Just off the Norwegian Gem on Sunday, sailing Spain > Gibraltar > Spain > France > Italy. I don't want to get into the morality of it but I can explain how it worked. We had free at sea.
In Spanish ports and waters, we would order a drink, swipe our card, be given a receipt with the full drink cost including service charge and VAT to sign. Normally the waiter circled the VAT cost. That is all that was charged, despite having a receipt and signing for the full amount. Generally after leaving a spanish port at 7pm, the charging regime was dropped around 9pm and then there were no receipts issued. In restaurants <9pm we were not charged VAT on drinks, I assume they tallied up the bill upon completion of the meal, after 9pm, which was helpful.
We visited Gibralter which is not in the EU, therefore our cruise left Europe and we were not charged in France, Italy or Gibraltar.