Can I rent my private boat to a tourist coming to Menorca?

Starting in July 2024, individuals will be able to rent their boat to tourists

Welcome to the million-dollar question, recently a legal modification has been formalized in the BOE and in relation to Nautical Charter matters that allows, in principle, owners of private boats (not companies) to rent their boat to a third party. At Nautic Charter Menorca we are aware that this is an issue that worries us, therefore, in this post we will try to answer some questions and clarify this issue that is creating a stir in forums, chats and networks in the nautical sector. We will clarify for you as an individual what you can do with your boat and we will also comment on how this measure implemented by the General Directorate of the Merchant Navy affects your business through Royal Decree 186/2023 of March 21 if you are already a company in the Nautical sector.

First of all, let’s situate the current legal context, if you have a private boat for your own use and enjoyment, whether to go fishing, take walks or go with the family, the registration badge that must appear on the bow of your boat , usually (and erroneously) called registration, must begin with a 7th, which means that it is on the seventh list and therefore, the boat can only be used for private, non-commercial use. If, before the aforementioned Royal Decree, an individual wanted to rent his boat to a third party, that is, for charter, he had to re-register his boat on the sixth list and become a nautical entrepreneur. To do this, it is necessary to meet very strict requirements in terms of security, processing of documentation, certificates and taxation, being a businessman and of course not using the boat as a private vehicle but as a company.

Therefore, before the release of RD 186/2023, the answer to whether you could rent your private boat on the seventh list to a tourist was categorically no, unless you put in order everything that the DGMM requires for this purpose and briefly has been commented.

Can I now rent my private boat with the application of this RD?

The answer after the publication in the BOE of the famous RD is that yes, an individual will be able to charter his boat on the sixth list for three months and also enjoy it for private use on the seventh list the rest of the year, but with several buts and things to keep in mind. account, which, to this day, remain pending to be resolved, clarified and delimited by regulations.

Firstly, article 9 of the aforementioned RD 186/2023 in section a) mentions that express authorization for a navigation license or dispatch may be requested for recreational vessels that want to change their temporary use from private to commercial for a maximum of 3 months. This means that, after this request to the Captaincy and its approval, an individual will be able to change from list 7 to list 6 for three months temporarily and commercially exploit their boat, that is, rent it to a tourist.

In addition, this authorization can be requested for a period of 5 years and also includes ships flying the flags of the European community that meet the appropriate requirements.

 

What requirements must the boat and the owner meet to be able to rent it to a tourist in summer?

Not all that glitters is gold. This new regulation, if applied to your boat, means that it will go from being for private use to commercial use for 3 months a year, and as such, it must meet the requirements that boats intended for commercial charter rental already meet. Among other requirements, the main ones would be:
 
  • Obtain authorization from the Captaincy for the temporary change from 7th to 6th (obvious).
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  • Have the correct and up-to-date EEC certificate of conformity for the boat and engines.
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  • Have the navigability certificate up to date and the correct inspections. 
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  • Seat sheet and navigation book or role up to date.
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  • Comply with safety regulations for rental boats, which means having the up-to-date and approved safety material that the DGMM requires you to have.
  • Have completed and approved the STCW Basic Marine Safety Training, validated it in the Maritime Captaincy and that it is in force.
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  • Have Civil Liability insurance for pleasure boats with the possibility of renting to third parties without/with a skipper, on the sixth list only for three months and another at a private level for the remaining nine.
  • Have occupant accident insurance for all passengers occupying the boat.
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  • SOVI people transportation insurance for the number of occupants of the boat.
  • Register in the Treasury census regime as an entrepreneur using form 036.
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  • Register as self-employed in Social Security for being the owner of an economic activity.
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  • Process the Charter responsible declaration at the Consell Insular de Menorca.
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  • Processing with the Maritime Captaincy any circumstance that has to do with the ship’s role.
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  • Have boat reviews and inspections (ITB) up to date and signed by a recognized technician. As you have to change from 7th to 6th list, this will be mandatory for all applicants.
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  • Pay the navigation aid fee to the Port Authority at each registration or annually depending on the length of the boat.
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  • Inform the company that manages the mooring that the boat will change from the seventh to the sixth list, go ahead, that 80% of the marinas are reluctant to accept boats on the 6th list and if you have the boat in a public mooring such as the of Port Authority you can forget about it, so they would have to look for a new mooring.
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  • Quarterly declaration of VAT, personal income tax, you will need a tax manager.
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  • Annual VAT and Personal Income Tax declarations (withholdings) will require a tax manager.
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  • Mandatory Income Declaration for being an entrepreneur even if you do not exceed the minimum requirements.

