Are you interested in buying a yacht in Palma de Mallorca? Buying a boat in Palma de Mallorca is a dream for many, but this dream does not come free of challenges. You need first a thorough understanding of the entangling Spanish tax law that applies to pleasure boats in order to avoid unpleasant surprises. We, in Emprendix, specialize in yachting. We are an accounting, legal and labour advisory firm in Mallorca and can assist you in every aspect of this purchase. But let us see first some of the important legal issues that buying a first or secondhand yacht in Mallorca entails.
Should you need any further information, please contact us www.emprendix.com.
Buying a Boat in Palma de Mallorca: what I should know
Yachts in Palma de Mallorca and Spain have always been considered luxury items and its purchase and use taxed accordingly. Favorable climate conditions, beautiful beaches, and well-protected harbors are some of the benefits that Mallorca has to offer and that make the island a paradise for boating lovers. Then, where are the challenges? What are those main considerations that we must be concerned with in the purchase of our boat? In order to buy a boat in Palma de Mallorca, or as a matter of fact, anywhere in Spain, we must differentiate between the purchase of a new and a second-hand yacht and decide place of registration and ship’s flag.
Yacht purchase in Palma de Mallorca.
Spanish Law establishes that all vessels from 2.5 meters long must be registered in the Register of Ships of the Directorate General of Merchant Navy, which is the official body for yacht registration in Palma de Mallorca. This national Registry has local branches in coastal cities as Palma de Mallorca and, upon request, it can provide information about vessels and owners.
A boat cannot wave two different flags. Then, if your boat is flagged in another country, and you want to transfer that registration to Spain, you will be required to first flag down your boat at the Register of Ships of the country of the current flag. This is procedure is mandatory in order to properly register the boat in Spain and must be performed once the sale is finalized.
Under Spanish law, it is not required to enter into a sales contract in order to purchase a second-hand yacht in Mallorca, but it is, nevertheless, highly advisable. A contract allows you to create a record of all sale details: boat and owner identification, price, form of payment, boat items and equipment inventory, etc. and it is certainly the best possible evidence of your ownership over the boat.
If the seller is a corporation and VAT applies to this purchase, an invoice is then necessary for the transaction. This same invoice and/or contract can also be used in the administrative procedure for the change of yacht ownership. Equally important, this invoice also works as a guarantee for buyer and seller in the event of damage and/or failure, or in the application for flag removal.
Yacht warranty in Palma de Mallorca.
Under Spanish law, the purchase of a boat is a guaranteed transaction that allocates rights and obligations to buyer and seller. If the boat is new, a 2 year warranty applies; if the boat is second-hand, and the seller a company, the same 2 year warranty period is prescribed by law. Finally, if the transaction involves a large boat, contracts are also commonly subjected to English law.
For second-hand boats the applicable warranty period is dependent on the nature of the contracting parties, particularly where the seller is an entrepreneur. If both parties are private individuals, and not companies, the seller must provide, by law, a 6 month warranty to the buyer as reassurance against potential latent defects in the vessel, i.e., pre- existing defects and/or failures that are previous to the sale and were not detected at the time of the transaction.
These potentially hidden defects are important to the transaction as they may affect the terms and conditions of the contract and the actual sale itself. If latent defects arise, during the 6 month yacht warranty, the buyer is then entitled to withdraw from the contract or to renegotiate the price with the seller.
If you hire a yacht broker in Palma de Mallorca, you should know that the vessel warranty usually applies for the seller, not the broker, unless this professional acts as the vessel seller.
Yacht taxes in Palma de Mallorca: VAT and ITP (Property Transfer Tax).
If you buy a new yacht in Palma de Mallorca, it will be necessary that the seller issues VAT invoice, currently at 21% rate but expected to peak 23% shortly; if it is a second-hand yacht in Palma, and the seller a company, a VAT invoice also applies. On the other hand, If the buyer is foreign company, VAT is payable in the country of boat registration; but if that vessel is for private use of residents in the European Union, VAT is payable in Spain.
