Latest Spirit Review - UBP Question

[Single Cruiser]

So, if we're on the Spirit this summer for the Grand Med cruise (which is primarily in EU countries, but does leave EU waters to visit Turkey), when should be expect to pay the VAT? We have the promotional UBP and, while I don't mind paying the VAT, I'd like to get an idea of what kind of total we'll have in the end.

 

Thanks!! :D

 

If it leaves EU then you'd only pay when in Spanish ports/waters.

[insanemagnet]

A few points -

 

If NCL are only applying the IVA (VAT) charge to bar bills then they have messed up. Spanish VAT should apply to bar purchases, speciality restaurant charges, and room service charges.

 

Spanish VAT applies in Spanish waters when a ship is making a call to a Spanish port.

 

So for people travelling on Epic and embarking at Rome this summer, they should only see Spanish VAT charged when the ship heads into Barcelona or Palma.

 

However where a ship is making a round trip journey from a Spanish port, if there is not a non-EU stop on the route, then Spanish VAT should be charged for the entire journey.

 

So for people travelling on Epic and embarking at Barcelona (and saying 'Hi' to the the Rome to Rome passengers on the same ship), they should see Spanish VAT charged on every drink (and meal) wherever the ship is. So in Naples, the passengers who embarked in Rome should not pay VAT, but the passengers who embarked in Barcelona should (isn't that going to be fun for the bar staff to explain).

 

NCL will also have messed up if they calculate the VAT on the menu prices of the drink (that was not paid).

 

VAT is calculated on the 'consideration', the amount actually paid, not a theoretical amount that you didn't pay. So VAT should be calculated on the amount the passenger paid for the UDP for that day (and I would say proportionality if you are only in Spanish waters for part of the day).

 

So if the UBP is $54 per day, then whether you have only had a single $1 drink or are insensible on the floor after consuming $500 of drinks, the VAT charge should be $5.40 (10% of $54). However, if you received the UBP 'free' as part of a promotion, then what have you paid for the UBP? It isn't $54, but it isn't really free either. It is part of the overall price that you paid for the cruise.

 

So to be correct, NCL should work out what the fraction of the overall price paid by customers relates to the UBP, and then apply VAT to that.

 

As someone travelling on Epic in May, it appears I may be having an interesting discussion with the desk clerk when checking out, on the intricacies of Spanish VAT.

 

Especially when the FAQs say "your check may reflect applicable VAT for certain ports or itineraries". What does that mean in plain English?

 

Does it mean I have to pay the amount of VAT, then if so, say so. Or does it mean that VAT appears on the receipt, but just for your own accounting purposes.

 

Anyway, if you want more details on the whole subject of VAT and cruise ships, then you can read more here - http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/key_documents/reports_published/com_2012_605_en.pdf

[jodieh12]

Our epic at Xmas stops in tangiers so on this explanation I'd only pay Spanish duty in Barcelona and Malaga? X

[Froggitt]

A few points -

 

If NCL are only applying the IVA (VAT) charge to bar bills then they have messed up. Spanish VAT should apply to bar purchases, speciality restaurant charges, and room service charges.

 

Spanish VAT applies in Spanish waters when a ship is making a call to a Spanish port.

 

So for people travelling on Epic and embarking at Rome this summer, they should only see Spanish VAT charged when the ship heads into Barcelona or Palma.

 

However where a ship is making a round trip journey from a Spanish port, if there is not a non-EU stop on the route, then Spanish VAT should be charged for the entire journey.

 

So for people travelling on Epic and embarking at Barcelona (and saying 'Hi' to the the Rome to Rome passengers on the same ship), they should see Spanish VAT charged on every drink (and meal) wherever the ship is. So in Naples, the passengers who embarked in Rome should not pay VAT, but the passengers who embarked in Barcelona should (isn't that going to be fun for the bar staff to explain).

 

NCL will also have messed up if they calculate the VAT on the menu prices of the drink (that was not paid).

 

VAT is calculated on the 'consideration', the amount actually paid, not a theoretical amount that you didn't pay. So VAT should be calculated on the amount the passenger paid for the UDP for that day (and I would say proportionality if you are only in Spanish waters for part of the day).

 

So if the UBP is $54 per day, then whether you have only had a single $1 drink or are insensible on the floor after consuming $500 of drinks, the VAT charge should be $5.40 (10% of $54). However, if you received the UBP 'free' as part of a promotion, then what have you paid for the UBP? It isn't $54, but it isn't really free either. It is part of the overall price that you paid for the cruise.

