UBP & Spanish VAT (for UK residents)

[bmwman]

Just what I was hoping to hear Johnnylad67!!!

 

We have prepurchased UBP and we sail 3 weeks today and whilst there was no spanish vat on drink cost when we did the 3 nights in April we weren't certain if that was a blip as it was 1st cruise out of barcelona for the year!!

 

Roll on!!

 

Ok.. VAT and European cruises. NCL have no exemption and they are correct. It is simple if the ship does not leave European waters VAT will be charged based on the port of Embarkation of the cruise (Summer for Epic will always be Spain).

 

VAT law is complex but the reason if you prepay that no VAT is charged is what has been provided.

 

What is never mentioned in these forums is the tour operators margin scheme (TOMS) which is pan European and deals with packages and I suspect UBP and UDP.

 

What NCL do on their ships is 100% correct and do not forget the Canary Islands are not part of Community territory for the purposes of VAT (Article 6 of VAT Directive).

 

I am afraid their is a lot of ill informed stuff on the question of VAT on these boards.

[Demonyte]

I am afraid their is a lot of ill informed stuff on the question of VAT on these boards.

 

 

You're definitely not helping when using phrases like "if the ship does not leave European waters" - the difference of physical EU area/waters and EU VAT area have been explained already in an earlier post (one does not need to "leave European waters" to leave the VAT area).

[bmwman]

You're definitely not helping when using phrases like "if the ship does not leave European waters" - the difference of physical EU area/waters and EU VAT area have been explained already in an earlier post (one does not need to "leave European waters" to leave the VAT area).

 

And you are certainly not helping by not understanding UK and Spanish VAT law. If you understood VAT at all you would realise that there is a lack of congruence in the EU how each member state has applied certain EU directives and readers would be well advised to remember the term European Waters. You need to leave EU and to do that you need to leave European Water.

 

Ask yourself a very basic question - Why has this only been in place for about 6 years but VAT for a lot longer. The answer is that it was not clear from the various EU countries how this was to be applied.

[nomad098]

Though the waters have been muddied on this topic the answer for cruisers is fairly straight forward

 

Years ago the cruise lines and the various countries in the EU had an informal agreement not to charge VAT. This all went out the window during the banking crisis about 6 years ago when Spain and later Italy decided it could gain extra much needed revenue by using the EU Vat rules for departures from Spain and Italy as in VAT terms everything purchased onboard was deemed to be purchased from the departure ports country as long as the ship did not call at a port outside the EU

 

EU waters are infinite as long as you do not call at a non EU port for example you could sail from Spain to the middle of the Atlantic turn round and come back and for VAT purposes and the EU maritime directive passed in 2012 you have not left EU waters

 

So as it stands

 

1) Pre purchase any package in the UK and VAT is applicable in the UK (same as US prices as the VAT can be reclaimed by the cruiseline). Other purchases made on board a ship departing either Spain and Italy local VAT is charged as long as no other non EU port is visited.

 

2) Purchase any package on board a ship sailing from Spain and Italy calling at all EU ports local VAT is applicable. Now this is where the cruise lines are swinging the lead a little what should happen is that the VAT should be charged for the whole package but they do not they use a loophole to charge the VAT on individual items and not the whole package. ( If you drink less than the package costs for example you save money on the VAT, drink more than the value of package and it costs more in VAT)

 

3)Sailing on a cruise from Spain or Italy calling at a non EU port including Canaries, Gibraltar, Channel Islands, Montenegro they are not part of the EU but official currency is the Euro. Pre purchased packages booked in the UK are subject to UK VAT (same as US prices as the VAT can be reclaimed) and only purchases made in territorial waters of either Spain or Italy are applicable to local VAT.

 

I hope this helps those from the UK and US looking at whether they should pre purchase packages

[Demonyte]

And you are certainly not helping by not understanding UK and Spanish VAT law. .... You need to leave EU and to do that you need to leave European Water.

 

That is still absolutely incorrect. You do not need to leave EU waters/area in order to leave EU VAT zone, examples and references have been posted here already and you can insist all you want (without any opposite references) but you are still wrong.

