The latest news regarding the matriculation tax

Can an owner use his/her yacht and still be eligible for exemption of the matriculation tax for nautical charter?

An owner of a yacht or anybody linked to him/her can use the yacht and still be eligible for the exemption of the matriculation tax (IEDMT) reserved for yachts dedicated exclusively for charter (art. 66.1.g) Law 38/1992 of Special Taxes): (i) always, when the use of the yacht takes place outside Spanish territorial waters, as the application of the regulations regarding the Special Taxes is limited to the national territory only, and (ii) in Spanish territorial waters, always when the beneficial owner or persons linked to him/her are not resident in Spain nor have any establishment in Spain.

As ANEN informed already months ago, on the 30th of October 2013  a modification to the Law of Special Taxes (Law 38/1992, or L.I.E) came into force, an initiative driven by ANEN, AEGY and AENIB, which saw the elimination of maximum length for the exemption of the matriculation tax for recreational and sports boats dedicated exclusively for charter (article 66.1.g) of the Law 38/1992).

The said measure should allow that the exemption meant for vessels dedicated exclusively for charter (art.66.1g) L.I.E) is applied to all types of recreational vessels, specially the superyachts, as the exemption was previously applicable only to boats up to 15 meters of length.

However, as the superyachts are normally dedicated to mixed activities: (i) charter activity and (ii) private use by the beneficial owner or by persons linked to him/her, it seemed that - at least as interpreted by the Regional Branch of Customs and Special Taxes - the requirement for "exclusive commercial use" established in the said article 66.1.g)  L.I.E was not fulfilled, and lead to a conclusion according to which "there is no charter activity when a vessel is ceded for charter by its owner, whenever the said owner or another person linked to him/her receives through ownership a right for sole or partial use of the referred vessel or of any other vessel that is owner is also the assignee or linked to the assignee".

By the same token, and against the opinion maintained by ANEN and Miguel Angel Serra from Garrigues Lawyers, some regional branch offices of Customs and Special Taxes have also made the interpretation that the requirement for "exclusivity" wasn´t limited only to the Spanish territory (area of validity of L.I.E), but should be considered to apply worldwide. Consequently, a vessel that was exempt of matriculation tax in Spain according to the article 66.1.g) L.I.E, could not be used privately anywhere in the world by its beneficial owner or any parties linked to him/her; otherwise they were not in compliance with the requirement of  "exclusivity" of the above mentioned article.

However,  at the end of last month, the Directorate General of taxation (DGT) published a binding ruling to a consultation nº V0860-14 referring to a non-resident company in Spain which applies for an exemption of  the matriculation tax according to the article 66.1.g) of the Law 38/1992 of Special Taxes. The reply of DGT:

(I) Confirms the previously explained opinion of ANEN, that under the application of exemption for vessels destined exclusively for charter (art. 66.1.g) L.I.E), both the beneficial owner as well as any parties linked to him/her can use the vessel privately any time they like outside the Spanish territorial waters.

According to DGT, "what makes the IEDMT taxable is the registration in Spain or the circulation and use in Spain of a vessel by people or entities resident in Spain or owners of establishments in Spain. Consequently, circulation and use of a vessel outside Spain will not make the IEDMT effective and therefore the matriculation tax will not be charged".

(II) Regarding whether the vessel, object of this consultation, can be chartered to its shareholders that are neither residents nor owners of establishments in Spain, the DGT concludes that:

"From the conjunction of described legal precepts, it is deduced that all the obligatory requirements mentioned in the article 66.1.g) of the Law 38/1992, should refer to people or entities resident in Spain or owners of establishments in Spain, as the activity is taxable only in the case that the circulation or use in Spain is carried out by the above mentioned people or entities.

Consequently, the fact that a vessel is chartered to people or entities linked to the owning company, and while the said people or entities are not residents in Spain nor owners of establishments in Spain, there is no modification of the circumstances that determine the exemption and therefore the matriculation tax will not be charged".

In other words, the DGT´s interpretation goes against the opinion maintained by the regional branch offices of the Customs and Special Taxes, and states that shareholders of entities that are non-resident owners of vessels, as well as parties linked to them, can use the vessels in Spain by means of a charter contract, always when none of them is (i) resident in Spain or (ii) owners of "establishments" situated in Spain, without canceling the application of exemption in article 66.1.g) L.I.E.

Therefore, from now on, partners and parties linked to companies that own vessels of any length, and specially the superyachts that apply for the exemption of IEDMT (art. 66.1.g) L.I.E) can use these vessels in Spain, when:

- They do it by the means of a charter contract with the owning company
- They are not resident in Spain
- They are not owners of an "establishment" in Spain


ANEN, in collaboration with Miguel Angel Serra from Garrigues Lawyers, considers that now with this binding ruling to a consultation to Directorate General of Taxation, the market for nautical charter will finally open up in Spain. Indeed, for the first time the exemption of the matriculation tax  (art. 66.1.g) L.I.E) is permitted to vessels dedicated exclusively to nautical charter in Spain, even when the owner or parties linked to him/her use the vessels in Spain, provided that these people  are not, as previously explained, residents in Spain or owners of "establishments" in Spain.

The above notwithstanding, the binding ruling includes terms of L.I.E, like "establishment", which is not a legally determined concept and has been interpreted in various ways by DGT in the past. Not the L.I.E nor any other national or international tax normative defines the concept of an "establishment".

ANEN, together with AEGY and AENIB will present another consultation to DGT  in order to clarify the concept.