VAT or to Transfer Tax?

VAT or to Transfer Tax in the purchase of a vessel in Spain by non residents?

Without prejudice of the Matriculation Tax the purchase in Spain  by a non entrepreneurial, that is, a private person may trigger VAT or Transfer Tax. We leave the Matriculation Tax out of scope of this article due to its importance itself which we will see in former months.

a) VAT: The acquisition of a pleasure craft from a business or entrepreneurial (VAT taxable person) will generate in general the obligation to pay the Value Added Tax, at the 21%.

Business or Entrepreneur

If the vendor is business  or  entrepreneur from another  the European Union Member State ( that is a EU  VAT recording) and also the purchaser in Spain business  or  entrepreneur ( for example  charter company) , we will have a zero rated  intra-EC  acquisition with reverse charge , no matter if it is a new or second hand vessel.

Private Individuals

If buyer is a private individual resident in Spain for tax purposes and purchases a new boat from an  EU business or entrepreneurial , we are also faced with an intra-EC acquisition that will accrue in Spain and should be filed by the purchaser through model 309  to be paid  – here there is no reverse charge as the purchaser is not VAT taxable person  – to the Spanish Tax Authority 30 days after the acquisition.

Non-EU Residents

Lastly, if the seller is a resident in a third country (non EU) and the buyer is resident in Spain for tax purposes , we are in the presence of an import to be dispatched and cleared at the Spanish Customs – if the vessel arrives to Spain’s waters firstly –  through  the correspondent Single Administrative Document (SAD or DUA in Spanish) together with the payment of the 21% Import VAT (plus 1.7% custom duty by small vessels  if they are under 7.5 m LOA).

b) Transfer Tax: Transfer Tax is accrued in the sale of used boats from individuals non entrepreneurial (or business and entrepreneurial that have not deducted VAT on acquisition and thus acquired as final consumers for VAT purposes) provided that the purchaser has Spanish tax residence or the boat is usually in Spanish territory

However if  the purchaser is not Spanish Tax resident and after the acquisition does not register the change of ownership in Spanish Ship´s Registry but changes flag – deletion in the Spanish Ship´s Registry and new registration in another jurisdiction  – even though the liability still exists the tax exposure is quite limited.

This obligation for non residents has been expressly recognized in a binding  Clarification Letter from the Spanish Tax General Direction  (“Dirección General de Tributos”) CV 1764-02from 02/12/2002. That is why  in those cases the contract must be carefully drafted  with regards of the place  of the delivery of the vessel.

Carlos Espinosa
Solicitor and Tax Advisor
(+34 627 413 201

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