ISDMT #2 - Is this correct?

[Grehan]

[ QUOTE ]
It could be that having paid the tax, provided the owner is non-resident, the vessel can remain under the British flag. That would make sense.....but is it the case?

[/ QUOTE ]
Well it's not the case for British registered cars that have to be 'imported' (and import tax paid) under the same law. They have to have Spanish registrations (and insurance and pass the Spanish MOT). The newish UK driving licence (and photocard), is legal in Spain and doesn't have to be changed - because it is an official EU document - nor does a new Spanish driving test have to be taken. But there's no equivalent EU boating licence, so . . . .

 

[Grehan]

Re: Story repeats

[ QUOTE ]
All these articles are copying each other

[/ QUOTE ]Yup, that's what I said! /forums/images/graemlins/wink.gif

FWIW I have passed details of this ISDMT debate onto two Spanish law firms that are recommended on the leading no-bullsh!t Spanish Property website (somewhat like YBW in stature) and who contribute regularly to it. They may well not be interested in boating issues, but who knows?

 

[Anonymous]

Re: Story repeats

[ QUOTE ]

There is nothing at all to suggest that any of this relates to non residents.

[/ QUOTE ] Not so. Have a look at the EU rules, posted in the last thread, link posted by me in this thread, and relevant part posted. It is clear that EU rules permit the charging of tax if the private/pleasure vehicle is in the country for more than six months out of 12 months -- no mention is made of who the owners are or their residency.

[ QUOTE ]
The people concerned have been living in Spain tax free so far.

[/ QUOTE ] I don't think that's entirely fair. If people have no income there is no income tax. If they do, and they are Brits, then it is likely to be taxed at source and because of the no double tax treaty, that means the tax is paid. There are wealth and CGT liabilities, I suppose, but surely we are looking at pretty humble folk with limited capital and limited (mostly pension) income? While they are in Spain they are paying IVA and taxes via their marinas. What taxes do you think they ought, fairly, to pay in addition?

[ QUOTE ]
There are also caravan sites full of folk doing the same, so it was bound to be caught up with eventually. No country would tolerate this if it realised.

[/ QUOTE ] I think you are wrong about this....if there is any tax due (other than ISDMT on yachts) it will probably be trivial. The wealthy will have homes and have taken legal or accounting advice. This is a vendetta against little people, is pathetic, sad and pointless -- as the Spanish authorities will discover in due course.

 

[Oliveoyl]

[/ QUOTE ]
Well it's not the case for British registered cars that have to be 'imported' (and import tax paid) under the same law. They have to have Spanish registrations (and insurance and pass the Spanish MOT). The newish UK driving licence (and photocard), is legal in Spain and doesn't have to be changed - because it is an official EU document - nor does a new Spanish driving test have to be taken. But there's no equivalent EU boating licence, so . . . .

[/ QUOTE ]

OK, let's try this scenario - say I live just north of the Pyrenees in France, French resident to all intents and purposes (nationality, tax resident...), but for whatever reason (OK let's imagine I have a Spanish lover), so I spend half my time (calendar year or otherwise), with my FR car parked in boyfriend's road, just over the border (and remember these are both Schengen countries, so no in/out procedure at border). Would I have to re-register my car, and pay ISDMT? And to whom - the aduana patrolling BF's road? Ridiculous, they could never apply to EU cars in transit, so they have no right to apply it to boats.
Note that the EU rule mentions total days, not consecutive days

 

[Grehan]

Can't really comment on your interesting love-life ( /forums/images/graemlins/blush.gif ) but the Policia have been increasingly cracking down on foreign registered cars that have obviously been in Spain for a long time. This police focus has been going on for a long time - years. I guess just south of the Pyrenees they'd see loads of French cars 'popping over for a quick one' (as it were) so yours wouldn't stick out too much. /forums/images/graemlins/wink.gif

 

[JonJon]

Seems to me that the basic Mugabe principle applies here- My country, my police I'll do what I damn well like, it will be at least 10 years if ever before some international ruling raps me across the knuckles, meanwhile I might as well scoop some useful revenue from these poorly represented unfortunates with the big yachts from somewhere else -full stop. /forums/images/graemlins/wink.gif

