Yacht registration: Choosing The Right Flag
The purchase, ownership and operation of a yacht can cause legal, financial, and technical issues that which require careful consideration.
In order to avoid unnecessary regulation, surveys, inspections, administration and cost, it is very important to set up the correct and most suitable ownership arrangements for your yacht. This includes the choice of flag (the country/jurisdiction where the yacht will be registered), and the registration process. Different countries have different rules and requirements regarding yacht registration which will affect issues such as privacy and taxes.
Points to consider:
- Owner’s place residence (EU or Non EU)
- Commercial or non-commercial use
- Specific areas of navigation (EU or Non EU)
- Yacht specification (date of build, length, tonnage, conformity with any commercial code and international conventions)
- Crew nationality (if applicable)Finance profile (marine mortgage loan or leasing)
- VAT/tax status of the yacht
- Place of delivery
A registry with a good reputation will avoid problems with Customs and Ports authorities. And Lenders and insurance companies, who will review a Flag State’s enforcement rules regarding environmental, safety, and international regulations.
- Red Ensign jurisdictions; British Virgin Islands and Isle of Man Flag Cayman Islands: The political stability and reputation associated with the British Red Ensign jurisdictions make these jurisdictions a popular choice. They are the most popular offshore jurisdictions and have a reputation for efficient management and administration. They also benefit from British Consular support.
- The Marshall Islands & St Vincent & the Grenadines: This jurisdiction has adopted many of the IMO regulations, while working closely with the US Coast Guard to ensure that Marshall Islands’ registered yachts have automatic rights to a cruising permit for sailing in US territorial waters. In common with St Vincent & the Grenadines, the Marshall Islands allows qualifying private yachts to charter up to 84 days a year, but subjects them to detailed surveys on lifesaving, safety, firefighting and a minimum safe manning certificate when on charter.
- Malta: Navigating within the EU, besides the UK, the pragmatic approach of Malta with tax advantages for commercial yachts and a leasing scheme for pleasure yachts has become an inevitable registry.
- Hong Kong: Very popular registry although it does not distinguish between pleasure and commercial yachts.
- Langkawi is the only registry in the South East Asia to have adopted a real commercial yacht registry.
Most of the main offshore registries have enhanced their presence in Asia including the Marshall Islands, Isle of Man and Cayman which also should be considered for navigating in Asia.
Commercial v Private
To choose the best flag, the decision also needs to be made, whether to register the yacht privately or commercially. Pleasure vessels (yachts) in commercial service need to comply with stricter rules than private yachts. Private yachts are defined as being used solely for the recreational purposes of their owners and guests, while commercial yachts are intended to carry for reward a maximum of 12 to 36 passengers, the number depends upon the registry, and are subject to stricter safety requirements. Owners of commercial yachts navigating in European waters would also need to appoint tax representatives or agents in each country where the yacht starts each charter. While introducing a stricter set of rules and regulations, commercial registration enables yacht owners to profit from the chartering activity of their boats and to take advantage of all the other fiscal benefits derived from commercial operations. Superyachts must usually meet the same requirements as a commercial vessel, if they host helicopters.