It should be said that all of the above requirements are what is requested of boats that are registered on the sixth list from the beginning in order to be rented and at this time it remains to be seen how the DGMM will manage this new figure of “now yes, now no”, but, by overwhelming logic, if the individual is going to become an entrepreneur, he or she must meet the same requirements as a current company, for at least 3 months. However, we must continue waiting to see how the Captaincies and especially the DGMM speak out, but the shots point to what has been said. Meanwhile, the Treasury must already be rubbing its hands.

When can the authorization be processed and the boat rented?

Well, for this we will have to wait at least more than a year, which is the time remaining for the sections regulated by the norm in the Royal Decree to come into force. More specifically, these modifications will be effective as of July 1, 2024, until that date it will not be possible to request authorization or process anything previously mentioned.
 

How has the nautical sector dedicated to Charters taken it?

The sector has taken it with genuine disbelief, with a feeling of intrusion, and above all with the feeling that all those who did not comply with the regulations are being legalized in a hurry and that now they will be able to jump on the bandwagon of legality as if nothing had happened. It would have happened for a long time, because it is a regulation that fits like a glove for them, the so-called “Pirate Yachts”, who Chart with the seventh list without any type of regulation and illegally.
 
From certain voices in the sector and representatives at the state level, there is a sibylline intention on the part of the DGMM to regularize what is illegal and bring it to light. In addition, bells are ringing that the lobby of ship and platform builders is behind this modification, Since, with this regulation, it may be much more attractive for their clients to purchase a boat and for the platforms to increase the number of employees and income. But these statements are not proven nor will they be, they are just winds that blow from certain circles and in our opinion, it is an opportunistic way of explaining a circumstance that not even the most knowledgeable saw coming and now do not know how to justify.
 
On the other hand, the DGMM allege that these measures improve the competitiveness of the nautical sector and improve the safety and sustainability of the sector, something that is neither understood nor clear.
 
Needless to say, this measure has already been in force in other CEE countries for a long time, for example in France and Italy, therefore, one more aspect that the DGMM adds is that we are adapting the sector to what was already in force in other neighboring countries.
 

How does it affect the current nautical sector?

It affects in several sections, on the one hand, emotionally all those efforts of companies and entrepreneurs to build their businesses in a stable, legal and solid way, they feel that a regulation that comes out of nowhere acts as a bridge for individuals to compete with them and the ” pirates” can continue doing what they did under a legal roof.
 
On the other hand, at a business strategic level it will affect all nautical companies, since there may be a greater supply of boats for rent, we will see in what quality and price, the greater the supply we already know, the lower the price and the fewer results. Many entrepreneurs who have opted for strong investments find themselves with the helplessness of not feeling protected and that they can progressively lose their capital and effort in the face of a market that will change distribution quotas and prices in a volatile way in the next year 2024, no one could imagine such measurement and this size.
 
For companies that are dedicated to renting without a skipper, it is a missile to their waterline, or at least, a toothache waiting to see how the individual market will react to such an opportunity.
 
Supposedly, the Professional Patterns market would be one of the benefited groups, since it seems unlikely (although not impossible) that all private owners also act as patterns, to which the volume of demand for patterns could increase.
 

Is this regulation the panacea?

Well no, the truth is that this seems more like a fix and a form of collection rather than a favor to those on the seventh list, the requirements that will be required of any neighbor’s son to be able to work as a nautical professional for only 3 months. They will be the same as those required of current entrepreneurs, therefore, we see few advantages. It seems more like a way to encourage the massification of nautical rentals to raise revenue at the expense of the safety and professionalism of the sector.
 

How do we see it in Nautic Charter Menorca?

Our company policy is based on the values of professionalism, quality of service, commitment to legality and safety in navigation, top-of-the-line nautical equipment and exquisite nautical experiences. Our boat is always rented with a skipper, whose training is professional and meets all qualifications, certificates and legal requirements, our clients appreciate these values. Our regular client is looking for a product with a professional skipper and quality service, not a boat to rent without a skipper. This quality and exclusivity in the service we offer is something that is acquired with experience, time and knowledge. This new legal circumstance pushes us to strengthen, even more so, our values and is an opportunity for Nautic Charter to demonstrate to the market and its clients that we are what they are looking for, that exclusiveness and quality are not overturned by royal decrees of the day to night.
 
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