Temporary admission regarding foreign yachts in Spain
Under the criterion applied by the Spanish customs authorities, the oral declaration system provided in the new Customs Code is not being required in the temporary admission procedure for yachts registered outside the customs territory of the Union, and the criterion under the previous Code is being retained.
Both owners of yachts registered outside the customs territory of the Union (non-EU yachts), and agents and operators in the chartering sector have expressed a number of concerns to us over the interpretation and treatment by the Spanish customs authorities of the temporary admission procedure (TA) for yachts, in particular, over the provisions on oral declarations that have been laid down in the new Union Customs Code (Regulation (EU) No 952/2013–UCC-, in force since 2016).
This is one of the tax and customs issues that is prompting the most requests for advice. The Balearics is one of the most in-demand destinations, and for that reason, alongside the issues related to yacht chartering operations, the treatment and interpretation applied by the Spanish customs authorities regarding the temporary admission procedure have sparked a great deal of interest.
As you know, TA is a mechanism that allows yachts registered outside the customs territory of the Union to enter that territory with the option for relief from import duty and to avoid, among other taxes, the accrual of the import VAT (i.e. 21% in Spain).
Under the implementing provisions for the new Customs Code, applicable since May 2016, the temporary admission procedure is available for yachts meeting the following requirements:
- They must be registered outside the customs territory of the Union;
- They must be registered in the name of an individual or entity established outside the customs territory of the Union.
- As a general rule, they must be used by an individual or entity established outside the customs territory of the Union.
These conditions are identical to those already envisaged in the implementing provisions for the former Customs Code (Regulation (EEC) No 2454/93). However, and here lies the issue, the implementing provisions for the new Customs Code laid down different provisions on the manner of declaring a yacht to place it under the TA when it is brought into the customs territory of the Union.
Under the former Customs Code, a declaration for temporary admission (importation) was considered to have been made on entry into the customs territory of the Union by the sole act of crossing the border of the customs territory. Whereas the new Customs Code does not consider the sole act of crossing the border sufficient to consider that a declaration has been made to place a yacht entering the customs territory of the Union under the TA, and it now requires an oral declaration to be made to Customs, by filing the Annex 71-01. Filing this declaration means that yachts must enter through a port having a customs area.
For yachts under TA leaving the customs territory of the Union, however, the new Customs Code has maintained the tacit re-export declaration to discharge the TA by the sole act of crossing the border of the customs territory of the Union.
The issue clearly concerns therefore only the manner of declaring a yacht entering (not leaving) the customs territory of the Union under the temporary admission procedure.
Despite the above, the Customs Department of the Spanish Tax Authorities in Madrid has issued an internal instruction (not officially published) to all Regional Customs Offices, in which it gives authorization for the criterion laid down in the former Customs Code to be applied again. In other words, under this new criterion, in practice any yachts meeting the requirements mentioned above and wishing to be placed under the temporary admission procedure on entering the customs territory of the Union through Spain, will be considered to have made the declaration for them to be placed under this procedure by the sole act of crossing the border, in line with the interpretation applied under the former Customs Code; without having to make an oral declaration (Annex 71-01).
In any event, since the criterion of the Spanish Customs Authorities has not been officially published, and because the wording of the customs legislation in force still retains the obligation to file that Annex 71-01 in these cases, it is highly recommendable if a yacht is intended to be brought into the Customs territory of the Union through Spain and placed under the temporary admission procedure, to check first the criterion being applied at that time by the Spanish Customs Authorities. Yacht operators must be very aware of all these factors, and take the necessary precautions to comply with all customs and tax requirements.
We will keep a close eye also on the effect that the completion of Brexit and the agreements to be reached between the UK and the EU will have on the yachting sector, because the TA procedure could apply, if the case, to yachts registered in the UK if this territory finally also left the customs Union after it has officially left the European Union.
Garrigues Transport & Shipping Department