This article does not provide, or replace, legal or financial advice.

Benjamin Maltby, an English barrister and Director of leading consultants MatrixLloyd, provides a little guidance for those thinking of joining the élite fleet.

This article does not provide, or replace, legal or financial advice.

Benjamin Maltby

What is a 'superyacht'?

‘Superyachts’ are yachts longer than 24 metres. Above this size certain rules and regulations apply, crew must be employed, and the whole adventure becomes much more exclusive. The good news is that charter income can contribute significantly towards running costs. They can take years to build, but buying an existing vessel gives immediate use, and a subsequent refit can soon provide individuality and a box-fresh feel.

Choosing Your Yacht

As an aspiring owner, you may have spent at least some time chartering, or enjoyed some quality time with friends on their yachts. With today’s levels of comfort and communication, superyachts are being used not just for relaxation but as mobile offices, too: where better to make key decisions? Owners are also investing in yachts as a platform for entertaining business clients and rewarding top employees.

Sailing yachts have a more natural feel at sea and can be raced competitively. Motor yachts provide more space, can be faster and built to more individualistic designs. There exists a warm-hearted rivalry between the two camps. Whichever you choose, you’ll be enjoying yourself in incomparable luxury and style.

Existing or New?

Whatever their size, all yachts are lovingly built by craftsman, and your input will always be welcome. Some owners really enjoy pushing back technological and aesthetic frontiers. Builds can take from a few months to a few years, so there may be a while to wait for delivery. One alternative, of course, is to buy an existing vessel, giving you immediate use, and undertaking a quick refit later to provide individuality. But by talking to a broker, you may also get to know of a yacht in the process of being built, which has come on to the market prior to completion: if this appeals, then it would be wise to purchase as soon as possible, to enable any mid-build changes you would like to see carried out with the minimum of disruption.

Buying an Existing Yacht

The usual place to start is the broker. They are a friendly and invaluable source of knowledge both on yachts and the current market. Understandably, their descriptions are, of course, usually without guarantee – much like those given by real estate agents.

Unlike a house, however, it is perfectly possible to buy a yacht without any legal formalities, so a detailed agreement called a Memorandum of Agreement (MOA) is normally drawn up and signed by both parties. Typically, 10% of the purchase price is paid straight away, with the balance only being paid once the yacht and the all-important documentation has been formally handed over.

The two other keys documents are the Bill of Sale, which formally records the transfer of legal title from buyer to seller, and the Protocol of Delivery & Acceptance, which sets out the exact time and date of the transfer - to ensure that insurance cover is seamless.

MatrixLloyd advises buyers to check exactly what is being bought. This means having the yacht surveyed, out of the water, by a qualified and insured surveyor. If satisfactory, this should be followed by a sea trial. The MOA needs to describe the parties’ rights and duties when issues are raised, including your right to pull out altogether.

The MOA should list all the equipment which is to be included in the sale: not just safety and navigation equipment but linen, crockery, and works of art. Yachts can also carry vast quantities of fuel and engine spares, which must be expressly included or excluded.

The MOA should cover other matters such as the documentation needed to enable a smooth transfer of legal title. Further, as charters are usually booked many months in advance, it’s important to make sure that you, not the old owner, will receive the charter fees, and that you are happy with the terms of the charter itself.

Although using one of the standard MOAs saves re-inventing the wheel, there’s always room for negotiation.

Having Your Yacht Built

Having spent some time researching the market, you may know which builders and designers will be capable of delivering your dreams. Builders may offer you their standard contractual terms. With this amount of buying power, MatrixLloyd recommends taking advice if only to ensure that someone has checked over the contract from the buyer’s point of view. Amendments may be needed, and builders are normally happy to make adjustments and often incorporate suggested changes into future contracts with other clients. The following matters are those which, in the MatrixLloyd team’s collective experience, merit particular consideration.


If you choose to have an independent designer develop a unique design, it may be possible for the finished blueprints to be interpreted by a builder in more than one way, so the specifications must be highly detailed. Further, a separate interior designer may be needed, as well as a naval architect and independent technical surveyor: a lot of voices. The contracts with these parties should be incorporated into a single build agreement, to ensure all sing from the same hymn sheet.

Builders must adhere to a complex array of regulations. This will depend on where the vessel is to be used, whether it is to be chartered and under which country’s flag it will be sailed. The contract must reflect these requirements in exquisite detail. Modifying your yacht afterwards may not be easy.


It’s not just the total cost of the project which must be agreed. The builder may need instalments paid to cover the cost of materials. Far better, though, to pay following the completion of various stages rather than paying at set intervals, just in case the delivery of materials is delayed. The builder will also need to factor-in fluctuations in materials costs and exchange-rates, to prevent surprises later on.


The builder will often employ outside suppliers and sub-contractors for the trickier parts of the process. This is perfectly normal for yachts of all sizes. For the sake of clarity, if it’s the builder choosing and hiring such suppliers or sub-contractors then it’s only fair that the builder makes sure that they don’t make mistakes. It’s also important for the builder to agree to pay suppliers for materials as soon as possible to prevent later misunderstandings.


Builders’ yards are hazardous places. The yard should be obliged to carry insurance against your yacht being damaged or destroyed even before it hits the water. Meanwhile, you should have the option in the event of a claim of a refund on payments made to the builder, or for the insurance payout to be used to repair both yard and project.