 

[prescott56]

Interestingly on the car side, i managed to get a friends car impounded the week before xmas, no docs in car and being a total donkey i had no id or driving license on me, i was doing a quick airport drop off with my son.
My matey was over at xmas, and quit easily got his car back, had to produce documents, which were all in english, NO spanish translations. Paid his 150 Euro's "storage" and drove away no probs. His car has been in Mallorca for over 18 months.
Most of the local, spanish, brits, and english deemed his chances of getting it back as a BIG Zero, unless he could prove it had been in Spain less than 6 months.
The fines i got were 10 Euros for no Docs in car, 60 Euros for no insurance in car, and 400 Euros for no License on me.
So lessons learned, always carry license, and in future my lad can get a taxi to teh airport
Regards
Roy

 

[JamesFrance]

Re: Story repeats

[ QUOTE ]
I don't think that's entirely fair. If people have no income there is no income tax. If they do, and they are Brits, then it is likely to be taxed at source and because of the no double tax treaty, that means the tax is paid. There are wealth and CGT liabilities, I suppose, but surely we are looking at pretty humble folk with limited capital and limited (mostly pension) income? While they are in Spain they are paying IVA and taxes via their marinas. What taxes do you think they ought, fairly, to pay in addition?



[/ QUOTE ]
David this is not correct. The only pensions taxable in the country of origin are public service pensions. Any old age or private pension is taxed in the country of residence, together with any investment income (if any).

I have talked to many people in Spain who believe they can avoid any form of income tax because nobody knows where they are. A crackdown was inevitable.

You will also see many UK registered cars without uk tax discs which are totally illegal and not therefore insured.

 

[JonJon]

Would that be a British license or a Spanish? Is your son over the age of consent does he live in Spain? Do you live in Spain - how long in each year........

Dont you feel a lot of this would be easier if they didnt own half our elecricity generation system, most of our major airports and a good chunk of the mobile fone system together with providing a number of mortgages.

Viz you want electricity - how long have you lived here? etc etc /forums/images/graemlins/wink.gif

 

[Plomong]

Maybe I should add that, in the case of cars, the ISDMT appears to be the remains of what was initially "Impuesto de Lujo" and later "Impuesto de Matriculacion".

That tax was 28%, and Spain was allowed, as a result of some tough negotiating some 10 or 15 years ago, to continue it temporarily, on the understanding that it would be phased out. However a phase out period was not agreed.

So far, the Spanish tax laws have only got it down to 12%. Recently I heard the head of the local Car Manufacturers Association (ANFAC) call for its elimination so as to encourage people to buy cars. I don't know if his suggestion will be heeded, but it would not surprise me, as it would be a quick way to kill several birds with one stone. The CE requires a level playing field, so a given model of car should not be more expensive in one country just because that country levies some special tax or other on the act of registration.

IIRC, at the time Spain was allowed to continue their Impuesto de Matriculacion, France obtained a waiver relating to the application of a 10% VAT rebate on boats.

One further point: A person becomes resident for tax purposes when they have been in a country of the EC more that 183 days in one year. An EC rule.

At that point, any car or boat owned by them and present in Spain, must be registered in Spain. To register a car or boat in Spain, you must pay ISDMT on the current value of the boat or car, as part of the process. The valuation, as far as I can see, is the value you declare. How that is checked for reasonableness I don't know, but it is checked in some way. If you try to declare your 44 footer to be worth 20.000 Euros, you are probably out of luck, unless you can show in the inspection that declaration will trigger, that it is a tired old hulk and is really worth no more than that amount. The trick is to be honest and fair.

The valuation process cannot be based on LOA and beam, for example, as two identical boats from the same manufacturer could differ in price by many tens of thousands of Euros, depending on the sail wardrobe, optional electronics, interior options, etc, etc. So valuations for a given model are not easy to formalize in a tabular simplistic manner. Even more so, when it comes to comparable boats from different manufactures (Bavaria, Beneteau, Jeanneau, HR, X-Yachts, Hanse, Island Packet, etc, etc).

