Valencia is again tax-free.. for the America's Cup in 2008

Related documents

- PDF file of the Royal Decree
- Link to the decree on the Spanish Cabinet website

The much-awaited Royal Decree from the Spanish central government was signed and published on Friday afternoon. The cabinet approved the extension of the tax and fiscal measures for another year and as a result all America's Cup teams based in Valencia will practically pay no taxes at all. According to the decree, the teams are exempt, in 2008, from income and social security taxes as well as the VAT (value added tax). In other words, Valencia is for the fifth consecutive year a tax-free city for the America's Cup teams.

The most interesting part of the decree is not the fiscal advantages the teams are entitled to, since they most probably don't change significantly from the previous years. The key issue this year is who benefits from these measures, given the legal mire the world's oldest sports trophy is in.

All teams that were duly entered in the 33rd America's Cup as of December 31st, 2007 are automatically entitled to these tax breaks. That means (according to their order of entry) Alinghi, Desafío, Shosholoza, Team Origin, Team New Zealand, Team Germany, Green Comm, AYRE, Victory, Argo, Team French Spirit and Carbon Challenge.

Where does that leave BMW Oracle? Most probably Larry Ellison's team will also avoid the tax collector because the Spanish ministers grant the same rights to all teams that participated in the 32nd edition, kept a base in Valencia and explicitly communicated to the local authorities their intention to participate in a future edition of this sports events. I must admit this is very vague but also very generous and most probably every team from the previous America's Cup will benefit from the law. All you had to do is keep a base in Valencia and write you wanted to take part in the America's Cup and I guess you have to be stupid not to do that, given the advantages you are entitled to.

Nevertheless, this decree concerns all income earned in 2008 and, to the best of our knowledge, there isn't anything similar signed yet for 2009 or beyond. Obviously, how could there be anything firm when the future of the event is still so uncertain? If one is to believe Manuel Chirivella, president of the CNEV, we shouldn't be expecting a decision from the NY courts before April-May 2009 and then we might be for another long ride, regardless of the legal case's final outcome.

Disclaimer: In this environment, prone to lawsuits and litigations, I think I'd better write the usual disclaimer. All the aforementioned information doesn't constitute any legal, tax or fiscal advice whatsoever and the details might actually differ from what we reported. It is solely presented for strictly information purposes and anyone interested should refer to a Spanish legal and fiscal expert.

BMW Sailing Cup
This is completely unrelated to the decree but nonetheless interesting. The Spanish final of the BMW Sailing Cup took place right inside Port America's Cup during the weekend. This event is now in its third year of life and consists of a circuit of 5-7 regattas, depending on the year, raced in one-design boats in various yacht clubs throughout Spain. Each club uses its class of one designs and in the case of Valencia it was Tom 28's, while is some cases 2 or 3 different classes were used, and the winners of each local event face off in a final.

A similar circuit is held in a number of other European countries - Italy, France, Germany, UK - and the respective winners then race in a world final. The 2007 world final took place in Dubai in April 2008 and this year's world final will be held in March or April 2009 in Italy. Unlike the national events, no professional skippers can take part in the world finals.

A total of 7 races were held for the Spanish finals, 3 on Saturday and 4 on Sunday, under light conditions, right inside Port America's Cup. It is interesting to see this trend of sailing events being held inside the basin. Purists might disagree but the general public can almost touch the racing yachts.

Spanish final of the BMW Sailing Cup. Valencia, 16 November 2008. Photo copyright Pierre Orphanidis / Valencia Sailing

Spanish final of the BMW Sailing Cup. Valencia, 16 November 2008. Photo copyright Pierre Orphanidis / Valencia Sailing

Spanish final of the BMW Sailing Cup. Valencia, 16 November 2008. Photo copyright Pierre Orphanidis / Valencia Sailing

Spanish final of the BMW Sailing Cup. Valencia, 16 November 2008. Photo copyright Pierre Orphanidis / Valencia Sailing