Hill Dickinson were recently asked to comment on a press report on an apparent 'clamping down' by the authorities in the Valencia region on yacht-owning UK residents.  Several British yachts have been reportedly impounded and others have left to avoid that fate.  The action is said to stem from enforcement of payment of matriculation tax (at 12%) on the value of the yacht.  Apparently, among those targeted were an English couple who have lived on board their yacht at Torrevieja marina for almost two years, seemingly without any issues being raised. In view of the alarmist nature of the press report, it is worth clarifying a few points. Matriculation tax, or the non-harmonised Spanish 'special tax on certain means of transport', is levied on the registration or use of a yacht in Spain.  It applies to pleasure craft over 7.5 metres (21 feet) in length.  The concept of "use" refers to the use of the yacht in Spanish waters by a person resident (or with a permanent establishment) in Spain where no application for registration of the yacht in Spain has been made within 30 days of the the commencement of use. The "commencement" date is deemed to be either the termination of the temporary admission customs regime (or tourist registration scheme) in respect of the yacht, or the date when the user becomes resident or permanently established in Spain.  The rules on residence are complex, but in essence, if the period spent in Spain exceeds 183 days per annum, matriculation tax will apply, unless the user can demonstrate a tax residency elsewhere.  If levied at the time of acquisition, matriculation tax is calculated on the purchase price and is other wise based on a contemporaneous valuation. It is unclear why the Valencia authorities have recently become so active on this, but it seems likely that their intervention was triggered not by the ownership of the yachts but on the basis of the residence rules described above. As matriculation tax is a non-harmonised levy, it is difficult to predict how the other Spanish authorities will apply the rules.  The reports from Torrevieja do not necessarily suggest a nationwide campaign, but certainly those operating and/or living on board their yachts in Spain should ensure that they are fully familiar with the relevant regulations. Hill Dickinson have been assisting the Spanish Superyacht Association (the "AEGY") in lobbying the Spanish Government to follow the lead of France and to some extent, Italy and establish a charter-friendly environment in Spain.  The requirement of a charter licence for any yacht wishing to charter in Spanish waters - itself dependent on the payment of matriculation tax - has all but decimated the Spanish charter indstry, notwithstanding the superb facilities, infrastructure and cruising grounds.  As France has discovered, direct income due to increased charter activity is likely to be significantly greater than the revenue from matriculaion tax.  The current economic climate, coupled with the AEGY's efforts and wider indsutry pressure, might just be the catalyst for change.  This presents the interesting question as to whether those who have paid matriculation tax to obtain a  Spanish charter licence and who are legitimately chartering in Spanish waters will be entitled to a refund if matriculation tax is ever abolished. Article supplied by Hill Dickinson