10 January 2018
For the fourth consecutive year we have prepared a report to track the development of the large yacht charter market.
On the 30th October, 2013, the Law 16/2013 of the 29th October was published in the BOE which, among other tax measures, modified the Special Tax on Certain means of transport (IEDMT) extending its exemption to any yacht intended exclusively for charter, without limit of length.
At the end of March 2014, a Binding Consultation of the DGT (General Tax Directorate) was published which confirms that yachts owned by a non-resident entity, dedicated to charter, can be chartered by individuals linked to the leasing company, provided that these individuals are not residents of Spain or have a permanent establishment located in Spain, without modifying the circumstances that gave rise to the exemption from the IEDMT. This query in effect regularizes the private use of yachts dedicated to charter and brings us closer to legislation in other EU Member States.
From these two important facts we have seen a growing interest from owners in chartering their yachts and on the side of clients in “chartering” in the Balearic Islands.
This report contains the results of the changes in the legislation: yachts that have obtained a charter license in the Balearic Islands, the total number of charter days and an estimate of the income of these yachts, VAT collected, the expenses of the yachts and other disbursements.
A detailed work has been carried out by contacting the representative of each yacht to know the exact number of days that the boat has been chartered in Spain during the summer of 2017. The charter revenues are a close estimate of reality, since depending on each owner and duration of the charter, the prices are somewhat negotiable.
* Yacht expenses: mainly includes: fuel, berths, beverages and foods. 30% of the charter price for motor yachts and 25% is calculated for sailboats.
** Other expenses: An estimate of 5% for other disbursements that the passengers spend out of the boat: shops, restaurants, hotels, golf, beaches, clubs.
*** 21% VAT is applied on the charter price. In some cases, charters have started in France or Italy, so the VAT was not collected in Spain. This explains why the VAT charged on the charters is not exactly 21% of total charters.
– YachtFolio.com (Commercial intranet of MYBA)
– Brokerage companies members of MYBA
– Brokerage subscriber companies to Yachtfolio.com
– Independent yacht owners
The report collects the results of all the yachts over 20 meters that are offered in the charter yacht market by the larger international companies. There is data missing from a number of yachts that are only offered in the local market.
In 2017 the number of yachts with a charter license has risen to 170. This does not mean that all 170 have made all, or part of their, charters in the Balearic Islands: 52 of them, 30%, have spent the season in other destinations.
The charter revenue is an estimate, depending on the owner and the duration of the charter, the prices are somewhat negotiable.
The charter revenues are an estimate very close to reality, conditioned to each owner and the duration of the charters.
Of the 170 yachts, 38 have a length exceeding 45 meters – in 2013 no there was none. 65 yachts have a length over 35 meters, compared to 5 in 2013.
It is important to highlight that in 4 years the income has multiplied by more than 10, both those for the local economy and those of the VAT collected.
Compared to last year, the results improved by 40%, both in local expenses and in VAT tax revenue.
It is an extraordinary result, especially when we consider that we do not compete on equal terms with neighboring countries:
• The main obstacle is the 21% VAT. In France and Italy you can apply a reduced VAT for international charters: 10% in France and 6.6% in Italy.
• The bureaucratic procedure to obtain a charter license is still quite complicated compared to neighboring countries; It usually takes about 2 months while in France it takes one month and in Italy, only three days.
• The legislation and the fiscal regime regarding charter in Spain are complicated and open to interpretation. This leaves the owners in a certain situation of legal insecurity.
In short, the charter of large yachts is a sector that has a huge margin to grow and the international sector is betting on the Balearics. Of the eight largest companies in the world dedicated to luxury yachting sector, six have offices in Mallorca, which supports the above.
The dynamising aspect of the sector in the local economy (€ 13,472,462 in local expenses) is not limited to summer. The yachts that are already in Spain for the charter season tend to spend the winter here to do their maintenance work and refits, thus contributing to the creation of direct and indirect employment and lengthening of the season.
In our aim for sustainable and lasting growth of the nautical sector in the Balearics, from within the industry we think it is important to work towards achieving the following improvements:
• Harmonization of the legislation of the nautical sector with that of our closest neighbouring countries (France, Italy, Croatia, etc.) so that we can compete on equal terms.
• The elimination of the Matriculation Tax on all vessels.
• Promotion of the Spanish Nautical Sector and Spain as a nautical destination with special campaigns.
• Improve professional training in the nautical sector with the creation of vocational training courses at intermediate and higher levels. (maintenance, repair and construction of pleasure boats)
• The possibility to incorporate yachts in the Special Canary Island Registry.
The adaptation of the regulations to what has been established by our European neighbours will allow Spain to improve its position in the sector of large yachts, to compete on equal terms, to become a permanent base for yachts and a privileged tourist destination in the Mediterranean and will help create a sustained economic growth and highly qualified employment.
Palma de Mallorca, December 2017
Anne Sterringa is the Senior Charter Broker at Camper & Nicholsons International in Spain, and a board member of AEGY (Spanish Large Yacht Association).