Our Head of Marketing | New Business, Lesley-Anne Walker, recently wrote an article for luxury lifestyle magazine, Abode2. In it she looks at the complexities surrounding yacht ownership and the importance of effective planning.
Over the last decade, the perception of luxury assets simply as sources of pleasure for HNWIs has changed.
Whilst traditionally a purchase of passion, they are now recognised as an effective asset class for those looking to expand their investment portfolios, and some have even been seen to outperform the more typical portfolios comprising stocks and shares.
Whether your luxury asset of choice is real estate, a superyacht, business jet, supercar or piece of fine art, they are all significant investments made up of time and money.
Yacht ownership can be complex, requiring a number of careful considerations.
Firstly, you should avoid holding a high value asset in your own name, instead place it in an appropriate ownership structure. It can afford a number of benefits including confidentiality, asset protection, limitation of liabilities, and can even be effective for succession planning, dealing with forced heirship issues and in some cases, provide tax and VAT benefits.
Different luxury assets classes have different wider financial and liability implications depending on their intended use, the type of ownership structure and when it comes to tax, where you are resident and domiciled.
For a yacht, consideration should therefore be given to how and where you plan to use the vessel to ascertain any tax or VAT exposure and whether the asset is intended to generate income, and subsequently whether tailored tax planning could offer any fiscal benefits and/or minimise any liabilities.
For private yacht owners, the EU’s Temporary Admission (‘TA’) regime can also provide an effective solution. Fundamentally concerned with accommodating non-EU residents, flag states and owning entities, a non EU individual with a non-EU owning entity and a non-EU flagged vessel can (subject to meeting the broader TA conditions) operate their vessel privately in the EU under TA. The benefit? The yacht need not be formally imported and therefore avoids Customs formalities, inevitable import VAT costs and structuring costs associated with EU importations.
Another consideration is therefore the choice of flag. The jurisdiction in which you choose to register your vessel determines how said vessel is treated in the countries and ports it visits, e.g. yacht registration in countries on the Paris Memorandum of Understanding (Paris MoU) and on Port State Control’s black or grey list can come under more scrutiny in inspections.
Think about the flag state’s reputation, jurisdiction stability (in terms of its local Government), the cost; ease of registration and its support services infrastructure.
A yacht might be a quintessential example of luxury but it is far more than just a high-value floating asset – it is a business, office, employer and a machine that requires maintenance.
With legislative and regulatory requirements in the yachting industry continually changing, it is has never been more important to stay abreast of new developments to ensure that your vessel remains compliant and that your ownership structure remains fit for purpose and yields results.
There are two vital stages to the effective structuring of yacht ownership:
1. Obtain the appropriate professional advice to ensure that you do not expose yourself or your asset to any liability issues or implications; and
2. Appoint a professional service provider to assist you with the establishment of a structure in accordance with said professional advice to ensure that it is set up correctly, any necessary statutory and administration requirements are met, and effective ongoing management is in place.
With a comprehensive understanding of the yachting industry and offices in the Isle of Man, Malta and Hong Kong, we are ideally placed to assist owners and their representatives in understanding the diverse requirements associated with the ownership, registration and management of a range of vessels, whether being used on a commercial or private basis.
If you would like more information about structuring ownership, yacht registration or ongoing administration and management of your vessel, you can find out more about our full range of Yachting Services within our website or contact us via email on info@sentientinternational.com or by telephone on +44 1624 616544.