 

So to be correct, NCL should work out what the fraction of the overall price paid by customers relates to the UBP, and then apply VAT to that.

 

As someone travelling on Epic in May, it appears I may be having an interesting discussion with the desk clerk when checking out, on the intricacies of Spanish VAT.

 

Especially when the FAQs say "your check may reflect applicable VAT for certain ports or itineraries". What does that mean in plain English?

 

Does it mean I have to pay the amount of VAT, then if so, say so. Or does it mean that VAT appears on the receipt, but just for your own accounting purposes.

 

Anyway, if you want more details on the whole subject of VAT and cruise ships, then you can read more here - http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/key_documents/reports_published/com_2012_605_en.pdf

 

Good post.

 

Another point......AFAIK, if you are setting to consumers, the VAT rules state that the price shown on menus etc must be inc-VAT. NCL doesn't do this.

[hawkeyetlse]

 

If NCL are only applying the IVA (VAT) charge to bar bills then they have messed up. Spanish VAT should apply to bar purchases, speciality restaurant charges, and room service charges.

I have never ordered bar drinks through room service, but I assume that VAT is added to those, too, when the ship is in port. As for the delivery charge, that is only incurred in the middle of the night when the ship is normally at sea. I can't say for sure if they were charging VAT on restaurant charges; again these are incurred after the ship leaves port , but for those who dine very early, the ship may still be in Spanish waters. And as you said, on EU-only cruises, VAT should be added to both of these charges, and I don't know if that is the case.

 

However, if you received the UBP 'free' as part of a promotion, then what have you paid for the UBP? It isn't $54, but it isn't really free either. It is part of the overall price that you paid for the cruise.

 

I think it must be considered free for tax purposes, because during the promotion, two people can book the same cruise, same cabin category, and they will pay the same price, but if one of them neglects to add the promo code, he/she will not receive the promotional perks. No part of the cruise fare can be identified as directly paying for the promotional UBP.

[Single Cruiser]

Sounds like it's all changed this year.

 

In previous years:

 

On Epic closed loop. When i pre-paid UBP before departure I was not charged VAT. When I paid onboard in addition to the extra $5 a day I also paid VAT on the full amount irrespective of qty of drinks taken.

 

On Spirit again I bought onboard I paid the extra $5 a day but was not charged VAT, they also didn't process it until the sea day. I.e. Hand written receipt in Barcelona but dated the sea day..the assumption here was the transaction processed outside of Spanish waters..

[hawkeyetlse]

Anyway, if you want more details on the whole subject of VAT and cruise ships, then you can read more here - http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/key_documents/reports_published/com_2012_605_en.pdf

This is an interesting read, but it is a report, not a regulatory text. They highlight the fact that VAT rules are complex and in many cases incompletely or incorrectly implemented by individual EU member states, and that the resulting situation is unnecessarily difficult for cruise lines. It's not just a problem of NCL being US-centric and incompetent (as some in this thread have suggested).

 

The reports ends with this recommendation, which is not likely to please European cruisers:

4. THE WAY FORWARD

The goods and services covered by this report are typical consumer products on which VAT is normally charged when they are supplied within the territory of the EU. As a matter of principle, the fact that the same goods and services are supplied on board certain means of transport cannot be a sufficient justification for exempting those supplies within the EU from VAT.

[…]

Given that the main purpose of VAT is to raise revenues and to tax consumption, the Commission is of the opinion that the actual taxation of supplies of goods and services taking place on board of means of transport should be an objective to be pursued in the future.

[Lucinarei]

If it leaves EU then you'd only pay when in Spanish ports/waters.

 

Since we disembark in Barcelona, this shouldn't affect us at all. Thank you so much for the clarification! :D

[insanemagnet]

I think it must be considered free for tax purposes, because during the promotion, two people can book the same cruise, same cabin category, and they will pay the same price, but if one of them neglects to add the promo code, he/she will not receive the promotional perks. No part of the cruise fare can be identified as directly paying for the promotional UBP.

 

Thinking further about the point, as there is no separate charge if the UBP is part of the cruise prices, then it fall to be part of the single supply of passenger transport, and therefore there should be no VAT charge on any drinks. If they tried to charge on drinks, then why are they not charging VAT on the other catering included in the price of the cruise.

 

For those who actually pay for the UDP then it would certainly seem to be a separate supply to the cruise, and therefore liable to VAT. However if NCL are only charging VAT if bought onboard as Single Cruiser below mentions, I struggle to understand NCL's logic.

