Chartering out your boat

[Illetas]

Volvopaul is right about the number of charter boats in Santa Eulalia and I guess that it will be similar at Botafoch. One of the boats on my jetty is a fifty odd foot boat used exclusively for charter and the maths just don’t seem to add up. The mooring will be costing over 20000 euros a year, there’s a captain who works full time, service , maintenance, depreciation etc etc
The boat is out ( always to Formentera) three or at the peak maybe four times a week at the moment and obviously less in June and September but that doesn’t add up to a huge revenue stream for such a major investment.

 

[alt]

Volvopaul is right about the number of charter boats in Santa Eulalia and I guess that it will be similar at Botafoch. One of the boats on my jetty is a fifty odd foot boat used exclusively for charter and the maths just don’t seem to add up. The mooring will be costing over 20000 euros a year, there’s a captain who works full time, service , maintenance, depreciation etc etc
The boat is out ( always to Formentera) three or at the peak maybe four times a week at the moment and obviously less in June and September but that doesn’t add up to a huge revenue stream for such a major investment.

A lot of people charter the boat to balance the books, not to make profit. I notice you say 'exclusively', but is it really? Possible it's not, who knows.

Or we could put the tinfoil hats on and say that it's being used to wash money.

 

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Spot on. I will add that here locally many are doing charters as a side business. Do they find out that running and keeping a boat of ten or above meters is too expensive?
As a side note having sold boats to customers who then use it for charter, the real problem is that in the end it might end as that your boat is not yours anymore and become more a business then anything else.
I would ponder about this first before doing anything else.

This! We have our Smeraldo 37 coded and do offer skippered charter. However, I limit it to approx. 10 charters per annum (all day trips, lasting only a few hours). It's a bit of fun, helps with the expense of running the boat. However, a season or two ago it started getting 'busy', and being on the boat felt like work rather than pleasure, so we cut back a bit. It's now back to being fun on the boat, even when we have guests out.

 

[Portofino]

One issue that’s not really been touched upon is the relevant countries tax authorities governance, and your own the U.Ks

You could “ get done twice “ although once at which ever end will be enough I suspect .Worse if “ done “ by the host Med country I suspect due to your and your advisers interpretation differences of the rules and issues locally by the authorities of the national rules .= Mine field forever shifting .

So you decide to grab the bull by the horns , reg a sep Co or unwisely use your own domestic Co .
Buy a boat through the Co , have it prepped for charter , hire a suitable FT or PT skipper , reg VAT and start claiming inputs of TVA back keeping a book etc .
Obviously keeping a record of income - days / weeks it’s charted out .

What could go wrong ? Everything’s all above board I hear you ask ?

Well this take a typical season May to Oct 5 months call it 20 weeks .
You get say 4/ 6 weeks ( basically the central summer bits ) of income / charters as said all above board everything seen in the Co,s bank statements etc .
The other weeks you use the boat with your friends and family again even that’s put through the Co,s bank A/C ie you effectively pay for own use just like a 3 P even at the going rate .

Every 1/4 or month claiming back TVA imputs , fuel , berth , any new stuff like covers , the engine service guy etc etc .

One day the local customs or similar authorities boat ,pops from nowhere into the nice anchorage where you or a party of guests + skipper are enjoying themselves and requests to see the papers .
In there cockpit there’s a guy on a laptop tapping away with one hand and on his mob in the other .

They realise it’s a foreign charter outfit very quickly .
I,ll cut to the chase they request you send all your recent accounts to there equivalent of the inland revenue by 14 days .

This because the locals , 1- the host is bleeding TVA every time you claim it back .2- are loosing out on the greater tax take because it’s written up as a loss ,as it is actually just about covering costs Even it was in profit because it’s owned by a UK Co and there’s a double taxation treaty the host looses any offsetting tax on any dividends taken by the Co directors you in the U.K.

There’s nothing for the host country to see only TVA haemorrhage which may be substantial.

It’s all perfectly structured and above board .

They then after receiving your UK “books “ look at the proportions of time use re punters and owners personal use .
The more years they go back the greater the picture emerges.
All these further request full filaments cost time and huge worry and hassle +++
If it appears the % time charted falls short they attempt to plant a faux charter tax dodge rap on you and start unpicking the previous TVA claims .
If your home accountant or you does not co operate , ie send the books or attend interviews then you get to see the inside of a court room or the boats impounded , either or both .

Basically if the time out on charter does not fit there norms and if they think by squeezing they can crush you they will .

Remember this is a fully legit structured and recorded set up .
That bit is not that being tested all the I,s are dotted and t,s crossed .

No what’s being tested is concept of the sole purpose of setting up the Co in the first place is to offset the running of a hobby against tax .The UK side does not like that kind of thing and if it finds out will push it back .

Obviously the local Med host country is 9issed off loosing TVA

Go under the table , start a doing cash only under there nose then if you are caught expect big trouble and serious consequences locally .

Worth trying to find out what the “:economic norm “ of % time on charter is acceptable to both sets of authorities.

Shifting goal posts me thinks .