extra added tax and gratuity

[GEORGET]

Sorry, typo in previous message, referring to UDP when of course it is the UBP.

 

The point is that there are three situations for ships sailing on cruises from Spain, and it is not clear that NCL are applying them correctly.

 

1. Drinks bought as no UBP. Then VAT should be included in whatever the menu price is (including any compulsory service charge). It doesn't matter that the menus are printed fleet wide, that is NCL's problem. However whether it is an inclusive price or added on top, VAT should be calculated on a per drink price.

 

2. UBP paid for (and it doesn't matter before boarding or after). VAT should be calculated on the daily UBP charge, not the theoretical drink price which isn't being paid. Whatever appears on the drinks bill is irrelevant, as either NCL charge the customer nothing (treating the UBP charge as they should as inclusive), or at worst, $5.40 per day irrespective how many drinks were drunk.

 

3. UBP included in the cruise price. No VAT is due, as no drinks are being bought. What has been paid for is transport for the cruise. Whatever appears on the drinks bill is irrelevant, as no VAT is due from either the customer or NCL.

 

 

you are wrong in some respects.

 

yes under eu law prices should include VAT in the upfront price, but cruise lines all that i have been on have added VAT If the ship does not leave EU waters or while in port in Spain or ITALY.

On Spirit in february while in port in Spain VAT AT 10% was added even if you had the UBP This will apply to the UDP UDP if the ship does not leave EU waters.

now if you are a EU resident and PRE pay the UDP or the UDP ARE YOU CHARGED vat at purchase???, if NCL or any other line says yes . you can argue this point.

But remember how many lawyers they have.

TO ALL CRUISERS DO NOT CRUISE IN THE EU UNLESS THE SHIP VISITS A NON EU PORT AT LEAST ONCE.

J

[Single Cruiser]

This is very interesting especially point #3.

 

 

 

If you purchase the UBP or pay as you go for beverages and are subject to the VAT are you then able to claim it back when you leave the country?

 

 

 

 

Rochelle

 

Claiming VAT back is only possible for items purchased in the VAT country that are being taken out at the end of the cruise. I.e. Goods/gifts purchased in shops and not possible on consumables like food and drink or on services (like SPA treatments).

[rochelle_s]

TO ALL CRUISERS DO NOT CRUISE IN THE EU UNLESS THE SHIP VISITS A NON EU PORT AT LEAST ONCE.

J

 

A tax would never make me not take a cruise. I cruise for the itinerary. If the government of the countries require a tax to be paid if that is what I must do. But if for some reason it does not apply then I will avail myself of that. Some countries require a visa to visit....it's all just an additional cost of traveling.

 

Single Cruiser

 

Thank you for that explanation.

 

 

Rochelle

[KeithJenner]

 

TO ALL CRUISERS DO NOT CRUISE IN THE EU UNLESS THE SHIP VISITS A NON EU PORT AT LEAST ONCE.

 

 

I disagree with this.

 

Let's say we spend $1,000 onboard. That means tax of $100 (about £70). That is a lot less than, for example, the price difference between a Balcony and a Mini Suite on the Epic. It is a very small percentage of the total cost and is far from being a deciding factor when it comes to considering which cruise to take.

[insanemagnet]

There's really no point in arguing the law here as none of us actually know what it is and how it's applied to cruise ships.

 

I do what the law is, and how it should be applied.

 

VAT would apply the same for speciality dining and the UDP, as drinks and the UBP.

 

The issue is the 'place of supply' of the food and drink that is paid for.

 

For the food and drink included in the cruise price, that is a single supply of transport (yes I know the ship goes from Barcelona to Barcelona, and this is something the EU Commission is looking at).

 

For food and drink supplied at a charge, you need to consider where it was supplied to consider if VAT applies, and whose VAT applies.

 

On a cruise with a Non-EU stop, then when the ship is in a Spanish or Italian port, their VAT applies.

 

On a cruise starting in Spain, with no Non-EU stops, the Spanish consider that Spanish VAT applies to the whole cruise.

 

VAT is a tax on the 'consideration' paid (see the link to the Principal VAT Directive that I previously posted, which the foundation of EU VAT law). If there is no consideration, there can be no VAT (with the exception of certain deemed supplies which don't apply here). So VAT is charged within what is actually paid, not a theoretical price that isn't.

