Sunday, 2 December 2018

2.12.18 Consejo Looks at Tax relief on Cask Seasoning Losses

The cask seasoning process, mainly for the whisky industry, shows no signs of slowing down. This important business is worth over 40 million euros a year to Jerez and according to the Consejo Regulador there are currently over 100,000 butts undergoing seasoning which are officially registered with the institution and thus carry its guarantee label. The official voluntary certification of Sherry butts for seasoning was introduced about three years ago to regulate this activity in the face of growing demand and the proliferation of the fraudulent practice by both cask seasoners and distilleries of using the term “Sherry Cask” when this was not the case.

New casks with the official Consejo label being seasoned with Amontillado

 With the certification system now up and running the Consejo now wants to consolidate this complementary activity and address the main concerns of the cask seasoners and coopers, an important one of which is to come to an agreement with the tax man over the taxation of evaporation/absorbtion losses. Last week the Consejo gave the green light to a study of these losses which in the case of new casks amount to three times those of casks in use for biological ageing as new casks absorb a great deal more wine (up to 40 litres!) than those with many years of seasoning. In the 1990s the Consejo and the University of Cádiz conducted a painstaking study of losses incurred during biological ageing which succeeded in persuading Hacienda (the tax authority) to exempt “lost” wine, in this case Fino and Manzanilla, from taxation. This new study will involve bodegas, cask seasoners and cooperages to determine the amount of wine lost during seasoning, estimated at hundreds of thousands of litres, and convince Hacienda to give it tax relief.

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