The hidden costs behind living la dolce vita: Taxes on speed boats
If you're planning to buy a boat in Spain, it's important to be aware that owning a speed boat has hidden Spanish tax implications. Our tax expert explains.
If you purchase a new boat in Spain registered under the Spanish Flag (length above 7.5 metres), you will be liable for taxes on your boat in Spain.
Acquisition by an individual
If the boat is purchased by an individual in Spain there is no way to avoid these taxes. However, there are some ways of reducing the financial burden by purchasing the boat using the services of a Leasing Company. This is due to a difference in interpretation by member states of the EU as to the 'place and supply of goods' and the 'place and supply of services' in the application of VAT collection. Some jurisdictions in Europe, like France or Italy consider that depending on the length of the boat there is going to be a certain use of the boat outside EU waters which allows buyers to benefit from lower VAT tax rates.
In Spain, as we said before, there is no a direct tax benefit for the buyer, but as for the French or Italian financial company, which provides the lease, they can benefit from these lower rates in their countries. Therefore they are able to offer to anybody who buys a brand new boat in Spain a financial option that involves a total payment after four years that is the same as the full payment up front.
The Spanish boat tax system explained
The aim of this article is to explain some key questions about tax and leisure boats in Spain. The Spanish tax system is one of the hardest in the EU.
The two main taxes to consider when we buy a boat in Spain or take a boat to Spain are the VAT and the registration (Matriculation) tax.
Any citizen of the European Union has the obligation to register their craft in the country where they have their usual residency.
The Spanish law requires to register, under the Spanish flag, any boat used inside a Spanish territory by a Spanish tax resident.
The concept of Spanish tax residency is defined in the Spanish Personal Income Tax Law, which establishes that any person becomes a Spanish Tax resident if they spend more than 183 days in any one calendar year in a Spanish territory.
As well, the Spanish Corporation Tax Law establishes that any company incorporated according to Spanish laws is classed as a Spanish tax resident.
Residency boat location registration (matriculation) and tax VAT
- Spanish territory, Spain: 12 percent, 16 percent.
- Spanish territory, out of Spain 12 percent 16 percent.
- Other EU territory, Spain: None, 16 percent.
- Other EU territory, out of Spain: None, 16 percent.
- Non-EU territory, Spain: None, 16 percent – 0 percent*.
- Non-EU territory, out of Spain: None, 0 percent
If a person spends less than 183 days in Spain that person doesn't become classed as tax resident in Spain.
However, if a person stays more than 183 days in Spain, they will become classed as a Spanish tax resident and will be required to pay the same tax as a Spaniard.
Some questions to be aware of when in Spain with a boat
Q. If we are living on board a boat in Spain, are we living in Spain?
A. Effectively when somebody lives on board a boat, they are deemed to be living where the boat is placed. Therefore in the Spanish case, if somebody spends more than 183 days living in a Spanish Marina, they will become classed as a Spanish tax resident.
Q. I have an administrative document that proves I'm a resident in a different country than Spain. Is that evidence enough to prove my residence for tax purposes?
A. It is very important to differentiate between the concept of administrative and tax residency. In this article we are interested in the concept of tax residency.
An administrative certificate of residency is not enough evidence to consider if one person is a tax resident in one country or another. Following the criteria of the Spanish Tax Administration, heating, lighting, and water receipts or even being on the electoral register are not enough evidence as to proof of tax residency.
To prove tax residency in a particular country the only accepted evidence is a tax certificate issued by the Tax Authority of a country. The person who owns a certificate by way of proof of his/her tax residency can therefore be considered as a non tax resident in Spain with the tax benefits which that involves.
Q. Who controls our presence in the Spanish territory?
A. Nowadays all the internal frontiers of the Shengen Area* are exempt of border controls. If any EU citizen of the Shengen Area* stays no longer than 3 months in another state of the EU he/she doesn't need to apply for an authorisation for administrative residence. Therefore for an EU citizen it's quite difficult to determine the exact date of entrance into a Spanish territory. For a non EU it is completely different. They are submitted to immigration controls and therefore it's very easy to determine their date of entrance into the country.
Q. Who controls the entrance of boats to Spanish waters?
A. The Guardia Civil is the division of the Spanish police in charge of controlling the entrance of foreign boats. This division compiles all the information from the different Spanish Marinas as a control on how long foreign boats have been in Spanish waters.
Price of the boat (VAT not included) GBP 60,000
Price (VAT included 16 percent) GBP 69,600
First payment 50 percent (deposit) GBP 34,800
– deposit of 10 percent (GBP 6,960)
– first installment of 40 percent (GBP 27,840)
47 Instalments of: GBP 740,43
Final value payment (nil as already paid as part of the deposit) 10 percent, GBP 6,960 (The residual value is guaranteed by the deposit)
Final cost of the boat VAT included: GBP 69,600
For boats that belong to the Shengen Area* there is no limit of time to remain in one or another Shengen* country. It doesn't matter if your boat moves from one Marina to another inside the country, it's the accumulative time spent in Spain and the police can easily calculate how long any boat has been inside the country. The clock, however, starts again from zero on the 1st January each year, permitting another 183 days of residency. So it would be possible to have a full consecutive year in residency providing it straddled a new year, 183 days each side!
The criteria for non EU citizens is very complex and outside the scope of this article. However if any reader requires information on boat residency in Spain as a non EU subject they are welcome to contact the author below.
Note: * The Shengen Area in the EU includes: France, Italy, Germany, Holland, Portugal, Denmark, Switzerland, Norway, Finland, Luxemburg, Greece, Belgium, Austria, United Kingdom and Ireland
Alex Chumillas / Expatica
Alex Chumillas Amat is a Spanish tax expert (economista, gestor administrativo) who specialises in nautical procedures and is officially licenced to deal with the different Spanish Administrations. For more information, contact Alex via telephone +34 934442137, mobile +34 667663521, or email firstname.lastname@example.org.
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