Yacht Owners Yacht Management

Key Considerations for Prospective Superyacht Owners

By
4 Minute Read

Owners Vision

Effective communication of the owner's vision is crucial for yacht ownership. Clear articulation of preferences and priorities to advisors through discussions and visual references ensures alignment. Ongoing communication fosters collaboration among advisors, enhancing the ownership experience and realizing the owner's desires and aspirations.

Whether you are in the process of building a yacht or purchasing a second-hand one, it is crucial to consider the ownership structure at an early stage. Failing to do so can diminish the overall ownership experience.

Often contracts are signed in a personal name and the contract is assigned to the corporate owner close to the delivery date.   Proactively planning and engaging professionals can protect an Owner's investment and result in a more enjoyable ownership experience.  It can also prevent expensive errors, particularly when it comes to Tax and ensuring the Yacht is built to the correct specification. This is especially crucial during the initial stages of ownership when unexpected issues may arise with a new Captain and crew operating the vessel.

 

Ownership and Tax

 

When it comes to owning a superyacht, it is common for them to be owned by a Limited Company or Limited Partnership rather than by an individual. There are several important factors to consider when deciding on the ownership structure, such as the tax residence of the Ultimate Beneficial Owners (UBO), the UBO's domicile, the location of the yacht before purchase, and where the yacht will be located and operated. These considerations play a crucial role in determining the most suitable ownership structure for the yacht.

Engaging a Corporate Service Provider is crucial for ensuring efficient and effective handling of legal and administrative tasks related to yacht ownership. These professionals offer valuable guidance in tax planning, asset protection, and legal compliance, as well as ensuring the yacht is built to the correct specifications. They can also assist in managing tax laws, VAT obligations, and exemptions, providing peace of mind and maximizing the value of the investment. Overall, working closely with a Corporate Service Provider is a proactive approach that protects the owner's investment and enhances the ownership experience.

Application of Value Added Tax (VAT)

The Application of Value Added Tax (VAT) is a significant factor to consider when purchasing a Superyacht. VAT is a consumption tax that is levied on the purchase of goods and services within the European Union (EU) and in other Countries like the United Kingdom. When it comes to superyachts, the application of VAT can vary depending on various factors such as the location of the yacht before purchase, the intended use of the yacht, and the tax residence of the owner.

In many cases, the purchase of a new superyacht may be subject to VAT. The rate of VAT can vary from country to country within the EU, and it is important for potential buyers to be aware of the applicable rate in their desired location. Additionally, the rules regarding VAT on superyachts can be complex and may involve considerations such as temporary importation, chartering, and use outside the EU.

On the other hand, purchasing a second-hand superyacht may have different implications when it comes to VAT. In some cases, the sale of a second-hand yacht may be exempt from VAT, particularly if the yacht has been previously used for commercial purposes or if the buyer is eligible for a VAT exemption due to their non-EU residency.

It is crucial for potential buyers to consult with professionals who specialize in superyacht taxation and have a thorough understanding of the applicable VAT rules and regulations. These experts can provide valuable guidance and ensure that buyers are fully aware of their VAT obligations and potential exemptions.

By carefully considering the application of VAT, potential superyacht owners can make informed decisions regarding their purchase and avoid any unexpected tax liabilities. This proactive approach can ultimately contribute to a more enjoyable ownership experience and help owners maximize the value of their investment.

Registration

The choice of flag jurisdiction for yacht registration is a critical decision for yacht owners, whether they opt for private or commercial registration. This decision holds significant influence over various aspects of yacht ownership, such as tax obligations, operational flexibility, and chartering opportunities. Seeking guidance from professionals who specialize in yacht registration and flag jurisdictions can assist owners in making well-informed choices aligned with their specific needs and objectives.

To conclude, regardless of whether owners choose private or commercial registration, the selection of the appropriate flag jurisdiction is an essential step in the yacht ownership process. It is crucial to carefully evaluate the legal and regulatory consequences, as well as the potential advantages and limitations associated with each option. By doing so, yacht owners can ensure compliance, optimize operational efficiency, and ultimately enhance their overall ownership experience.

Private

Private registration offers owners privacy, control, and flexibility over their superyacht. They can choose where to operate the yacht and customize their onboard experience. By selecting the right flag jurisdiction, owners can ensure their needs are met while enjoying a personalized and exceptional yachting experience.

Commercial

Commercial registration is the ideal choice for yacht owners who intend to charter their yacht for income generation. Yachts registered under commercial status must adhere to specific regulations and safety standards in order to prioritize the safety and well-being of both guests and crew members. The selection of a flag jurisdiction for a commercially registered yacht is typically determined by various factors, including potential tax advantages, the ease of obtaining necessary licenses and permits, and the reputation of the flag state within the yachting industry.

Classification

The choice of Classification Society for a yacht is crucial and can impact insurance coverage and operations. These independent organizations ensure compliance with safety and technical standards. Owners should consider reputation, expertise, and track record when selecting a society. Working with a reputable society provides confidence in yacht safety and facilitates insurance processes. Insurance companies consider yacht classification when determining coverage terms and premiums. A reputable classification results in more favourable rates. The choice also affects operational aspects, with some societies offering specialized services. Owners should consult professionals to select the most suitable society for their needs.

Crew Management

Finding the right crew members and effectively managing their employment and payroll is crucial for the smooth operation and success of a superyacht. The recruitment process should focus on selecting individuals with the necessary skills, experience, and personality traits to create a harmonious and efficient team onboard. Once the crew is hired, proper management of their employment contracts, salaries, and benefits is essential to ensure their satisfaction and motivation. This includes complying with relevant labour laws and regulations, handling payroll accurately and timely, and providing necessary support and resources for their professional development. By prioritizing the recruitment and management of suitable crew members, yacht owners can create a positive and enjoyable environment for everyone onboard.

Yacht Management

Implementing standard operating procedures and frameworks like MLC and ISM will ensure the safety of the crew and deliver high-quality service. Improving the speed and accuracy of data processing using modern cloud accounting systems can enhance management information. Having a qualified accountant engaged provides valuable financial support and significantly enhances the administrative aspect of yacht ownership. It is of utmost importance to maintain precise accounting records, especially for yachts that have multiple VAT numbers in different countries. By employing a qualified accountant and leveraging technology, the process of data delivery can be streamlined, leading to improved financial control. Ultimately, these measures will not only save time for the captain to focus on yacht operations but also minimize the risk of encountering tax irregularities.

Breaking the Mould Consulting

Business Advisory Coaching and Superyacht Consultancy

Author