Broadly speaking, most Registers will only register yachts which are owned by nationals of their flag state or the economic territory that the jurisdiction belongs to. However, even if the yacht owner nationality does not qualify for yacht registration in any particular jurisdiction, by having their vessels owned by an appropriate company, anyone can benefit from any flag state yacht registration.
The use of a suitable yacht owning company may also facilitate legitimate tax mitigation as well as asset protection and estate planning.
Using a company to own and operate a yacht does not only provide some privacy to the ultimate owner but will also limit the owner’s liability in the event of a claim. While yachts are designed for recreational purposes, they are movable assets with a very important element of risk. They are generally owned by a special purpose vehicle which will avoid any individual entering into agreements and contracts when employing crew members, negotiating the purchase or construction of the vessel and generally contracting with third parties.
The estimated annual operating costs of a yacht will run at about 10 to 12% of the initial purchase price. Structuring the ownership through a company will assist in accounting for yacht expenses and help optimise running costs.
Genuine yacht chartering structures are able to reclaim any VAT paid on the supply of the yacht or may even be zero-rated depending on the applicable intra-community rules. The yacht chartering entity must be VAT-registered and therefore it must be demonstrated that the yacht will be operated on a commercial basis. The commercial aspect of the company is not only important when obtaining VAT registration but also must be demonstrated during the on-going operation of the yacht to maintain that registration.
While each case is different and should be assessed on case by case basis, transferring the vessel on sale by transfer of the shares in the company avoids the relatively expensive and protracted procedures which are necessary to change the ownership of the vessel at the registry. Corporate ownership allows the sale to be effected much more easily, quickly and cheaply.
RegisterAYacht relies on Sovereign Group 25 years of experience in the provision of corporate management and financial services. Feel free to contact us with any enquiry, for an initial consultation without fee or obligation in order to determine which jurisdiction is most suitable owning entity for your yacht.