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Benefits of yacht ownership through offshore corporate structures

Benefits of yacht ownership through offshore corporate structures

Paying for water

Whether the structure is onshore or offshore, the nature of the yacht world is its mobility. The clear and unmistakable trend is toward governments everywhere taxing ‘use’.

Succinctly stated: if you use the waters of a state or nation, you must pay to use the waters. Witness the recently enacted (but still in flux) efforts by Italy to tax visiting vessels and aircraft.

This point also calls for the selection of an informed and educated charter broker to understand the issues relating to offshore structures and flag selection based on your situation.

The negative financial result of bad advice to an owner can be serious. A word to the wise: Stay with the tried and true selecting a flag, offshore structure or charter broker.

We are also seeing an increased sophistication with respect to financing yachts. The old paradigm that every yacht loan is a personal loan, no longer applies. Sophisticated banks, particularly those with expertise in true ship finance, have entered the new and growing world of chartered yachts. Many of these finance sources actually prefer recognized offshore structures for the financing.

Flag state matters

These trends in chartering and finance are linked to commerce and are being facilitated by the ever-more sophisticated global insurance market. Insurance products designed to cover the risk confronted by yachts flying the flag of seafaring nations, irrespective of corporate structure, are readily available.

So a yacht’s flag state matters and popular ones usually offer an attractive start-up cost, cost of maintenance, and annual fees. But the real benefit can be the protections and reduced government intervention in the offshore structure.

Conversely, the hidden cost of selecting the wrong offshore structure can be expensive on many levels. Many small and emerging nations would love to have a lucrative new revenue stream. You should question whether these nations are prepared to make the kind of investment needed to support a global fleet in these challenging times as an http:// offshore structure, while providing many benefits, is only as good as the recog http:// nition that civilised nations extend to it.

Having said this you should always consult a professional, knowledgeable and specialised in the appropriate area of expertise, if you or your advisers have a concern.

Michael T. Moore has practised maritime and aviation law for more than 30 years. He is the founder and chairman of the marine and aviation law firm of Moore & Company, Florida, USA

Originally published in Superyacht Owners’ Guidebook 12.

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