A file photo of a custom official.

The owners of a luxury sailing yacht have been ordered to pay four million euros in IVA (Valued Added Tax) by Spanish customs for sailing to Palma from Gibraltar.

The "Rock" is not part of the European Union Customs Union and therefore the owners were ordered to pay VAT when the vessel sailed into Palma. She had sailed to Mallorca from her builders in Holland via Gibraltar.

According to reports her captain, when questioned by Spanish Officials, said that Palma was the vessel´s base port.

The dispute first started in 2014.