Ship agents regulated for the first time through a specific instrument
An important new development has occurred with the publication for the first time of a specific instrument on ship agents. Royal Decree 131/2019 implementing the obligation to hire ship agents was published in the Official State Gazette (BOE) on March 23, 2019. This instrument, coming into force on July 1, 2019, sets out the obligation for national ships to have ship agents (except for fishing and pleasure boats) at every national port (run by the central or autonomous community governments), unless the owner or shipping company has an agent within its own organization. It is a known fact that foreign vessels are already required to have ship agents under article 10.2 of Maritime Shipping Law 14/2014.
In addition to laying down that ship agents must satisfy the conditions imposed by the port authority for the port where they are going to carry on their activities and receive their authorization, an electronically operated ship agent register has also been created, designed as an instrument for public disclosure of the activities of shipping agents and to monitor compliance with their obligations.
Lastly, the royal decree implements the replacement or transfer of the ship agent as provided for in article 259.4 of the current Legislative Royal Decree 2/2011 approving the Revised State Ports and Merchant Shipping Law and, in particular, determines that the outgoing ship agent is responsible for notifying the authority through the national one-stop shop mechanism. The new ship agent must use the same mechanism to notify their acceptance to the maritime and port authority.
New advances in legislation on the activities of vehicles for hire (VTCs) regarding registration and information
Spain has therefore taken a step forward in relation to standardizing the rules on companies providing vehicles for hire services with or without drivers. Companies providing vehicle rental services without drivers have always had registration and notification obligations, which apply in part to these types of companies hiring out vehicles with drivers.
CNMC issues report on flag requirement for providing port services
The Spanish Markets and Competition Commission (CNMC) issued, on December 4, 2018, a report (INF/CNMC/160/18) on the establishment of a flag requirement for vessels and boats providing port services (towage, mooring, pilotage, bunkering, etc.) in Spain.
Regulation (EU) No 352/2017 establishing a framework for the provision of port services and common rules on the financial transparency of ports, in force since March 24, gives member states the option of reserving the provision of port services for their national vessels, subject to the following conditions:
- The member state should deem that it is necessary to impose a flag requirement in order to ensure full compliance with obligations in the field of social and labor law;
- The decision should be non-discriminatory and based on transparent and objective grounds, and should not introduce disproportionate market barriers;
- The European Commission should be informed before adopting the decision; and
- The decision should relate predominantly to vessels used for towage and mooring operations.
Besides finding that the flag reservation does not appropriately satisfy the discussed conditions, the CNMC's report finds that it does not appear either to meet the principles of good regulation that are a part of Spanish law.
Unlike cabotage services, which are effectively allowed for certain vessels flagged in EU member states (Regulation (EEC) No 3577/1992), shipping in inland waterway navigation l has now been determined legally reserved for Spanish commercial ships, except as provided otherwise in this respect in EU legislation (article 256 of Legislative Royal Decree 2/2011 approving the Revised State Ports and Merchant Shipping Law -TRLPEMM-, currently in force).
Spain finally transposes EU legislation on package travel and linked arrangements
A notable change is a joint and several liability system among wholesalers and retailers in relation to travelers for the performance of travel arrangements included in the contract.
At the end of 2018, after clocking up a considerable delay, the government had to abandon the bill amending the revised General Consumer and User Protection Law and other companion laws, so that it could transpose Directive (EU) 2015/2302 of the European Parliament and of the Council of 25 November on package travel and linked travel arrangements. Instead the government finally opted to publish in the Official State Gazette (BOE) Royal Decree-Law 23/2018 of December 21, 2018 transposing directives regarding trademarks, rail transport and package travel and linked travel arrangements.
Alongside other provisions, on rail transport, for example, the decree-law transposed the package travel directive, which Spain should have included in its law in January 2018, and had already been applicable, as a directive, since July 1, 2018.
Among the royal-decree’s main amendments mention should be made of the change to the scope of application and the harmonized definitions. As a result of these amendments, package travel and linked travel arrangements have been defined and distinctions made. Both are modes involving a combination of services, such as for example accommodation, carriage of passengers by bus, rail, water or air, as well as rental of motor vehicles or certain motorcycles. Additionally, the precontractual information and the rights of travelers have been broadened, and obligations to provide security have been introduced for organizers and retailers to be liable, generally, for a breach of the obligations arising in relation to providing their services, especially, for the refund of pre-payments and the repatriation of travelers in the event of insolvency. The respective autonomous community government authorities will be responsible for determining the form this security will take.
In relation to the liability system, the royal decree-law has notably elected a joint and several liability system for the organizers (wholesalers) and retailers of package travel in relation to travelers for correct performance of the travel arrangements included in the contract, regardless of whether they themselves or other providers are to perform the services. The directive did not provide for a joint and several liability system between wholesaler and retailer, instead it allowed the member states to decide whether to establish in their national laws provisions stipulating that the retailer is also liable for performance of the package travel arrangement. It is questionable that instead of joint and several liability, the spirit of the directive should suggest that each business owner should be liable within the scope of their own activities.
Be that as it may, companies in the industry have been preparing for this new system for months which finally saw the light of day in the final stages of 2018.
Nonresident income tax, greatly overlooked in yacht chartering
In the yacht chartering industry, charter operators are often not Spanish residents, so it needs to be asked whether or not those -non-resident- companies are taxable in Spain on the income they obtain from their businesses.
Before answering, it first needs to be determined whether the non-resident company has a permanent establishment in Spain. If it does, any income obtained in Spain is taxable at 25%, in a similar way as for any Spanish company, and it must file a corporate income tax return.
If the non-resident company operates in Spain without a permanent establishment it must be determined whether the country of residence of the company carrying on chartering activities in Spain has signed a tax treaty with Spain:
In the absence of a tax treaty, the income obtained in Spain by the non-resident company is taxable in Spain in respect of nonresident income tax (IRNR) at 24%. Certain costs, such as wages and utilities, may be deducted from their gross revenues.
If there is an applicable tax treaty, however, the income obtained by the non-resident chartering company is classified as business profits, provided they assume the risk associated with the business, and as such the income is taxable only in the country where the taxpayer is resident. This is because in every tax treaty signed with Spain business profits may only be taxed by the country of residence of the non-resident company operating in Spain.
The different scenarios facing a non-resident company carrying on yacht chartering activities in Spain are therefore as follows:
Briefly, where a company not resident in Spain is going to carry on chartering activities in Spain, besides complying with the associated notification and administrative obligations, it must look into both the indirect tax liability on its operations (VAT, for example), along with any potential direct tax on the income it obtains in Spain (in respect of nonresident income tax).