Cruise line’s ‘all-inclusive’ drinks package doesn’t apply in Spanish waters

“Free at Sea” – that is the name of the all-inclusive drinks and WiFi package offered by Norwegian Cruise Line (NCL).

But passengers who paid hundreds of pounds for the deal are furious to find that they face additional charges when drinking in Spanish waters. On voyages beginning at ports in Spain, and while in Spanish territorial waters during other cruises, they must pay 10 per cent in VAT on every drink.

The tax also applies if they dine at one of the “specialty” restaurants on board an NCL ship. A meal in one of these à la carte restaurants is included in the package – but “Free at Sea” passengers now face a bill for tax on the cost of whatever they order.

People who had booked the package, which typically costs £20 per person per day, were told: “10 per cent VAT will be applied to all food and beverage purchases made onboard, including purchases made under our Unlimited Open Bar or Specialty Dining packages, for certain sailings departing from Spain or any European itinerary while in Spanish waters.”

The authorities in Madrid take the view that as tourists on dry land pay tax on their food and drink, those aboard ships should do the same.

The policy was brought in during the spring of 2023. But passengers who bought packages after it was introduced were told only later that “inclusive” did not include Spanish tax.

Stephen Donoghue of Newcastle, who has just set sail from Bilbao on NCL with his wife, described it as “the latest attempt to extract more money from me by effectively making me pay twice for the same thing”.

Mr Donoghue told The Independent: “At the time of our booking, the ‘Free at Sea’ upgrade cost us £249 each. We like the fact we can both relax, and not have to worry about a large bill at the end of our cruise.”

After paying for the upgrade, he was sent an email about the tax.

“I would assume NCL could have just factored in the VAT into their ‘Free At Sea’ package and increased the price pro rata, and the customer would be none the wiser, but that of course would raise the cost of the package and perhaps make it less attractive.

“As for the here and now, I cannot see how I can or should pay VAT on something which, from my perspective, is free. Ten per cent of nothing equals nothing. Not my problem, NCL.”

Ray Fromm, who is due to sail from Lisbon on 1 November to Spain, Morocco and Gibraltar, made a similar point: “How can Spanish VAT be charged on pre-purchased bar and specialty dining packages when part of the already paid fare includes these items?”

Another NCL passenger, Brendan Monaghan from Glasgow, is booked on a cruise from Southampton to France, Portugal and Spain in October aboard the NCL Prima. He told The Independent: “I was not advised of the liability when I booked the cruise and I do not think that Spanish VAT is a new tax. So why are NCL introducing this now?”

A spokesperson for NCL said: “We were advised with the beginning of our Europe season earlier this year that guests will be charged additional VAT on certain sailings.”

In its terms and conditions, the company tells passengers: “Guest’s cheque [sic] may reflect applicable VAT and/or taxes for certain ports or itineraries.

“Taxes which are not included in the confirmed holiday price must be paid by you. Additionally, unless otherwise specified at the time of booking, fares do not include … charges imposed by local authorities whilst in port or within territorial waters on goods and services provided on board ship.”

For voyages that depart from Spanish ports and do not call at any nation outside the European Union, the tax is charged throughout the trip. On other cruises, VAT applies when the vessel is within 12 nautical miles (22km) of the Spanish coast.