When you register the boat in Spain, you must comply with the Spanish requirements for outfitting the vessel (number and type of lifejackets, etc). Compliance is checked by an inspection out of and later on the water. This inspection is NOT a tax or valuation inspection -- it is only a compliance with Spanish RCD implementation and SOLAS requirements. For example, all sea cocks will be examined, extinguishers and flares must be in date, a gas alarm must be fitted for some categories, a 4 or 6-man liferaft must be on board and serviced, for some categories, gas bottle must be outside in a vented locker, etc. Which categories and what equipment? See the RCD and SOLAS requirements, no more, no less.

As for a comment by Lemain that it is impossible to register a boat that is over 5 years old, that is absolute rubbish. It WOULD be difficult to register a foreign-built, little-known in these waters, model that does not come with an RCD compliance declaration. As in the UK, it is up to the owner to prove complance with the RCD. If the boat comes with a manufacturers RCD Compliance declaration, no problem.

Once you are tax-resident in Spain, with your boat on the Spanish register, you must hold a valid Spanish qualification or ticket:
1. Patron de Embarcación de Recreo: of little use to a long-distance cruiser.
2. Patron de Yate: Similar to Coastal Skipper. Permits navigating along the coast in any direction and for any distance so long as you never are more than 60 miles from the nearest harbour.
3. Capitan de Yate: Ocean Yachtmaster -- the world is your oyster!!!

As far as I know, foreign qualifications are valid in Spain, and can be swapped for the corresponding Spanish certificate. This is certainly true for drivers licenses, and is, as far as I know, also true for sailing qualifications. The local paper-pusher in the comandancia or in the capitaneria may not know the rules and permitted swaps, but if you gently persuade them to check it out with "Madrid" or their higher authority (meaning boss), or go through a recognised and reputable sailing school, there should be no problem. When doing this, it is important to be diplomatic, not abrupt or disparaging. Remember, all this is relatively new to most of them, and even they may not have all the instructions they need to handle your case correctly. Be charming not smarmy, try to get them to understand your "problem" and see how we can find a solution, etc, etc. As everwhere, the agressive, I want my Rights, approach will not work.

Hope this clears up some doubts.

Plomong

 

[Grehan]

Thanks for an interesting post, Plomong.
Do you have any info. or opinion on the possibility of the boat by itself 'carrying' the 183 day liability (irrespective of anyone being on-board and/or qualifying as Resident), rather than a boat being occupied by a person for the 183 days who is then liable to import said boat?
Ever heard that one?

 

[Anonymous]

Thanks for some useful information but you haven't addressed the point about the non-resident whose boat is in Spain for >185 days. We have evidence that the Spanish are targeting those boat and that the EU rules permit that.

Your description of the re-registration requirements does not agree with my experience. For a start, you have neglected the special radio equipment power supply requirements and the requirement that all on-board equipment must be homogulated. Unless evidence of homogulation is provided, items might need to be replaced; in the case of a five year old, or older, British yacht, that could include the entire package of marine electronics, liferaft, lifejackets, lines, motor parts,....

You introduce and use the term 'tax resident' very unwisely. The rules are about being 'Ordinarily Resident'.

I have never heard of anyone managing to 'exchange' or otherwise qualify for the Spanish yachting qualifications without taking the Spanish exams. Unless and until someone, somewhere, succeeds in doing that, assume that it is not possible. I know several people who have taken the Spanish exams and they all said that language, for them, was the biggest problem because the examiners were not sympathetic to the language issue. When you say that "As far as I know foreign qualifications are valid in Spain" what do you base that on?

 

[Anonymous]

Re: Story repeats

[ QUOTE ]
David this is not correct. The only pensions taxable in the country of origin are public service pensions. Any old age or private pension is taxed in the country of residence, together with any investment income (if any).

[/ QUOTE ] I thought that we were talking about people (let's say Brits) who just slip off to Spain in their yachts, campers, or stay in holiday homes and don't tell the Spanish authorities that they are there? i.e. they are still paying tax in the UK. As far as the Spanish are concerned, they are tourists, and spend foreign currency in Spain.

