not happen in any other European country and limits the business possibilities in the islands.
Particularly hard hit is the luxury sector, yachts between 24 and 70 metres, as the Balearic firms which offer them do not own any and must rent them from foreign owners. “We have European yachts guaranteed in their own countries, which cannot be chartered in Spain because of this registration tax. If the yacht is valued at ten million euros, it would have to pay 1.2 million euros to operate in Spain, which means it is impossible for us to meet demand for sailing in the Balearics,” according to Marta Iglesias of Koch Newton & Partner, a member of APEAM. As a result many brokers opt for sending clients to Italy, France and other countries “where our activity is not penalised.” Cristina Sastre of Pimem said that the situation also affected the charter of smaller yachts, which also had to pay the tax.
She claimed that the tax office has changed the interpretation of the law, and treats charter companies as though they were the final clients and not intermediaries. But the tax office denies this, and said that the sector was not being “persecuted”.
However, Sastre said that they would be putting their grievances in the hands of Ramon Socias, the central government's representative.
She went on to say it was “illogical” to penalise this sector with a tax that was unique in Europe, particularly when the regional government wants to boost this sector. “In other European and Mediterranean countries, the bigger the boat, the bigger the fiscal benefits, so our situation only benefits competitors such as France, Italy, Greece and Turkey,” Sastre added. The situation affects about 80 charter firms registered in the islands, operating with a fleet of 700 yachts, 80 per cent of which are managed and only 20 per cent owned by the firms.