Yacht registration:
Once a yacht has been chosen, the most important decisions that need to be made are its’ ownership structure, flag choice and registration. After the purchasing, approaching yacht ownership with a good understanding of what’s involved can be crucial. Breath-taking views, high speed cruising and luxurious parties are no good if you’re constantly interrupted by unnecessary regulation, surveys, inspections and administration.
With great leisure comes great complexity
When talking about yacht owners the majority of potential buyers do not understand the complexities of yachting and when it comes to buying the yacht, they are reluctant to incur the cost of advice. It’s important that owners, consultants and reps realize that a yacht is not just a luxury toy, but its’ purchase, ownership and operation can give rise to a number of legal, fiscal, financial, technical issues and contractual relationships which require careful consideration.
Choosing the most suitable jurisdictions
There are many different options available, and different flags mean different rules and obligations, which can have a direct influence on privacy, taxes, functionality and overall enjoyment of your yacht. Kokkikakis Law, a prominent leader in yacht management and registration matters, suggests some key factors to take into careful consideration when making the choice of where to register your yacht.
- The place of residence of the owner (EU / Non EU)
- Area of navigation (EU / Non EU, within EU whether in Spain and Greece for instance where specific rules apply, US, Asia…)
- Use (pleasure, commercial or dual)
- Characteristics of the yacht (date of build, length, tonnage, conformity with any commercial code and international conventions)
- VAT/tax status of the yacht
- Place of delivery
- Nationality of the crew
- Finance needs (marine mortgage loan or leasing)
Choose a registry with a respectable reputation
The chosen jurisdiction should be universally accepted, whilst providing political and economic stability without subjecting the owner and the yacht to unnecessary regulation and bureaucracy. Choosing a registry with a poor reputation or one that is targeted by Port States and Customs could have a detrimental effect on the smooth running of the vessel. Lenders and insurance companies will also review a Flag State’s enforcement of international environmental, safety, procedures, standards, compliance with international regulations and casualty record. A poor record will inevitably affect the decisions of the lenders and underwriters.
The popular choices for registering a yacht
We recommend some of the most popular choices for registering a yacht from around the world, explaining what advantages each of these jurisdictions can offer. These include EU & non EU jurisdictions.
Commercial yachts vs. private yachts
To choose the best flag, the decision also needs to be made, whether to register the yacht privately or commercially. We point out some key differences between the two below.
Stricter rules for commercial yachts
It should be noted that pleasure vessels in commercial service (i.e. commercial yachts) need to comply with stricter rules than yachts that are only used privately. 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.
Among other matters, commercial yachts must be in Class (some exceptions are available depending upon the Registry for yachts below 24m or below 500 GT) and comply with the Commercial Yacht Code Regulations, in accordance with the chosen registry, and International Conventions and Regulations (ie: SOLAS, MARPOL, Load Line, STCW 1995, ISM, ISPS, MLC 2006…) and minimum safe manning requirements for yachts over 24m.
Owners of such commercial yachts navigating in European waters would also need to appoint Fiscal representatives or agents in the several countries where the yachts start their charters.
Advantages of commercial yachts
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. Super yachts must usually meet the same requirements as a commercial vessel, if they host helicopters.
Time to enjoy the ride
Once the best flag is chosen and the yacht is correctly registered, it’s time to start enjoying the luxury cruising. Remember, yacht owners must do their homework before cruising and/or importing vessels as each country, each region have specific navigating rules whether in the EU, the US, the Caribbean or in Asia, which is why it is often advised to consult an expert.
