EDITOR’S COMMENT

The planned ‘luxury tax’ on Mallorca, which has been demanded by the Government of the Balearic island, has been met with strong criticism from the regional business association, La Confederación de Asociaciones Empresariales de Baleares (CAEB). In particular, the yachting industry and the marinas, boatyards and other nautical enterprises that serve it are concerned about possible collateral damage that such a tax could cause and fears an ‘exodus’ of private luxury yachts.

In early February, the Balearic Parliament had passed a motion to officially ask the central government to levy a special tax on luxury goods from companies. An investigation committee of the Ministry of Finance in Palma had come to the conclusion that numerous luxury properties such as vacation villas or superyachts are declared by their owners as assets of their companies founded especially for this purpose, with the intention of mitigating their tax liabilities.

The introduction of a special tax on luxury villas and yachts declared as assets by enterprises would be levied by the Balearic tax authority, which wants to proceed against what it considers to be a form of tax evasion.

However, the yachting industry on Mallorca fears that such a tax could have a deterrent effect on the owners of super or megayachts. Many foreign owners have already chosen to give the Balearics a wide berth due to the restrictive and sometimes confusing tax laws in the yachting sector. Another tax could only add to this uncertainty and cause the super-rich to favour new yachting destinations, which are either established or being developed to serve this lucrative market.

In addition, the yachting industry is supported by ancillary facilities for repair and maintenance work. This allows companies in the fields of carpentry, electronics, interior design, safety equipment, spare parts and even on-board catering to win contracts and secure employment for the local workforce.

CAEB has expressed concern that similar taxes introduced by other autonomous communities in Spain have not had the desired success. I have been writing about marinas since 1988 and recall that Sardinia introduced a luxury tax in 2007. This also reduced the number of visiting yachts, with a corresponding drop in business along the Costa Smeralda.

David Young