Over the last five decades, the superyacht industry has experienced remarkable growth and progress. Although luxury yachts have existed for more than a century, the presence of and demand for opulent yachts of such size, sophistication, complexity, and comparative value as we see today have predominantly emerged within the past half-century.
Wealthy individuals and families who possess superyachts are likely to have substantial investments tied up in this ever-evolving asset class. While it is impossible to provide a comprehensive guide to superyacht ownership within the confines of a single post, our aim is to shed light on some of the common considerations faced by superyacht owners.
The key considerations for Superyacht ownership
Holding Structures for Superyachts: Selecting the right ownership structure entails consideration of both direct and indirect taxation, along with the mitigation of personal liability. Establishing a corporate entity as a holding structure to own the vessel on behalf of the Beneficial Owner can be a prudent choice. Tax planning requirements and available structures play a significant role in determining the ideal jurisdictions. Modern offshore locations like the Isle of Man often offer tax-neutral and globally compliant solutions. Various structures, such as Private Limited Companies and Limited Partnerships, cater to the Ultimate Beneficial Owner’s specific needs and objectives, taking into account factors like the vessel’s intended use and the UBO’s tax position.
Yacht Ownership and Limited Partnerships: Limited Partnerships (LPs) formed in the Isle of Man follow the Partnership Act 1909. They provide limited liability and can acquire separate legal personality upon establishment. An LP consists of at least one General Partner, responsible for day-to-day management, and one Limited Partner, contributing capital to the LP. It’s crucial that the Limited Partner avoids active management involvement to maintain limited liability. Typically, the General Partner is a Private Company. The LP must have an Isle of Man Registered Office at all times.
Yacht Ownership and Special Purpose Vehicles (SPVs): Special Purpose Vehicles are legal entities established to achieve specific purposes, such as managing a superyacht. SPVs handle various yacht-related tasks, including financing, purchasing tenders, and coordinating with third-party experts for crewing and maintenance. The Isle of Man offers two types of Private Companies, under the Companies Act 1931 and Companies Act 2006, for SPV incorporation, with the latter being more administratively streamlined.
Choosing the Yacht’s Flag: Registering a superyacht determines the laws, jurisdiction, and regulatory requirements it will be subject to while sailing. The choice of flag can offer tax benefits and legal advantages. The British Red Ensign is often preferred, accessible through Commonwealth countries like Bermuda, the British Virgin Islands, and the Isle of Man, among others. Other popular jurisdictions include the Marshall Islands and Malta, each offering administrative benefits, modern legislative environments, and compliance with international maritime agreements.
Import and Export Implications: Sailing between territorial waters requires careful consideration due to potential customs duties. For non-EU yachts entering the EU, full-rate VAT on the yacht’s value may apply unless specific exemptions or procedures are followed. Options like Temporary Admission (TA) for private yachts or the French Commercial Exemption (FCE) for commercial charters can provide relief from import duties and taxes when properly executed.
Crewing Considerations: Many yacht owners employ third-party agencies to handle crew recruitment and management. These agencies, in collaboration with service providers like Baker Tilly Isle of Man, ensure the selection and supply of qualified crew members, from captains to deckhands, to enhance the overall experience for the Ultimate Beneficial Owner and their guests.
At Baker Tilly Isle of Man, we bring decades of experience and strong partnerships with experts in the yachting industry, including tax and legal advisors, yacht builders, managers, and crewing specialists. Our expertise in corporate entity management, registration, and administration positions us well to assist owners of superyachts of all sizes and purposes in achieving their goals.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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