Yacht Ownership Structures
Every yacht has to be registered in an internationally recognised jurisdiction to provide proof of nationality and ownership. A yacht assumes the nationality of the jurisdiction where it is registered and is therefore subject to the regulations laid down by the governing register.
Very often companies and private individuals enjoy major advantages and legal tax savings by registering their yachts in an appropriate jurisdiction, providing confidentiality and the protection and privileges offered by such registration.
Which jurisdiction is most suitable for registering a particular yacht depends on a number of factors such as in which country the owner is resident, in which countries the yacht will be mainly used, whether the yacht will be chartered to third parties or only privately used, etc.
Through our own offices as well as through highly specialised affiliates in all jurisdictions that are important for yacht registration and management, we are able to provide comprehensive services to yacht owners, including
· Registration of private yachts as well as commercial vessels
· VAT registration and VAT mitigation
· Financing of private yachts and commercial vessels
· Set-up and management of yacht ownership structures
· Marine administration and accounting
· Marine insurance
The following is an outline of the key issues to be considered prior to the purchase, registration and use of private yachts. This overview is of course not exhaustive and all individual issues and factors are discussed with each client prior to the decision to proceed.
When purchasing a yacht one should take care in reviewing the terms and conditions of the contract. This includes ensuring that the specification is sufficiently detailed and delivery of the vessel is suitably defined and provided for. In case of new yachts, often the builder’s standard forms are used, which are normally one-sided in favour of the seller. For example, in most legal systems yachts are defined as being chattels so that title to them passes by delivery. Form contracts that provide for the builder to pass title upon completion are putting pre-completion deposits at risk.
Where large yachts are concerned, it is even more important to use the services of a specialised lawyer rather than a standard sale contract. Although all key points are usually covered in such contracts, advice may be required on issues such as the warranties which a purchaser should request, security for port dues or other liens, the documents which should be taken up (e.g. a VAT paid certificate), the tax implications of the sale for a seller, and liens and mortgages concerning a purchaser.
All yacht owners have to register their vessels in an internationally recognised jurisdiction to provide proof of nationality and ownership. One of the most important decisions after the purchase is about the jurisdiction of registration and whether to register the yacht directly (under one’s own name) or on a company, which usually provides several important advantages over direct ownership (see below under “Ownership structure”).
Important points to consider when choosing the jurisdiction for registration include the reputation and respectability of the flag, the cost of registration and annual maintenance of the registration, the ease of registration, and the insurance, employment, regulatory, charging, succession and tax implications of the jurisdiction.
We can register yachts as well as commercial vessels in any of the world’s registers, but we have usually recommended to our clients to adopt the British flag. The strict requirements for British registration, including the provision of physical proof of the yachts existence and identity by way of a tonnage survey, mean that the owners of British registered yachts have definitive proof of legal title that is universally accepted.
Registration under the British flag can be obtained in any of the following jurisdictions:
· Cayman Islands
· Isle of Man
· United Kingdom
Alternatively, and depending on the client’s individual circumstances, we register yachts in a number of carefully selected other jurisdictions, including Malta the Isle of Man, the United States, and St. Vincent & the Grenadines.
The majority of our clients choose to have their vessel owned by a company, which provides several important advantages over direct ownership.
Many yacht owners prefer to keep their ownership confidential. The ownership of a yacht through a company provides for a good level of confidentiality. In addition, having a company owning the vessel limits the clients exposure to liabilities which can arise through the ownership of the yacht.
Many of the countries in which clients are resident have complex inheritance laws which can frustrate clients wishes regarding the disposition of their assets on death. These problems can in certain cases be avoided by settling the shares of the company owning the vessel into a trust.
We are able to incorporate companies in all key jurisdictions worldwide. For yacht ownership structures, we usually incorporate in Jersey, The Bahamas, St. Vincent or Malta, depending on the client’s individual circumstances.
Additionally, it may be advantageous to establish a trust or a foundation as the ultimate holding vehicle for the vessel. A trust or a foundation enables assets such as private yachts, which individuals may prefer not to hold themselves, to be accommodated in an effective legal structure. Through our own trust companies in several important jurisdictions we are best positioned to advise and assist in setting up the most appropriate structure. Our services are comprehensive, provided by specialist consultants and lawyers, independent trustees and other highly qualified professionals, and focused on each client’s individual circumstances and requirements. We combine the expertise of these professionals in their relevant fields to provide excellent advice and service.