[ QUOTE ]
I have talked to many people in Spain who believe they can avoid any form of income tax because nobody knows where they are. A crackdown was inevitable.

[/ QUOTE ] I know that there was a huge black economy but I don't know the mechanics of it. The Rottweiler brigade along the Costas. Very nasty. Is that the group you are thinking of?

[ QUOTE ]
You will also see many UK registered cars without uk tax discs which are totally illegal and not therefore insured.

[/ QUOTE ]That's an interesting one. I know many Brits with old British cars, most are insured with Linea Directa via Gibraltar, I think, and some do get an ITV every year. Whether the insurance is valid is another matter...."You and the law in Spain" says specifically not, but then again Linea Directa is a very large company. I know of many pay-outs but I don't know whether they have honoured a really big pay-out, say after a large accident with fatalities. We refuse to do that and sold our car in the UK, the first year, before the MOT ran out. We are now thinking of buying a new car and keeping it in the UK during the summer. Down Under Insurance seem to offer a policy that allows you to be genuinely non-resident in the UK but still drive a UK vehicle on a UK licence. Saga suggest that you can be overseas for as long as you like but when I put into writing what we are doing they declined since we don't spend at least 183 days a year in UK. To reiterate, with Saga you must spend > 183 days pa in the UK. Not everyone knows that.

 

[bazobeleza]

Re: Story repeats

David, quite rightly you raise serious issues here, you are painting a very black picture of probable boat taxation in spain. It also seems to be a situation picked up by the press. They can't resist a good story.

I was considering moving on to spain for a year or so, now I'll give it a miss and go straight on. Individually no great loss to spain, but if its repeated????? I have allready been contacted by several friends asking to help move boats out of spanish marinas, and I am not talking about 30' floating hulks but large mobo's and sailboats.

Where does this leave spain? there are thousands of 'Foreign' boats in the spanish marinas, if they pursue and collect this 'tax' it will bring them a large windfall ... and alienate boat owners to the point that the marinas will empty faster than water down a plughole.

If judging by the attention this is getting here and in the press both national and Yachting, (it will also be picked up by the continental yachting press), it will, if not speedily resolved, and publicised, have a huge effect on the spanish marine and tourist industry this coming year. Even the mere talk of a rumour of gun toting taxmen striding the pontoons will unsettle a lot of people. Can any gov't be so shortsighted? (gordon's excepted)

 

[Ardelloeixe]

Re: Story repeats

Maybe someone here will remember the 1988 Merchant Shipping Act, and how this Act afeccted to the brittish flag fishing boats, owned by spanish fishing firms.
These boats where forbiden to fish in british waters because they belonged to foreing firms.
Many years latter the british Governement, after loosing the case in the Supreme European Court, had to pay a lot of money to the owners of these fishing boats.

Perhaps the spanish authorities are making the same mistake?

Bye

 

[Wansworth]

Re: Story repeats

A Spanish policeman told me once that Spanish people didnt always obey the traffic laws because of their Latin blood he felt that was ok,unfortunatly the laws still exist and now and again they are acted on,so although you think its all jolly and laid back because no one acts it does not mean they wont.This is the confusing bit.We would expecta German customes to act but have somehow belive the spanish customes cannot be bothered.As a British person living in Spain this is the biggest problem,my Spanish friends say o thats ok they wont find out or no problem no one bothers etc.....But things are changing.Local governments are not allowing high rise flats on the beach,poeple now pay taxes cars have mot etc.Spain is coming up to european standards,slowly so beware that you abide by the regulations.....thats if anyone actually knows them!

 

[westernman]

Re: Story repeats

The situation with ISDMT seems to be identical to that of moving cars around in Europe.

For cars in Europe the situation is simple and clear.
If you become resident in another country (usual definition more than 6 months there in any calendar year), then you have to register the car there.

In some countries, this means paying a registration tax. Here in France it depends on engine size. A typical car will cost about 300 euros or so. This is not VAT and has nothing to do with VAT (which has to have been paid somewhere in the EU). A colleague imported a Corvette with a 5litre V8 engine from California to France. No VAT to pay, since it was part of his personal belongings and he was moving here, but the car had to be re-registered (and get a kind of type approval - which meant changing headlights, changing the colour of side lights and a fair bit of hassle). The registration fee was 2500 euros.
Of course you then must have french insurance, and a french driving license. This can be obtained by a straight swap.

