“The changing EU Tax landscape and how it affects super yachts” 11 January 2015 TAX MARINE 1 Alex Chumillas Amat Managing director

Content: VAT & Superyachts Customs Leasing schemes Charter Other taxes Action plan TAX MARINE TAX MARINE SPAIN, S.L.U

TAX MARINE 3 VAT & superyacht 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE VAT & superyacht 2015 TAX MARINE SPAIN, S.L.U 4 1. Customs territory 2. VAT territory 3. EU territory

Customs – Union's Customs Code (Council Regulation (EEC) No 2913/92) – Code's implementing provisions (Commission Regulation (EEC) No 2454/93) VAT Directive – EU VAT Directive 2006/112/EC Excise duties – EU EXCISE Duties DIRECTIVE 2003/96/EC Income tax Local taxes TAX MARINETAX MARINE VAT & superyacht 2015 TAX MARINE SPAIN, S.L.U

Private pleasure yachts Private pleasure yachts used in EU waters must be VAT paid (unless deemed VAT paid or temporary importation applies). VAT paid VAT is payable upon the supply, intra-EU acquisition or importation of a yacht into the EU. The standard VAT rate of the relevant EU Member State applies. Standard VAT rates of the EU Member States range between one country and another. Deemed VAT paid status Certain vessels that were in use as private pleasure yachts prior to 1 January 1985 and were in the EU on 31 December Austria, Finland and Sweden 1987 and TAX MARINE VAT & superyacht 2015 TAX MARINE SPAIN, S.L.U

Commercial charter yachts A commercial structure generally enables full VAT recovery on the yacht itself and on operational expenditure. Importation of commercial yachts with full VAT deferral is available in - Malta - Isle of Man - France & Monaco - Spain** TAX MARINE VAT & superyacht 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE 8 Customs 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE Customs 9 Temporary importation - Customs Procedure Temporary admission of a non-EU means of transport, enables the private use of a yacht within EU waters subject to certain conditions, including: Owner and user(s) of the yacht must not be EU resident Vessel must be flagged outside the EU Commercial use is strictly prohibited** It is valid for up to 18 months (generally renewable, although some EU Member States adopt different interpretations) TAX MARINE SPAIN, S.L.U

TAX MARINE Customs 10 Temporary importation - Customs Procedure ITALY Written declaration MALTA Supporting Documents required by Customs SPAIN No formal declaration. The 18 months can be unlimited extended by hauling the vessel. GREECE Limitation of use of 6 months in every 12 months. FRANCE Sporadic charters allowed TAX MARINE SPAIN, S.L.U

TAX MARINE Customs 11 Returns good relief - Customs Procedure “On re-importation the vessel is exempt from import duty on the basis of its free circulation status prior to being exported and considered as returned goods Import VAT is exempt” SPAIN Recent issues resulted in the arrest of yachts in Spain (2013) Requirement of temporary export declaration 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE Customs 12 Deferred Importation France FCE allows commercially registered yachts to be imported without payment but need to be imported first and obtain a DAU to be put into free circulation in the EU and allowed to charter Malta Free circulation status - VAT deferred in respect of all commercial yachts on the condition that bank guarantee for 20% of VAT deferred can be provided Import duty is ‘zero’ rated in respect of Sea Going Yachts – Over 12 metres Isle of Man Has a deferral regime in place. Spain Not possible until now. Although since 01/01/15 a new deferral Import regime has been introduced TAX MARINE SPAIN, S.L.U

TAX MARINE 13 Leasing structures 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE Leasing structures 14 Use and enjoyment provision - Article 59 EC Directive 2006/112 The hire out a yacht where the place of supply would be the EU but the yacht is used and enjoyed outside the EU during the hire period, member states might apply VAT on a prorrata base on the base of the use outside the EU. The hire of a yacht where the place of supply would be outside the EU but the yacht is used and enjoyed in the EU during the hire period, member states might apply VAT on a prorrata base of the use within the EU TAX MARINE SPAIN, S.L.U

TAX MARINE Leasing structures 15 Where available, these schemes enable mitigation of VAT cost based on EU effective use and enjoyment provisions. For yachts greater than 24m, the VAT effective rate might be as low as: France and Monaco: 10% Italy: 6.6% Malta: 5.4% Cyprus: 5% Spain – NOT as it is not applicable 59.a) 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE 16 Charter 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE Charter 17 SPAIN Owners/operators are obliged to obtain a Spanish VAT number and appoint a fiscal representative in Spain. Charter licence is required by operators. Legal to charter in Spain, a Spanish charter license is required. Matriculation tax relief available but still some limitations. 21% VAT (standard rate). No reductions on the standard rate on charters starting in Spain. However VAT can be applicable on charters starting outside the VAT territory and entering into Spain (Gibraltar). August 2014 – Balearic Islands Government removes limitation to obtain a charter license for Non EU flagged commercial yachts TAX MARINE SPAIN, S.L.U

