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This article discusses the most relevant legal issues in which people should take into consideration when buying a second hand yacht in Spain.
1. Yacht documentation
Once or before adopted the decision to buy a yacht in Spain, it is needed to proceed checking the documentation. This involves request for yacht information in the Register of Ships of the Directorate General of Merchant Navy. This is the official body responsible of such registry.
In Spain, the vessels with more than 2.5 meters in length must be registered. In the Register of Ships (there are branches in major coastal cities) you can get information about the owner and the boat. In this sense we can say that there is a significant certitude, we will not find in many others records of yachts in others countries.
If the boat will be flagged in another state different to Spain, once formalized the sale, should be asked to flag down at the Spanish Register of Ships. The flag drop will be required to apply for registry the boat in another state.
2. Purchase Documentation
Being a second-hand yachts, is desirable but not required, the formalization of a contract in which the parties will be established the circumstances of the operation.
Basically, the contract for the sale of a vessel must include at least the owner data and boat identification, price, form of payment, the inventory of equipment and law of the contract. This will give us security and guarantees in the event of any conflict. For the buyer is the title or evidence of boat ownership.
When the seller is a corporation, the sale must be documented with a invoice if it should include VAT, although this is not an impediment to also sign a contract.
The same contract (or invoice) will serve to go ahead with the administrative procedure of ownership change, and to give security to the parts in case of damage or failure and to apply to remove the flag.
In principle, unless agreed to the contrary, when the purchase is done in Spain, guarantees and obligations of the parties are governed by the Spanish law. In many cases, when is the transaction of large yachts, the parties use to submit the contract to the English law.
In the Spanish law, new boats are warranted for a period of two years for any lack on conformity. When is a second-hand boat, the warranty period depends on the nature of the parties (especially if the seller is an entrepreneur)
In the case of a sale between non-professionals, the seller must ensure the vessel for a period of 6 months for latent defects that may arise. Are hidden or latent defects this existing before the purchase and are not easily detected and, in case buyer would know them, would failed to perform the purchase or had paid a lower price.
In this case the buyer can apply to the resolution of the operation or reduction in the price paid.
When the seller is a company, Spanish law requires that boat is guaranteed for two years, like a new one. However, being a second hand boat, the parties can agree that the guarantee is reduced to one year.
It is important to consider that the participation of a broker in the purchase does not mean always that guarantee is for two, unless the intermediary acts as a seller.
4. Tax liabilities
In case of a new boat the seller will prepare an invoice with VAT to the buyer. In Spain, the VAT rate is 18% since Juliet 1st 2010.
When a is a second hand yacht and the seller is a company and VAT was deducted when the yacht was bought, the sales will be also subject to VAT.
If the buyer is a foreign company and is entitled to deduct the VAT, the tax must be paid in the country in which the yacht will be registered.
When the VAT is already paid and the ship will remain registered in Spain, it is necessary to pay the Transfer Tax (ITP) for change of ownership in the Spanish Register of Ships. This tax is 4% of the value of the boat.
For ITP should be considered that applies whenever a transaction of a yacht is carried on in the Spanish territory and operation has not VAT. This means an acquisition in Spanish territory of foreign vessels and between foreign parties would be taxable. The Tax Administration has not much control of this kind of operation because are not declared in the Spanish yacht register.
In any case, it is important to check and have evidence that VAT is paid when the boat is for private use of a resident in European Union because it is required.
In Spain also there is the Special Tax on Certain Means of Transport, known as Matriculation Tax. The Spanish Matriculation Tax affects boat of more than 8 metres in length registered in Spain. Spanish residents have the obligation of register his boats in Spain, so, unless the vessel has been used for charter, should be that tax already paid. If the flag is going to move, it is possible to get some refund of the tax.
We recommend our reports "Matriculation tax application to foreign yachts sailing in Spain" and "Debts reclaim and the yachting industry".
Yamandu R. Caorsi
Lawyer at Blas de Lezo Abogados
Yachting tax and legal consultant in Spain