 

Sounds like it's all changed this year.

 

In previous years:

 

On Epic closed loop. When i pre-paid UBP before departure I was not charged VAT. When I paid onboard in addition to the extra $5 a day I also paid VAT on the full amount irrespective of qty of drinks taken.

 

Which makes sense for the onboard, but makes no sense for the pre-paid.

 

On Spirit again I bought onboard I paid the extra $5 a day but was not charged VAT, they also didn't process it until the sea day. I.e. Hand written receipt in Barcelona but dated the sea day..the assumption here was the transaction processed outside of Spanish waters..

 

Which if true sounds a pretty dodgy practice.

 

This is an interesting read, but it is a report, not a regulatory text. They highlight the fact that VAT rules are complex and in many cases incompletely or incorrectly implemented by individual EU member states, and that the resulting situation is unnecessarily difficult for cruise lines.

 

Absolutely.

 

If you want the regulatory text, then it is in Article 37 of the Principal VAT Directive 2006/112/EC - http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:347:0001:0118:en:PDF

 

But even the legislation confirms that this area is a mess that needs to be resolved.

 

The reports ends with this recommendation, which is not likely to please European cruisers:

 

Absolutely, but on an EU to EU cruise, why should you be able to avoid paying VAT on a 'floating hotel' when you would required to pay VAT anywhere else in the EU.

[Single Cruiser]

I thought it was dodgy at first.

 

BUT.

 

If we agree VAT is only charged when a product is sold in Spanish ports / water.

 

If I buy a bucket of beer when at a sea day. But then drink them the next day whilst in port you would expect to be charged VAT?

 

So if buying a drink package and you purchase a qty of alcohol when at sea and just drink it in ports is this not the same?

[insanemagnet]

So if buying a drink package and you purchase a qty of alcohol when at sea and just drink it in ports is this not the same?

 

Sorry if I misinterpreted, but when you said -

 

On Spirit again I bought onboard I paid the extra $5 a day but was not charged VAT, they also didn't process it until the sea day. I.e. Hand written receipt in Barcelona but dated the sea day..the assumption here was the transaction processed outside of Spanish waters..

 

I thought that you meant that they sold you the package whilst you were in Barcelona, so you could benefit from the drinks then, but dated the paperwork the following day so they evaded paying VAT as they 'seemed' to have sold you the package a day later.

 

Unless there was a non-EU stop on the voyage, then they were still wrong not to charge VAT, even by incorrectly describing when they sold the package.

[Single Cruiser]

Sorry if I misinterpreted, but when you said -

 

 

 

I thought that you meant that they sold you the package whilst you were in Barcelona, so you could benefit from the drinks then, but dated the paperwork the following day so they evaded paying VAT as they 'seemed' to have sold you the package a day later.

 

Unless there was a non-EU stop on the voyage, then they were still wrong not to charge VAT, even by incorrectly describing when they sold the package.

 

I agreed to a purchase in Barcelona (it was going to a non-EU, we stopped in Morocco). The "system was down" :D and as soon as we were a few miles off the coast that evening the transaction was completed. :cool::rolleyes:

 

Any drinks purchased in Barcelona were on a "tab" which was "settled" after we were a few miles off shore.

 

If I pre-pay at home but agree delivery at sea would it not be the vat applicable in location of purchase and NCL responsible for any importation tax of delivered product.

Edited March 1, 2015 by Single Cruiser

[insanemagnet]

I agreed to a purchase in Barcelona (it was going to a non-EU, we stopped in Morocco). The "system was down" :D and as soon as we were a few miles off the coast that evening the transaction was completed. :cool::rolleyes:

 

Any drinks purchased in Barcelona were on a "tab" which was "settled" after we were a few miles off shore.

 

That was convenient for NCL! I wonder if the system breaks down every week about the same time?

 

If I pre-pay at home but agree delivery at sea would it not be the vat applicable in location of purchase and NCL responsible for any importation tax of delivered product.

 

For consumption in Spain, or anywhere on the voyage on a Spain to Spain cruise, it wouldn't matter where you were when you bought the package, the place of supply is the point of departure.

 

If it was an Spain to non-EU, again it doesn't matter where you are when you bought the package. Drinks consumed in Spanish waters, then VAT due, those consumed outside, non VAT due.

 

Place of supply rules for VAT are not always obvious, as many non-EU companies found on 1/1/15 with the change in the place of supply rules for electronic services delivered to consumers. Theoretically a US company selling a $1 app to a consumer who lives in the EU needs to register for VAT in the EU country where the consumer lives, irrespective if they have no business premises there.

