A luxury yacht can be a gateway to many different experiences, from seeing breath-taking coastlines and sea life in the comfortable company of family and friends to enjoying an overnight stay in a Mediterranean seaside town. Unfortunately, the path to yacht ownership is far from straightforward and the wrong decision could end up incurring significant costs for the owner. Luckily, there is a multitude of solutions available, and with the right advice, a luxury yacht can be enjoyed without having to worry about financial loss.
Unintentional damage to property can be costly, and this is certainly true at sea, given the high cost of vessels in general and luxury yachts in particular. In the case of a yacht, the owner would normally be liable for any damages caused by the vessel and when the costs involved exceed its value, the owner would stand to lose not only the yacht but additional funds too. An insurance policy from a reputable firm is only one part of the solution though. The other is creating a trust or a corporate structure, which would become the legal owner of the yacht and thereby protect the beneficial owner’s assets.
Creating a separate legal entity for the yacht could also bring significant tax benefits if the trust or company were to be registered in a jurisdiction with a favourable tax regime. A corporate structure would also allow the yacht to be chartered commercially when the owner wishes without necessarily being exposed to income or capital gains tax. An ideal jurisdiction permits the owner to shift between pleasure and commercial use smoothly.
Location is important for other reasons too, as choosing where to register the yacht will have tangible consequences for the amount of the registration fee, VAT, reoccurring taxes and the inspections and fees that it is subject to by the state authorities in visiting ports. Suitable jurisdictions are listed on the Paris Memorandum of Understanding’s white list.
With some desirable locations charging fees in excess of 2,000 euros per day, it is often better to remain in the bay and use a dinghy for visiting the harbour. The captain will usually know what is most suitable. Added to this are the costs generally involved in managing a company with one or multiple employees, and the time needed for submitting paperwork related to technical safety inspections and more.
Yacht ownership can easily seem daunting, but with the right assistance an owner will be able to focus on the things that matter – the enjoyment rather than the administration involved in yachting.