A boat transaction also pays Property Transfer Tax (ITP), due to the change of ownership in the Spanish Register of Ships. Therefore, once VAT is paid, if the ship remains registered in Spain, this tax duty, amounting to 4% of boat value, will apply.
You should be aware that Property Transfer Tax always applies to any yacht purchase where no VAT is applicable. Thus, any acquisition of foreign vessels in Palma de Mallorca and, anywhere in Spain, as well as vessel transactions between foreign parties must always meet this tax liability.
Yacht registration tax.
There is also a special tax on some transports applicable for yachts in Palma de Mallorca: the registration tax. This Spanish tax applies to vessels from 8 meters long, registered in Spain.
If the boat is to be registered in another country, it then will be necessary to first apply for flag deregistration in Palma de Mallorca. This procedure has to be performed in any of the country´s capitanias maritimas which are the local sailing authorities.
Ways to avoid yacht taxes in Mallorca.
Non-tax residents in Spain can easily avoid the payment of ITP and VAT depending on the residency status of the buyer and whether he/ she is EU resident or not.
“Matricula turística” is a tax option which allows an EU resident, a national from any EU country residing in Spain, to benefit from exemption on registration tax, but not from VAT, which applies to all EU residents. If the yacht buyer in Palma de Mallorca is a non-EU citizen, he/she will be exempted from the payment of both registration tax and VAT, as long as the boat does not sail Spanish waters for any period of 6 months or longer during any complete year.
Yacht insurance in Palma de Mallorca.
Under Spanish applicable law for yacht insurance, RD 607/1999, any boat over 6 meter long, boat in water, shall hold a third party liability insurance for yachts in Mallorca. Failure to comply with this obligation can be heavily fined.
For more information, please contact us in www.emprendix.com.
Are you interested in buying a yacht in Palma de Mallorca? Buying a boat in Palma de Mallorca is a dream for many, but this dream does not come free of challenges. You need first a thorough understanding of the entangling Spanish tax law that applies to pleasure boats in order to avoid unpleasant surprises. We, in Emprendix, specialize in yachting. We are an accounting, legal and labour advisory firm in Mallorca and can assist you in every aspect of this purchase. But let us see first some of the important legal issues that buying a first or secondhand yacht in Mallorca entails.
Should you need any further information, please contact us www.emprendix.com.
Buying a Boat in Palma de Mallorca: what I should know
Yachts in Palma de Mallorca and Spain have always been considered luxury items and its purchase and use taxed accordingly. Favorable climate conditions, beautiful beaches, and well-protected harbors are some of the benefits that Mallorca has to offer and that make the island a paradise for boating lovers. Then, where are the challenges? What are those main considerations that we must be concerned with in the purchase of our boat? In order to buy a boat in Palma de Mallorca, or as a matter of fact, anywhere in Spain, we must differentiate between the purchase of a new and a second-hand yacht and decide place of registration and ship’s flag.
Yacht purchase in Palma de Mallorca.
Spanish Law establishes that all vessels from 2.5 meters long must be registered in the Register of Ships of the Directorate General of Merchant Navy, which is the official body for yacht registration in Palma de Mallorca. This national Registry has local branches in coastal cities as Palma de Mallorca and, upon request, it can provide information about vessels and owners.
A boat cannot wave two different flags. Then, if your boat is flagged in another country, and you want to transfer that registration to Spain, you will be required to first flag down your boat at the Register of Ships of the country of the current flag. This is procedure is mandatory in order to properly register the boat in Spain and must be performed once the sale is finalized.
Under Spanish law, it is not required to enter into a sales contract in order to purchase a second-hand yacht in Mallorca, but it is, nevertheless, highly advisable. A contract allows you to create a record of all sale details: boat and owner identification, price, form of payment, boat items and equipment inventory, etc. and it is certainly the best possible evidence of your ownership over the boat.
