L obbying actions across Spain have gathered pace during this last year, highlighting the ludicrous loss of revenue and negative affect on jobs created by the imposition of 12 percent matriculation tax on foreign owned charter yachts.

Several of the meetings held with the yachting sector in Palma have been orchestrated by local tourism specialist Kate Mentink, who has also kept well in touch with the majority holding Partido Popular Party in Brussels, via Rosa Estar·s who is the Member of the European Parliament for The Balearic Islands.

Rosa has always shown her understanding of the problems and been keen to raise them in Brussels, with a view to getting an EU Commission ruling on the legitimacy of the tax within the context of European fiscal legislation and fair trade.

In July this year the EU Transport Commission in response to questions raised by the Balearics and Catalunya, suggested that the Spanish tax law on ‘certain means of transport' (IEDMT) burdens with the 12 percent matriculation tax, yachts longer than 15 metres dedicated to commercial charter in Spanish waters coming from other EU member states. And crucially does so, even if they have satisfied all the certification and matriculation requirements demanded by the country of residence of their owners.

The argument behind their opinion was that the tax prevents the development of commercial charter activity in Spain from taking place on an equal footing with the rest of the EU, and effectively harms the principles of free circulation of peoples and services which is enshrined in the EU constitution.

The commission further stated that European Union fiscal harmonisation has not yet reached the stage where individual member states are prevented from applying matriculation tax on certain means of transport.

However it goes on to say that it does not believe the application of such a tax should be so rigidly applied to a charter yacht, which thus far has been levied irrespective of the period of time that the yacht is engaged in actual charter activity in Spanish waters.

Therefore the suggestion was that a proportional tax payment relative to the time the yacht is actually available for charter might be a fair compromise, and better adjusted to the EU principles on free movement of goods and services.

So, now we are at the end of the yachting season, you may have thought that the actions and lobbying against the 12% matriculation tax on yachts in Spain might be laying dormant whilst the national government is disbanded and waiting for elections, but that is actually far from the case! In late October the EU Commission issued a statement following on from the letter they wrote to Madrid in the summer, demanding a response to their opinion about the imposition of matriculation tax on yachts from other EU countries chartering in Spain. In this they said that the tax charged should be in proportion to the amount of time spent by the vessel in Spanish waters. l Here are exerpts from the EU press office statement on the subject dated 27th October 2011. l The European Commission has formally requested Spain to change the way in which they tax leased or rented ‘Means of Transport' (vehicles or yachts) from another Member State, as well as company cars, so as to ensure their rules comply with EU legislation. l According to EU rules, a Member State can only levy a registration tax on a leased or rented MOT from another Member State in proportion to the use in its own territory. This means that a Member State may only levy a full registration tax on a leased or rented MOT from another Member State if it is used or intended to be used on a permanent basis. l These provisions are contrary to EU rules on free movement of workers and on freedom of establishment, both fundamental principles of the EU's Single Market. l In the absence of compliance with EU law within two months, the Commission may refer Spain to the EU's Court of Justice.
Meanwhile the major yachting associations in Spain, (ANEN, FENIB, AEGY, AENB, ANAVRE etc,) are as united as ever in their lobbying efforts towards politicians, particularly with regard to the potential incoming party, which is widely expected to be the Partido Popular.

In several meetings the associations have had with prominent PP politicians, they have been encouraged by the understanding of the irrefutable business case facts and figures, which seem to have been readily understood and fully acknowledged.

In the latest move, a top Madrid law firm are being approached to present the facts to Madrid before the year end, along with suggested wording for a reframing of the tax law as it is applies to all EU flagged charter vessels over 15 metres.

This is now a constantly changing and fast moving situation due to the impending national elections, and the necessary finance ministry budget process which will have to take account of any changes in tax law and its revenue generation before the new government takes over in the new year.

Therefore the nautical business associations will be issuing statements from time to time as the process unfolds.

Written by Peter Franklin.
On behalf of The Balearic Nautical Business Association. (AENB)

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