 

Note I said 'within'. VAT is added to the value to reach the consideration.

 

So as I said before, if you are paying for individual drinks or for speciality dining, then VAT should be included in the total amount paid. In most EU states it is illegal to advise VAT exclusive prices, so the price you see is the price you pay. This is not in VAT law but consumer protection law.

 

Whether VAT applies to service charges depends on the view of each member state, but generally it applies if the service charge is compulsory, and doesn't if it isn't.

 

For those paying for the UBP or UDP, then VAT is due within what has actually been paid, not theoretical menu prices. It doesn't matter when or where the UBP or UDP is paid, as the liability to VAT is determined by where the food and drink is consumed.

 

For those not paying for UBP or UDP, but got it included in the cruise price, there is no consideration, so no VAT. The cruise is not a multiple supply, but a single supply (see the ECJ case involving Card Protection Plan for the gory details). If the cruise was a multiple supply, then VAT would be due on the food included in the ticket price supplied in the MDR and buffet.

 

Enough detail?

[KeithJenner]

I do what the law is, and how it should be applied.

 

VAT would apply the same for speciality dining and the UDP, as drinks and the UBP.

 

The issue is the 'place of supply' of the food and drink that is paid for.

 

For the food and drink included in the cruise price, that is a single supply of transport (yes I know the ship goes from Barcelona to Barcelona, and this is something the EU Commission is looking at).

 

For food and drink supplied at a charge, you need to consider where it was supplied to consider if VAT applies, and whose VAT applies.

 

On a cruise with a Non-EU stop, then when the ship is in a Spanish or Italian port, their VAT applies.

 

On a cruise starting in Spain, with no Non-EU stops, the Spanish consider that Spanish VAT applies to the whole cruise.

 

VAT is a tax on the 'consideration' paid (see the link to the Principal VAT Directive that I previously posted, which the foundation of EU VAT law). If there is no consideration, there can be no VAT (with the exception of certain deemed supplies which don't apply here). So VAT is charged within what is actually paid, not a theoretical price that isn't.

 

Note I said 'within'. VAT is added to the value to reach the consideration.

 

So as I said before, if you are paying for individual drinks or for speciality dining, then VAT should be included in the total amount paid. In most EU states it is illegal to advise VAT exclusive prices, so the price you see is the price you pay. This is not in VAT law but consumer protection law.

 

Whether VAT applies to service charges depends on the view of each member state, but generally it applies if the service charge is compulsory, and doesn't if it isn't.

 

For those paying for the UBP or UDP, then VAT is due within what has actually been paid, not theoretical menu prices. It doesn't matter when or where the UBP or UDP is paid, as the liability to VAT is determined by where the food and drink is consumed.

 

For those not paying for UBP or UDP, but got it included in the cruise price, there is no consideration, so no VAT. The cruise is not a multiple supply, but a single supply (see the ECJ case involving Card Protection Plan for the gory details). If the cruise was a multiple supply, then VAT would be due on the food included in the ticket price supplied in the MDR and buffet.

 

Enough detail?

 

The problem is that none of us (I assume) know what discussions have happened behind the scenes.

 

Previously, paying for the UBP beforehand was a good way of avoiding the tax. I'm assuming that the Spanish tax people got interested in this as they want to get that tax. The fact that many people cruising with NCL now have the UBP prepaid will also be an issue to them.

 

I'm certainly no expert in how these things work behind the scenes, but I'd have thought a discussion like this could certainly have happened:

 

Tax man - "OK, NCL, we need to discuss with you the the tax you should have paid on drinks in the past couple of years, and the treatment of promotional packages"

 

NCL - "But there isn't any tax payable as the purchase was not made in Spain, and there is no purchase price for the promotional offers".

 

Tax man - "Hmmm, well we're not so sure about that. Out legal people have looked into it and we're quite confident that we've got a good case. However, perhaps we can come to some agreement. Why don't we agree from now that there will be a notional tax charge for every drink consumed under these packages. That will save us all a lot of bother and legal fees"

 

NCL - "Well at least that way, the tax will be paid by our customers, rather than us having to pay anything backdated, and will save us legal fees. Where do we sign".

 

Obviously just speculation, but with tax, when talking about specifics that is usually all we have.