[Demonyte]

3)Sailing on a cruise from Spain or Italy calling at a non EU port including Canaries, Gibraltar, Channel Islands, Montenegro they are not part of the EU but official currency is the Euro.

 

Canary Islands are part of EU like the rest of Spain, just not part of EU VAT area - as already explained (and referenced) earlier in this thread.

[bmwman]

Canary Islands are part of EU like the rest of Spain, just not part of EU VAT area - as already explained (and referenced) earlier in this thread.

 

Ah thank you for now agreeing with me if you cruise goes or starts from Canaries no VAT (Outside EU/VAT waters)

 

:)

Edited July 27, 2015 by bmwman

[bmwman]

Though the waters have been muddied on this topic the answer for cruisers is fairly straight forward

 

Years ago the cruise lines and the various countries in the EU had an informal agreement not to charge VAT. This all went out the window during the banking crisis about 6 years ago when Spain and later Italy decided it could gain extra much needed revenue by using the EU Vat rules for departures from Spain and Italy as in VAT terms everything purchased onboard was deemed to be purchased from the departure ports country as long as the ship did not call at a port outside the EU

 

EU waters are infinite as long as you do not call at a non EU port for example you could sail from Spain to the middle of the Atlantic turn round and come back and for VAT purposes and the EU maritime directive passed in 2012 you have not left EU waters

 

So as it stands

 

1) Pre purchase any package in the UK and VAT is applicable in the UK (same as US prices as the VAT can be reclaimed by the cruiseline). Other purchases made on board a ship departing either Spain and Italy local VAT is charged as long as no other non EU port is visited.

 

2) Purchase any package on board a ship sailing from Spain and Italy calling at all EU ports local VAT is applicable. Now this is where the cruise lines are swinging the lead a little what should happen is that the VAT should be charged for the whole package but they do not they use a loophole to charge the VAT on individual items and not the whole package. ( If you drink less than the package costs for example you save money on the VAT, drink more than the value of package and it costs more in VAT)

 

3)Sailing on a cruise from Spain or Italy calling at a non EU port including Canaries, Gibraltar, Channel Islands, Montenegro they are not part of the EU but official currency is the Euro. Pre purchased packages booked in the UK are subject to UK VAT (same as US prices as the VAT can be reclaimed) and only purchases made in territorial waters of either Spain or Italy are applicable to local VAT.

 

I hope this helps those from the UK and US looking at whether they should pre purchase packages

 

Now this is an educated reply and notes well the fact that the canaries are not part of the EU for VAT purposes. The VAT rules are the tour operators margin scheme and I regret that the poster from Finland has really mis-understood the rules.

 

This post is absolutely correct in law.

 

Ignore the comments from Demonyte they are simply wrong in law

Edited July 27, 2015 by bmwman

[bmwman]

That is still absolutely incorrect. You do not need to leave EU waters/area in order to leave EU VAT zone, examples and references have been posted here already and you can insist all you want (without any opposite references) but you are still wrong.

 

Sorry mate this is wrong and if you want I will send you the UK VAT rules on it. Territorial waters mean you are in the EU. Give me an example of a cruise that ports in a place outside the EU and does NOT leave EU waters:confused:

Edited July 27, 2015 by bmwman

[Misself]

So this explains why none this applied to my last cruise to Spanish ports over 10 years ago. Thanks. Out of interest, If sailing from uk does the VAT issue not kick in until we reach 1st Spanish port?

[Demonyte]

WRONG WRONG they are not for the purposes of VAT that is why I referenced it to the law not to some uneducated guess :mad:

 

You can not redefine what "part of EU" means. The definition of that term is not discussion specific.

[Demonyte]

Sorry mate this is wrong and if you want I will send you the UK VAT rules on it. Territorial waters mean you are in the EU. Give me an example of a cruise that ports in a place outside the EU and does NOT leave EU waters:confused:

 

UK VAT rules have nothing to do with this matter. I have already provided references - for example Canary Islands and Åland are islands that are part of EU (inside EU area) but not in EU VAT area.

 

Going from inside EU VAT area to either Canary Islands or Åland without calling anywhere else does not leave EU area just like nomad098 stated:

 

"EU waters are infinite as long as you do not call at a non EU port..."

