In the event that you consider buying a super yacht for international cruises and chartering within the Caribbean and the Med, your lawyer or broker will inform you to register and flag the yacht offshore.
The flag you decide to fly from your transom could have a direct bearing on your privacy, taxes, experience of liability and boarding, the vessel’s success as being a commercial enterprise, and, ultimately, your enjoyment of this yacht. So how do you decide which flag best serves your purposes? There is absolutely no answer that is simple covers every owner, but some fundamental considerations do apply.
‘The selection of flag state has, throughout the last couple of years, be one of the most crucial decisions owners and/or their representatives must make,’ says Mike Dean of Isle of Man-based Döhle Yachts.
A flag state may be the nation or governmental entity under whose laws a vessel is registered or licensed. This could easily be the nation where the owner resides, or more commonly in the world that is super yacht an offshore ship registry in a country with laws that are attuned to the complexities of yacht ownership and charter operations.
The flag state has got the responsibility and authority to enforce laws over vessels registered under its flag, including those concerning inspection, certification and issuance of safety and air pollution prevention documents.
Offshore flagging benefits
Owners who decide to flag offshore especially those who plan to make their yachts available for charter in the EU can benefit in lots of ways, including, but not limited to, mitigation of some income tax burdens, privacy of ownership, and reassuring lenders and insurance companies. An owner who intends to operate his vessel as being a private yacht registration and maybe not charter might register the vessel in his home country.
However, many popular flag states have appealing and relatively simple avenues for establishing offshore corporate structures that offer favorable taxation and obligation protections under a well balanced financial and legal system. In addition they have construction, inspection and regulatory conformity regimes that can streamline the means of having and running a large yacht.
Registering as a private yacht with a non-EU flag also allows an owner to work under the Temporary Importation regime in Europe in which a yacht can operate for as much as 1. 5 years without the vessel being subject to traditions duties or the EU’s Value Added Tax (VAT).
Owners who plan to actively pursue charter in the world’s most destinations that are popular in specific, the Med, that will be ringed by EU states and the Caribbean, will generally decide to include, flag offshore and register being a commercially operated vessel.
As well as the advantages above, such structures can allow the vessel to operate within the VAT system. VAT on charters is nevertheless chargeable to the end consumer the charterer but the system allows operators of genuine charter businesses to account fully for their input tax in the business sense that is normal. For instance, if a continuing company buys meals for a charter, it will pay input tax on the supply but can subtract it as an operating expense.
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