[SteveH2508]

 

In May we will be doing a B2B on the Jade and one of those weeks the ship does not leave the EU. Next March we will be doing B2B on the Epic and one of those 10 day segments does not leave the EU. For all legs we have chosen the UBP as part of the promotion. Based on package price alone what you are saying in post #3 would save us $75.60 this May and $108 next March.

 

Rochelle

 

A closed EU cruise out of Spain will attract VAT on food and drink. A closed EU cruise out of Italy (e.g. Jade out of Venice) does not attract VAT for food and drink. (different rules for different countries -dontcha just love the EU and its many and arcane rules:rolleyes:)

[KeithJenner]

Sorry, ignore this.

Edited March 23, 2015 by KeithJenner

[rochelle_s]

A closed EU cruise out of Spain will attract VAT on food and drink. A closed EU cruise out of Italy (e.g. Jade out of Venice) does not attract VAT for food and drink. (different rules for different countries -dontcha just love the EU and its many and arcane rules:rolleyes:)

 

So no tax this year but I should be prepared for it next. Yes it is confusing but I will catch on. :)

 

 

Rochelle

[glittergal1]

So in a nut shell my drinks are going to cost more than I first thought :(

 

Does anyone know if Epic has a buy 1 get 1 free happy hour on drinks ? and if so in what bar at what time :D

[KeithJenner]

So in a nut shell my drinks are going to cost more than I first thought :(

 

 

 

Does anyone know if Epic has a buy 1 get 1 free happy hour on drinks ? and if so in what bar at what time :D

 

 

I've not seen buy 1 get 1 free for a while.

 

They do buckets of beer (buy 5 get 1 free) and also a wine package with discounts on 4+ bottles of that helps.

[glittergal1]

Yes Ive looked at the Viva vino wine package it was priced at $88 for 4 bottles and you could only buy it on board it then I suppose has the added 18% service charge on top ? and how about the Spanish tax if I buy it while in Port at Barcelona is that added as an extra 10% ?

if I buy it while out at sea would the 10% Spanish Tax not be added ?

 

oh so confusing I just wish they would advertise the actual price you pay :(

[KeithJenner]

If you are on the Epic all EU cruise then yes, I'm afraid you will get the 10% tax as well as the gratuity.

 

It is about the cheapest way of having a drink onboard though (other than carrying it on yourself).

[glittergal1]

Can anyone post copies of up to date bar prices ? or direct me to where I can find a copy? Ive tried searching but I dont think Im doing it properly

[insanemagnet]

 

I'm certainly no expert in how these things work behind the scenes, but I'd have thought a discussion like this could certainly have happened:

 

Quite simply, they don't.

 

NCL - "Well at least that way, the tax will be paid by our customers, rather than us having to pay anything backdated, and will save us legal fees. Where do we sign".

 

So you are suggesting that NCL is deliberately conning its customers, by overcharging them to avoid a historic tax liability.

 

Strong accusations.

 

I would suggest that far more likely is my experience that American companies struggle to understand VAT.

[KeithJenner]

So you are suggesting that NCL is deliberately conning its customers, by overcharging them to avoid a historic tax liability.

 

Strong accusations.

 

I am so obviously not suggesting such a thing (or accusing anyone of anything) that I think it's best if I just ignore the rest of your post.

Edited March 23, 2015 by KeithJenner

[Guindalf]

Well, I guess the laws have changed in recent years because I clearly remember companies that were able to advertise products with an Ex-VAT price. Admittedly, these were firms like Staples and Dixons, who were directing their ads at business buyers as well as the genpop! There was clearly no legal responsibility to include the VAT, as you suggest.

 

As I've said, I don't know the law and I don't pretend to know all the ins and outs of the cruise trade and how it is dealt with by the various EU countries, but as I said, I'm pretty sure the lawyers for said companies and countries do, and they will all work WITHIN the law to provide the services and collect the taxes due.

 

Go into as much detail as you feel you need to, but you're not going to convince me that NCL, and every other cruise line, is breaking the law!

[Froggitt]

I would suggest that far more likely is my experience that American companies struggle to understand VAT.

Indeed. However ignorance of the law is no defence.

[KeithJenner]

Go into as much detail as you feel you need to, but you're not going to convince me that NCL, and every other cruise line, is breaking the law!

 

It certainly does seem unlikely.