If the seller is a corporation and VAT applies to this purchase, an invoice is then necessary for the transaction. This same invoice and/or contract can also be used in the administrative procedure for the change of yacht ownership. Equally important, this invoice also works as a guarantee for buyer and seller in the event of damage and/or failure, or in the application for flag removal.
Yacht warranty in Palma de Mallorca.
Under Spanish law, the purchase of a boat is a guaranteed transaction that allocates rights and obligations to buyer and seller. If the boat is new, a 2 year warranty applies; if the boat is second-hand, and the seller a company, the same 2 year warranty period is prescribed by law. Finally, if the transaction involves a large boat, contracts are also commonly subjected to English law.
For second-hand boats the applicable warranty period is dependent on the nature of the contracting parties, particularly where the seller is an entrepreneur. If both parties are private individuals, and not companies, the seller must provide, by law, a 6 month warranty to the buyer as reassurance against potential latent defects in the vessel, i.e., pre- existing defects and/or failures that are previous to the sale and were not detected at the time of the transaction.
These potentially hidden defects are important to the transaction as they may affect the terms and conditions of the contract and the actual sale itself. If latent defects arise, during the 6 month yacht warranty, the buyer is then entitled to withdraw from the contract or to renegotiate the price with the seller.
If you hire a yacht broker in Palma de Mallorca, you should know that the vessel warranty usually applies for the seller, not the broker, unless this professional acts as the vessel seller.
Yacht taxes in Palma de Mallorca: VAT and ITP (Property Transfer Tax).
If you buy a new yacht in Palma de Mallorca, it will be necessary that the seller issues VAT invoice, currently at 21% rate but expected to peak 23% shortly; if it is a second-hand yacht in Palma, and the seller a company, a VAT invoice also applies. On the other hand, If the buyer is foreign company, VAT is payable in the country of boat registration; but if that vessel is for private use of residents in the European Union, VAT is payable in Spain.
A boat transaction also pays Property Transfer Tax (ITP), due to the change of ownership in the Spanish Register of Ships. Therefore, once VAT is paid, if the ship remains registered in Spain, this tax duty, amounting to 4% of boat value, will apply.
You should be aware that Property Transfer Tax always applies to any yacht purchase where no VAT is applicable. Thus, any acquisition of foreign vessels in Palma de Mallorca and, anywhere in Spain, as well as vessel transactions between foreign parties must always meet this tax liability.
Yacht registration tax.
There is also a special tax on some transports applicable for yachts in Palma de Mallorca: the registration tax. This Spanish tax applies to vessels from 8 meters long, registered in Spain.
If the boat is to be registered in another country, it then will be necessary to first apply for flag deregistration in Palma de Mallorca. This procedure has to be performed in any of the country´s capitanias maritimas which are the local sailing authorities.
Ways to avoid yacht taxes in Mallorca.
Non-tax residents in Spain can easily avoid the payment of ITP and VAT depending on the residency status of the buyer and whether he/ she is EU resident or not.
“Matricula turística” is a tax option which allows an EU resident, a national from any EU country residing in Spain, to benefit from exemption on registration tax, but not from VAT, which applies to all EU residents. If the yacht buyer in Palma de Mallorca is a non-EU citizen, he/she will be exempted from the payment of both registration tax and VAT, as long as the boat does not sail Spanish waters for any period of 6 months or longer during any complete year.
Yacht insurance in Palma de Mallorca.
Under Spanish applicable law for yacht insurance, RD 607/1999, any boat over 6 meter long, boat in water, shall hold a third party liability insurance for yachts in Mallorca. Failure to comply with this obligation can be heavily fined.
For more information, please contact us in www.emprendix.com.
Gestoría en Palma de Mallorca.
Si buscas una gestoría cerca de ti, asesoramos a empresas en el ámbito laboral, fiscal y contable. También somos una gestoría administrativa en Palma y realizamos traspasos de vehículos.