TAX MARINE Charter 18 FRANCE AND MONACO Owners/operators are obliged to obtain a French VAT number and appoint a fiscal representative in France. In case where vessels start charters in Monaco owners/operators also required to register for VAT and appoint a fiscal representative in Monaco. 20% VAT (standard rate). Effective VAT rate dispends on the percentage of time the yacht spends outside EU waters. VAT may be reduced to 10% VAT rate if the vessel exits the 12 nautical miles limit and enters international waters. ITALY Owners/operators are obliged to obtain an Italian VAT number and appoint a fiscal representative in Italy 22% VAT (standard rate). Effective VAT rate may be reduced based on the use of the yacht in EU waters, which depends on the length of the yacht. For vessels over 24 m in length VAT may be reduced to 6,6% VAT rate if the vessel’s itinerary exits the 12 nautical miles limit and enters international waters. On the opposite side Italy can tax charters starting outside the EU and entering into its waters TAX MARINE SPAIN, S.L.U

TAX MARINE Charter 19 MALTA Owners/operators are obliged to obtain a Maltese VAT number and appoint a fiscal representative in Malta. July Effective VAT rate dispends on the percentage of time the yacht spends outside EU waters 18% VAT standard rate. Effective VAT rate may be reduced based on the use of the yacht in EU waters. This reduction depends on an application to Maltese Director General VAT for approval. CROATIA Operators/owners wishing to charter out of Croatia are to register for a Croatian VAT number and appoint a fiscal representative in Croatia. 25% VAT (standard rate). January Approval of a flat VAT rate of 13% on charters commencing in Croatian waters. Non Croatian and Non EU flagged commercial yachts under 40 m in length cannot embark passengers in Croatia. Limited number of non EU flagged yachts over 40 metres are granted a charter licence to embark passengers in Croatia TAX MARINE SPAIN, S.L.U

TAX MARINE Charter 20 GREECE There is a new regime in place since April New regime allows EU and Non EU yachts commence charters in Greece. No need for charter licese. It seems the regime is not operative yet. Being that the case the old regime establishes that If the charter starts and ends in Greece – owner/operator is required to be a Greek company or to open a branch office in Greece. Charter licence is required. 23% VAT standard rate. Vessels under Greek commercial flag or EU flag and owned by EU entity would pay VAT at 6.5% in case where charter commences and ends in Greece. No Greek VAT applicable where charter commences or starts outside of Greece CYPRUS 19% VAT standard rate 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE 21 Other taxes 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE Income tax 22 FRANCE, ITALY & MALTA The common practice for commercial yachts owned in third countries is that they are not subject to income tax. GREECE Income Tax applicable due to the obligation of setting up a Greek branch. SPAIN There is no need for foreign entities to set up a branch in Spain. However charters performed in Spain by entities incorporated in a third jurisdiction without a DTT in place are subject to the nonresident income tax at 24% TAX MARINE SPAIN, S.L.U

TAX MARINE Excise 23 FRANCE De-taxed fuel available. French 2015 Finance Law (Loi de Finances pour 2015 ‘petroleum tax’ sooner rather than later. ITALY The approach inconsistent along the shores of Italy. The central customs authority has embarked on a process to streamline the treatment. No definitive outcome has been reached as yet. SPAIN Bunkering subject to VAT and Excise TAX MARINE SPAIN, S.L.U

TAX MARINE Other taxes 24 SPAIN October 2013 – Amendment Spanish Excise Duties Law 38/1992. Any commercial yacht whatsoever its length can benefit from matriculation tax relief (previously only yachts up to 15m could benefit from this relief). However there are some limitations for some kind of UBO The tax is in place, has not been abolished. It applies to Spanish residents intending to buy a private vessel. FRANCE The French Government are proposing the introduction of a mooring tax on any vessel moored inside a Marine Protected Area (MPA) from the summer of 2016 onwards. The tax would impose a charge of up to 20 Euros per meter per day on all yachts mooring in these areas. ITALY Luxury yacht tax imposed in Sardinia in 2006 and repealed TAX MARINE SPAIN, S.L.U

TAX MARINE 25 Action plan 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE The tax landscape 26 Variety of taxes and complex rules. Different interpretation and implementation at national level and even with the same countries. Diversity of jurisdictions. Competition. The European Commission standpoint? 2015 TAX MARINE SPAIN, S.L.U

TAX MARINE What do we want to change ? 27 What is the goal? Clarity and simplicity to reduce the risk for our clients. Keep advantages for commercially registered and operated yachts. Some proposals Harmonization of taxes & removing barriers to trade. Mini One Stop Shop (MOSS). Non-VAT paid private yachts – removal of 18 month limitation. Non EU flagged vessels – cabotage. Similar income treatment across the EU TAX MARINE SPAIN, S.L.U

TAX MARINE How can we achieve this? 28 Yachting needs a new definition. Commercial yachting should move towards a definition close to shipping. FCE? The yachting industry needs one single voice to achieve its goals at the European level. Possible alliance with the business jet industry. Studies to demonstrate the impact of the yacht industry and the social benefits. Who and how should represent the industry? 2015 TAX MARINE SPAIN, S.L.U

“Thank you” TAX MARINE 29 Alex Chumillas Amat Managing Director Tax Marine Spain, S.L.U