 

Tax authorities across the world reach agreements with individual businesses all the time with regard to specific treatments, where things aren't straight forward. I'd be quite surprised if the issues raised by ships which travel in international waters don't cause some significant issues which result in specific agreements.

 

It you take the Epic, as an example, it travels for about 6 months a year around Europe and up until now those cruises have been almost exclusively closed loop ones. If we say there are on average 3,000 passengers onboard, and each one will spend $250 on taxable purchases. That is about $2m of tax being collected each year.

 

How does the situation change in the Italian and French ports if Spanish tax is being charged? I can't believe that NCL just picked a way of doing this and hoped for the best. There will have been discussions with the tax authorities at various times, probably inspections as well. If there is something wrong with the way they are doing it then it won't have gone undetected for the past 5 years.

[hawkeyetlse]

Without having complete information about how EU VAT applies on cruise ships, and the VAT status of packages like UBP/UDP and purchases made with them, I think it would be wise to avoid accusations of "cheating" or "conning". It may turn out to be true that NCL is overcharging VAT, but if they are turning all the money collected over to Spain/Italy/etc. they are not benefiting from the extra charges. On the contrary, people spend less on board once they find out about the extra VAT so NCL and other cruise lines will avoid charging it, within the limits of their legal obligations. Maybe you are right, and they don't understand the rules. Or the rules are unclear and they are applying VAT to be on the safe side. Or maybe they are charging exactly what the VAT rules of each country require them to charge. It is no doubt pleasant for some to think of NCL as a bunch of incompetent Americans bumbling around Europe overcharging their customers and needlessly contributing to the national economies of a number of EU member states. But personally I am not yet convinced that this corresponds to the reality of the situation.

 

For the UBP/UDP the issue is whether purchasing the package is considered to be a purchase of food/drink. Are you actually buying your bar drinks and specialty dinners when you buy the package? That is evidently not the way they have set things up. What you are buying is a "discount pass" that gets you a 100% discount of the base price and gratuity for all bar orders and specialty restaurant visits throughout your cruise. I don't know if they are supposed to charge VAT on the before discount or after discount total of such transactions.

[SteveH2508]

Regarding the discount - VAT on invoices is always calculated at the fully discounted price, whether the discount is taken up or not (think Cash or Early payment discounts) so it would seem logical that this principle is followed.

 

The charging (or not) of VAT on the packages is rather more complex. The time of supply (Tax Point) is relevant as is the location of the supply and the taxing regime of the country (which country/location - buyer's residence or departure port?). I suspect that there has been much legal 'to and fro' to get to an answer.

 

NCL would not charge VAT if they did not have to for two main reasons:

1) It is an offence to charge VAT when it is not due

2) It POs their customers

[KeithJenner]

The charging (or not) of VAT on the packages is rather more complex. The time of supply (Tax Point) is relevant as is the location of the supply and the taxing regime of the country (which country/location - buyer's residence or departure port?). I suspect that there has been much legal 'to and fro' to get to an answer.

 

This is the real point in my opinion.

 

Purchasing the UBP beforehand used to avoid the tax, and offering it for free means an additional number of people who aren't buying their drinks at the time they consume them. It wouldn't surprise me at all if the fact that the tax is now being charged when the drinks are consumed has been driven by the tax authorities, rather than NCL.

[Froggitt]

Go into as much detail as you feel you need to, but you're not going to convince me that NCL, and every other cruise line, is breaking the law!

Im not saying they are, but here is some information about VAT.

http://www.findlaw.co.uk/law/tax/taxes/9495.html

Prices advertised to the public in ordinary retail shops include VAT. No tax will be added to the price when you pay. This is a legal requirement.

Products advertised in outlets, magazines, on the internet, or shown in catalogues, price lists and other literature may be aimed at the consumer, businesses, or both. If they're only meant for the general public, they'll show you a price including VAT. This is a legal requirement.

Source: DirectGov

[Single Cruiser]

Can anyone post copies of up to date bar prices ? or direct me to where I can find a copy? Ive tried searching but I dont think Im doing it properly

 

image by single_cruiser, on Flickr

 

image by single_cruiser, on Flickr

 

image by single_cruiser, on Flickr

 

All these are pre tax and pre grats prices so add either 18% or 28% to them!

Edited March 23, 2015 by Single Cruiser

[glittergal1]

Thank you I take it there are separate cocktail menus ?