The Mallorca Model – Simplifying Spanish Yacht Charter
Spain is a diverse and stunning destination for yacht charters, with long stretches of sun-drenched sand, idyllic islands and both culture and cuisine in abundance. The majority of luxury superyacht charters to this vibrant country centre on the yachting hubs of Barcelona and Marbella. With their modern marinas, these centres act as springboards to 1,660 kilometres of diverse coastline and offer easy access to the Balearic Islands of Mallorca, Menorca and Ibiza. The islands themselves continue to grow in stature among the superyacht set with their beach clubs, restaurants, nightlife and wellness offerings.
Pantaenius have had an office in Palma de Mallorca since 2006. Sarah Mullis, part of the sales team for Pantaenius in Palma comments: “We are a local insurance specialist for the many yachts based in Spain and the islands, and can attend to our clients in English, Spanish and German. We are able to cater for vessels with various flags and offer a very personal service and in-house claims handling.”
For US, Canadian, Russian, Chinese and other non-EU commercial yacht owners, who usually operate their yachts via a non-EU company like Cayman Islands or BVI, the chartering of their yacht in Spain requires additional administrative steps compared to European structures and there are a few steps to undertake. We asked our friends at Vistra Marine, who have developed a ‘Mallorca Model’ that simplifies things for owners, to cover off the fundamentals.
Anthony Galea, Managing Director of Vistra Marine and Aviation LTD advises that first, the yacht must be imported within the EU for commercial operation. This process requires declaration of the yacht with a Customs Authority in one of the EU Member States and involves a valuation of the yacht, as well as payment of any customs duties.
Then, the yacht’s owning company will need to appoint a Fiscal Representative in Spain to import the yacht in Spain and said representative will then handle the application for the Spanish VAT number, together with the administrative requirements, like the valuation of the yacht.
Chartering in Spain is possible for both EU and Non-EU (e.g. Cayman Island, BVI, Marshall Island) flagged yachts, as long as the yacht is registered with a commercial status.
From an insurance perspective, chartering could mean an increase in use of the yacht and possibly an increase in number of crew employed to be compliant with manning requirements on a commercially registered yacht. Therefore your insurance provider may apply an additional premium, or additional conditions, to cover the commercial activity. Once the new conditions and premiums have been approved, the policy can be activated very quickly. For clients of Pantaenius, a simple call or email to your representative is enough to start the process.
As a Pantaenius client, we would ensure that you are offered the full insurance package for your charter yacht, including loss of charter cover under the hull insurance, personal accident for charter guests and MLC compliant medical and accident insurance for the crew. We would also ensure that the yacht is equipped with the Certificates that they are obliged to carry on board as a commercially registered yacht.
Lastly, and unlike in other charter hotspots such as France or Italy, before a yacht can start its charter business in Spain a Charter License must be obtained for the Spanish region where charters will start. Applying for both a Balearic and Barcelona license will give you wider flexibility.
VAT on charter income in Spain is 21%. It also important to note that if the charter is done by a non-EU company and this country does not have a double tax treaty with Spain, then an additional withholding tax of 24% has to be deducted from the charter income.
Making your yacht available for charter in Spain might appear daunting but the potential rewards are great. Using a specialised company to handle the administrative burden and take responsibility for the various transactions and tax implications is the obvious choice for many.
The main advantage of Vistra’s ‘Mallorca Model’ is that the setup avoids a huge amount of complexity, with the company taking all responsibility and alleviating the need for additional fiscal representation - an incredible help to owners wishing to offer tax-compliant charters in Spain.
Like Pantaenius, Vistra Marine strive to provide their clients with tailor-made solutions, specific to superyachts and crafted especially for each owner’s unique requirements. Vistra can provide assistance with the registration of both a company and a yacht, asset administration, corporate structuring and services, accounting, payroll, yacht financing, customs, VAT, and tax compliance. Their network includes lawyers, tax advisors and yacht brokers, providing owners and family offices with the support they need to purchase a yacht, setup a company and manage the on-going administration. Pantaenius Yacht Insurance is pleased to be part of this network.