[Demonyte]

So this explains why none this applied to my last cruise to Spanish ports over 10 years ago. Thanks. Out of interest, If sailing from uk does the VAT issue not kick in until we reach 1st Spanish port?

 

Only in that Spanish port (and specific distance after departing from it) - not the rest of the cruise from that port.

[Misself]

Also strangely on my last cruise this year to Italy we were told whilst drinks were VAT exempt any purchases made in the shops onboard would have VAT. I bought something small and was given a handwritten receipt with VAT but the actual amount charged to my account was without!

[bmwman]

Only in that Spanish port (and specific distance after departing from it) - not the rest of the cruise from that port.

 

You really should refrain form answering questions you are clearly not qualified to answer.

 

A cruise from the UK will incur UK VAT - Please do accept what this guy is telling you as he is wrong.

[bmwman]

UK VAT rules have nothing to do with this matter. I have already provided references - for example Canary Islands and Åland are islands that are part of EU (inside EU area) but not in EU VAT area.

 

Going from inside EU VAT area to either Canary Islands or Åland without calling anywhere else does not leave EU area just like nomad098 stated:

 

"EU waters are infinite as long as you do not call at a non EU port..."

 

Really I would be interested to see the maritime law you seek to rely upon:confused:

[SteveH2508]

There seems to be some confusion regarding 'territorial waters' and 'EU waters'.

 

To determine whether a cruise is subject to VAT charges for its complete duration, you need to look at the itinerary. If any port of call is outside the VAT area (i.e. visits ports such as the Channel Islands; Gibraltar; The Canary Islands; Turkey etc.) then VAT may only be chargeable within some countries' territorial waters (e.g. Spain).

 

If the itinerary only calls at ports within the VAT area, then VAT is payable throughout the cruise following the regime and rates of the originating country.

 

I suspect (but do not know), that whether VAT is payable on a pre-purchased package would be determined by the itinerary - that would seem logical (though EU laws are not always logical!:rolleyes:)

[Froggitt]

A cruise from the UK will incur UK VAT

 

At what rate?

 

And are you talking on NCL and in theory or in practice?

[bmwman]

There seems to be some confusion regarding 'territorial waters' and 'EU waters'.

 

To determine whether a cruise is subject to VAT charges for its complete duration, you need to look at the itinerary. If any port of call is outside the VAT area (i.e. visits ports such as the Channel Islands; Gibraltar; The Canary Islands; Turkey etc.) then VAT may only be chargeable within some countries' territorial waters (e.g. Spain).

 

If the itinerary only calls at ports within the VAT area, then VAT is payable throughout the cruise following the regime and rates of the originating country.

 

I suspect (but do not know), that whether VAT is payable on a pre-purchased package would be determined by the itinerary - that would seem logical (though EU laws are not always logical!:rolleyes:)

 

GREAT ANSWER this sums it up thank you for the insightful reply.

[bmwman]

At what rate?

 

And are you talking on NCL and in theory or in practice?

 

The rate will be the UK current rate 20%. Theory is practice and NCL would always remain in my view tax compliant.

[insidecabin]

The rate will be the UK current rate 20%. Theory is practice and NCL would always remain in my view tax compliant.

 

Earlier this year they were not compliant.

 

The POS was charging VAT on stuff that was prepaid or free.

(I understand this has been fixed)

 

 

Prepaying or getting a package included in the cruise fare should mean NO VAT at the point of consumption you can't put VAT on a zero charge.

[Froggitt]

The rate will be the UK current rate 20%. Theory is practice and NCL would always remain in my view tax compliant.

 

Compliant like displaying inc VAT prices on menus? :rolleyes::rolleyes::rolleyes: Or VAT numbers on room bills? And then there was the last newbuild TA...........

[SteveH2508]

Compliant like displaying inc VAT prices on menus? :rolleyes::rolleyes::rolleyes: Or VAT numbers on room bills? And then there was the last newbuild TA...........

 

VAT number is not a requirement on an invoice to an end-user - only required for VAT registered traders who would be reclaiming Input Tax.

 

A TA cruise would not attract VAT because the itinerary ends outside the EU VAT area.

 

They may have a derogation from the inclusive price display requirements - who knows? We certainly do not.