I had the same experience when I moved from France to Germany. I had no VAT to pay, however I did have to pay a registration fee, pass a kind of type approval (I had to change the headlamps from yellow to white) and exchange my french license for a German one.

Now, this ISDMT thing sounds to be exactly the same thing as I have experienced for cars. Unfortunately the registration tax seems to be a very high percentage of value, and of course getting the boat up to scratch for the Spanish rules will be a pain (as it is for importing cars - especially cars which are being importanted from outside the EU - different type approval rules, lights need to be changed, fog lights installed etc etc).

I don't know if the swap of qualifications goes as smoothly as the drivers license swap does.

Seems like there are better places to become resident than Spain!

(PS France has a kind of road tax on boats - if you are resident you have to pay a tax each year which depends purely on the size and engine size of your boat - but there is no need to register the boat in France - if it is properly registered somewhere else and respects the rules for that registration with regards to equipment etc).

 

[Anonymous]

Re: Story repeats

Barry, I like the 'carpet slippers' comment in your tag line...Nauticats are nice and comfortable /forums/images/graemlins/smile.gif

We never intended to spend any time in Spain -- preconceived ideas -- but found that we really liked it, especially the weather, the company and when I got into it, I found Spanish fairly easy to learn (easier than Italian, for me). The biggest problem - and this makes me angry - is that we cannot find out what the law actually says. That really is unjust. The Spanish tax authorities know that there is an issue and they must know that foreign owners don't understand the rules or where the rules are published. This business of taxing the boat regardless of residency after 185 days in the country is a real bummer. If the rule was 185 days in any calendar year, the same as residency, that would be fine for most cruisers.

As for this being an 'own goal' I'm not so sure. Horrid things go on in politics. For a start, for every liveaboard Brit yacht there must be ten to twenty non-liveaboards. If they can now target the non-liveaboards who are all working, over the winter with bad weather, how can they get them out of Spain? Having taxed them, are they then going to impound them until they have been re-flagged (that means a full survey out of the water by a Spanish inspector before and after any work)? There's a lot of potential work in that for Spanish yards. OTOH, the Brit and N. European owners would not be able to sail them, after re-flagging. There would be no market for all those yachts with Spanish dusters, either.

Where can people take their yachts? Gib is full and the anchorage is closed -- could owners demand sanctuary north of the runway? Maybe? Or Smir? There is plenty of space but it isn't cheap. Portugal has its own boaty issues. Few are going to want to take a yacht back to Blighty before late May early June, at the earliest and you are into the Portuguese trades.

France is a possible - the coast from the Spanish border down to around Marseilles was being badly affected by the recession early last summer. Worth a look. Port Napoleon, of course.

It is a major problem for people. But are we just seeing a general tendency for governments to tax everyone who has cash that can be taxed to make up the shortfall after these absurd bailouts taking place around the globe? They'll put a tax on the number of bogs you've got, next, or the number of windows, even /forums/images/graemlins/shocked.gif

 

[Anonymous]

Re: Story repeats

That's exactly what our Spanish friends have been saying. Plus, they add, corruption is rife and you cannot trust anyone. Your summary to abide by the regulations if anyone knows them is bang on target. Even the gestors give different advice in the same town. We have got as close to emigrating to Spain as you can without actually doing the deed and I have serious doubts. Particularly now that the economy is in such trouble.

You are up in Galicia; I am worried about attitudes towards immigrant Brits in SE Spain...what's it like up where you are?

 

[Wansworth]

Re: Story repeats

Lemain,There are lots of northern europeans living here;althoughso few I have yet to meet one,the atitude ingeneralto immigrants is good and to brits ,Gernmans etc very good asit seemhalf the populationhas been working in Europe especially if theyare over 50.We had several Brits come to look at our house,,,escaping the world of expats and the sun!!!! I will be buying a small boat and do have an a foreboding of whats to come but a friend reregisterd a nic 32 and is alive to tell the tale....you need endless patients!