Major news concerning arrival or departure of yachts from EU customs territory
Tax Commentary 7-2018
On October 10, 2018 the Spanish Tax Agency published in their webpage an information notice by the Customs and Special Taxes Department with the intention of “enabling interested parties to comply with their tax and customs obligations” as regards the arrival and departure of recreational craft from the customs territory of the Union, in view of the complex wording of some of the articles in Commission Delegated Regulation (EU) No 2015/2446 of 28 July 2015 supplementing Regulation (EU) No 952/2013 of the European Parliament and of the Council as regards detailed rules concerning certain provisions of the Union Customs Code (Delegated Regulation (EU) 2015/2446).
The main issues that the Customs and Special Taxes Department attempts to clarify, and which have recently caused considerable concern in the yachting sector, relate to:
1. Filing import and export declarations
The Customs and Special Taxes Department considers that, on the basis of the provisions in the customs legislation in force and from the standpoint of the conclusions drawn by the groups of experts attached to the European Commission, for the purposes of determining the customs formalities required for yachts, a distinction must be made as to whether they are (i) yachts having Union status or (ii) yachts not having Union status. It also specifically explains that this new distinction between yachts with and without Union status does away with the former classification among (a) yachts with Union status and registered in the customs territory of the EU (CTU), (b) yachts without Union status registered outside the CTU and (c) yachts with Union status but not registered in the CTU.
(i) For yachts with Union status, wherever they are registered, their declaration of export must be presumed just by the mere fact of crossing the border. Moreover, it must be presumed that when they leave the customs territory of the Union they are intended to be re-imported. And therefore, their export must be presumed to be temporary.
Thus, on their reentry into the CTU, just by crossing the border, they will be deemed to be declared for free circulation as returned goods, to the extent that the requirements laid down in the regulations are met.
Accordingly, for the first time the Spanish customs authority has recognized that, as far as customs formalities are concerned, the same treatment must be given for yachts registered in the CTU as for yachts not registered in the CTU but having the status of a Union good.
(ii) For yachts not having Union status, the Customs and Special Taxes Department has officially confirmed in its information notice a view that since November 2017 has only been known as an informal interpretation: yachts not having Union status and meeting the requirements to benefit on their arrival in the CTU from the temporary admission procedure (TA), just by crossing the border will be deemed to be declared for the purposes of being placed under TA, as it was the case under the former customs regulations.
Without a doubt the government is to be thanked for finally confirming in writing these questions with huge consequences for the yachting industry.
2. The temporary admission procedure
The Customs and Special Taxes Department has recognized that, as set out in the customs legislation in force, yachts placed under TA are allowed to be used for yacht chartering business activities (where permitted by the industry legislation) with the only restriction that those yachts may not be used/enjoyed by persons established in the CTU.
The Customs and Special Taxes Department recalls in relation to this that the person deemed to be the holder of the authorization (and therefore the assessable person) is the person that has “physical control” of the yacht when it crosses the border, which is when the yacht is deemed to be released for its temporary admission. And it specifies further that, unless the yacht entered the CTU under a prior charter agreement, the “holder” of the temporary admission procedure must be taken to be the nonresident individual or entity that owns the yacht or has the power to make decisions about the yacht (power of disposition) for carrying on chartering activities.
The Department takes the view that, from this standpoint, if the breach of TA consists of a subsequent user being resident in the CTU, the customs and tax obligation will fall to the charter company not to that user.
3. VAT on importation
It is clarified that import VAT on the entry into the CTU of a yacht is not chargeable to the extent that it may be eligible for TA (and as long as the requirements are maintained) or imported as returned goods.
In relation to returned goods, an exhaustive analysis is made of the requirements for their application, highlighting the presumption that the departure of these yachts were of a temporary nature.
4. The special tax on certain means of transport (“IEDMT” after its initials in Spanish, also known as the “Registration Tax” or “Matriculation Tax”)
At the end of its information notice the Customs and Special Taxes Department mentions as a reminder that the utilization in Spain of means of transport by persons resident in Spain, or who own an establishment located in Spain, determines an obligation to make their final registration in Spain, or a direct and alternative obligation to pay the “matriculation tax” on the occurrence of the taxable event related to its “circulation or utilization”.
As a result, the Department takes the view that whatever the customs status of the yacht, if it is not registered in Spain and is intended to be utilized by persons resident in Spain or who have an establishment in Spain, the “matriculation tax” will become payable.