Although you will already be handing over tranches of money, legal title may not be allowed to pass until completion. This gives rise to a slim financial risk, which can be elegantly overcome by having an obligation on the builder to repay instalments backed by a bank guarantee, in case the build cannot be completed. Alternatively, you can have legal title to the half-built yacht, but the builder (not unreasonably) may then ask you for a guarantee against not paying the remaining instalments.


As no two yachts are ever perfectly identical, their performance in terms of speed, noise levels, vibration and range, are difficult to predict - even with today’s sophisticated computer-aided techniques. No one wants to spend time quibbling over small discrepancies, so it’s normal just to agree a fixed sum as compensation if the performance criteria aren’t met exactly but still fall within certain limits.


It’s easy to get excited and overlook the paperwork. But it’s crucial that all the correct documents relating to legal title are presented before payment is made, otherwise your new yacht cannot be registered and you will not be allowed to sail anywhere. The place of delivery may also have tax implications, and should be agreed. The newly completed vessel will have to be formally tested, at sea, to make sure that the performance matches the specification. For this you will need to appoint an expert representative with the right qualifications and testing equipment.


Given the complexity of the project and the importance of things happening at the right time and in the right order, it is accepted that delays are possible. So it’s sensible to agree in advance how much delay is acceptable, and how much money will be deducted from the instalments should larger delays occur.


Only over time will all the equipment and systems be used and tested in varying weather conditions. So materials and workmanship are usually guaranteed for a period of warranty following delivery. It’s common to agree for some form of financial security to be provided by the builder, perhaps in the form of a bank guarantee or by the last instalment being withheld until the end of the warranty period.


If you want to keep your yacht in European Union waters, you may have to pay Value Added Tax (‘VAT’), ranging from 15% to 25% of the vessel’s value depending on the country. Although the principles are the same, in MatrixLloyd’s experience all the EU countries interpret and apply VAT differently. Generally, VAT is normally payable in the EU country through which the yacht is first brought into the EU. Once VAT has been paid in one EU country, this should (in theory) be good enough for all the other tax authorities. So it’s possible to bring the vessel into the EU through the country with the lowest rate. Removal of the yacht from the EU for a particular period of time resets the clock and VAT must be paid again.

Having the correct paperwork on board to prove the yacht’s VAT status is vital. MatrixLloyd advises that the VAT status should be made a term of the sale contract.

Thankfully, there are ways of avoiding VAT. For a start, yachts built by a certain date, and moored in the EU on a certain date, are relieved, as are vessels registered outside the EU, owned by a non-EU resident and only used temporarily in the EU. Temporarily means for 18 months in any 24 month period. An individual is resident in the EU having spent more than 185 days a year there. It is also possible to effectively neutralise the payment of VAT through an offshore structure.

You may often see the phrase ‘Not for sale to US residents while in US waters’ or similar. It’s got nothing to do with any sales tax, as is popularly thought. In fact, it’s stated because for a yacht built outside the US to be offered for sale to US residents, while in US waters, an import duty must have been paid. Once the duty has been paid, where the yacht is registered outside the US, the yacht may only be kept in the US, by a US resident, if it’s in the care, custody and control of a licensed yacht broker and not in the owner’s use. He may only use it after he’s paid a 6% use tax. US residents may purchase a foreign-registered yacht, kept outside the US, on which duty has not been paid, but the yacht must be offered to them entirely outside the US.


All vessels must be registered with a certain country, and wear that country’s maritime flag known as an ensign. Most yachts fly the ‘Red Ensign’, which means registering the vessel in the United Kingdom or one of a small group of Commonwealth countries including Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Guernsey, Jersey and the Isle of Man. The reason for this, according to MatrixLloyd, is that the Red Ensign safety standards are very high, adding to your vessel’s resale value and prestige.

Beyond the Red Ensign group, other nations such as the Marshall Islands have adopted many of the same regulations, while working with the United States Coast Guard to make sure US red tape for visiting yachts is minimised.

Insurers and financiers may insist on certain countries’ flags, to help ensure that the highest regulations are being applied to their liability, and there will be tax implications inherent in any choice.

Resting Assured

Although relatively rare in the restful world of yachting, accidents do occasionally happen. Insurance spreads risk and brings certainty. Individual yacht underwriters are often keen yachtsmen and women themselves, and keenly aware of the need to pay promptly.

According to MatrixLloyd, you must still disclose anything which might influence a prudent underwriter when considering whether to take on the risk, and if so what the premium should be. Thankfully, not everything needs to be disclosed. Anything which diminishes the risk, or which is already known or presumed to be known by the underwriter, need not be revealed.

Mooring your Yacht

In the long run, it may make sense to purchase moorings, but given the unusual nature of such property, MatrixLloyd advises seeking expert advice to check exactly what is being bought, what charges may still be levied by the marina managers, and what the tax implications will be for both you and your vessel.

Crew control

When buying an existing yacht large enough to need its own crew, it makes sense to take on the existing crew who will be familiar with the vessel. In fact, given the time needed for a new crew to familiarise themselves with any vessel, and the fact that the yacht will often need to be delivered to you, it may be a good idea to make the signing of new contracts with the old crew a condition of purchase. You must also ensure that the whole crew meets the standards of training and medical fitness required by the yacht’s flag state. Manning levels must also be satisfactory.


To buy a superyacht is not only to join the very top ranks of the world’s greatest achievers, it is the start of an incomparable adventure. Yes, there are potential pitfalls, but with the right guidance from the start, all will be plain sailing.

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