[Froggitt]

If they charge VAT on drinks on a pre-purchased or promotional UBP, why not charge VAT on meals in the MDR and on pre-purchased/promotional UDP or on the $20 speciality restaurant supplement?

Also, whenever I check out of a hotel and get my bill, there is always a VAT breakdown (VAT code/rate/amount etc) with the VAT registration number of that hotel in that country.......I've never seen anything like that provided by NCL.

[insanemagnet]

[quote name='Froggitt']If they charge VAT on drinks on a pre-purchased or promotional UBP, why not charge VAT on meals in the MDR and on pre-purchased/promotional UDP or on the $20 speciality restaurant supplement?[/QUOTE]

On the meals in the MDR (and therefore promotional UBP) what you are paying for is to be transported from A to B (even if A and B are both the same place!). So a single supply of travel, not a multiple supply of travel and food and drink.

With the pre-purchased UBP, you would be specifically buying drinks, which under the Spanish implementation of VAT law is that VAT is due when the drinks are supplied in a Spanish port or for the whole voyage on an EU cruise that departs from Spain,

[quote name='Froggitt']Also, whenever I check out of a hotel and get my bill, there is always a VAT breakdown (VAT code/rate/amount etc) with the VAT registration number of that hotel in that country.......I've never seen anything like that provided by NCL.[/QUOTE]

There is normally only an obligation to provide a VAT receipt to a business customer, but most businesses such as hotels automatically provide one to save needing to ask whether the customer was staying for business or not.

[Froggitt]

[quote name='insanemagnet']On the meals in the MDR (and therefore promotional UBP) what you are paying for is to be transported from A to B (even if A and B are both the same place!). So a single supply of travel, not a multiple supply of travel and food and drink.
[/quote]

So why the VAT applied to promotional UBP accounts? Ignorance or incompetence?

[insanemagnet]

[quote name='Froggitt']So why the VAT applied to promotional UBP accounts? Ignorance or incompetence?[/QUOTE]

I will find out in May.

[GEORGET]

[quote name='insanemagnet']A few points -

Spanish VAT applies in Spanish waters when a ship is making a call to a Spanish port.

So for people travelling on Epic and embarking at Rome this summer, they should only see Spanish VAT charged when the ship heads into Barcelona or Palma.

[B][U]However[/U][/B] where a ship is making a round trip journey from a Spanish port, if there is not a non-EU stop on the route, then Spanish VAT should be charged for the [B][U]entire[/U][/B] journey.

So for people travelling on Epic and embarking at Barcelona (and saying 'Hi' to the the Rome to Rome passengers on the same ship), they should see Spanish VAT charged on [B][U]every[/U][/B] drink (and meal) [B][U]wherever[/U][/B] the ship is. So in Naples, the passengers who embarked in Rome should not pay VAT, but the passengers who embarked in Barcelona should (isn't that going to be fun for the bar staff to explain).

.

You have got it wrong

Italy is part of the EU so ALL passengers will be charge VAT as the ship does not leave EU waters.
FOR THE WHOLE CRUISE.
We fell for this on a back to back , one week visited a non eu so no VAT at sea, second cruise all EU (different countries)vat whole cruise.
one cruise line we used out of Italy did not charge vat on the drinks but had Italian Vat of 20% added to everything else
.
also note that no duty free shops will be open on board or on shore for you.

you could ask NCL to give you an eu Vat reclaim form to obtain a refund of VAT PAID from the airport (same as on land)but getting that on board may be as hard as finding wooden rocking horse manure.
hope it helps j

[hawkeyetlse]

[quote name='GEORGET']
one cruise line we used out of Italy did not charge vat on the drinks but had Italian Vat of 20% added to everything else
[/quote]Yes, this how our last EU-only cruise out of Italy on NCL worked. That was in 2014; things may have changed for 2015. But if Spain and Italy continue to have different rules about VAT on cruise ships (which I think is very likely), then insanemagnet is correct to say that the Epic cruises, with passengers embarking either in Barcelona or in Rome, will be complicated…
[quote name='GEORGET']
you could ask NCL to give you an eu Vat reclaim form to obtain a refund of VAT PAID from the airport (same as on land)but getting that on board may be as hard as finding wooden rocking horse manure.[/quote]You can have VAT refunded on goods taken off board and out of the EU, but not for goods and services consumed on board, like drinks.