For those of you who have successfully opened an offshore bank account, got a 2nd passport and is living the lifestyle of dreams traveling the world, the time has come to move on to the next level of flag theory.
This is the 1 where the focus shifts from acquisitions that are largely for diversification purposes toward purchases meant purely to improve your lifestyle, like yachting.
For those who reach this place in life, the next step is to combine travel and leisure by investing in the purchase of a yacht.
Buying a yacht is an investment of international nature, and deciding upon the best country for yacht registration is a decision for which you need professional advice so you do not expose your assets to unnecessary taxes and liabilities.
If you go into the process loosley, your new purchase might become just a ‘hole in the water‘ into which you pour unnecessary amounts of your money.
As with other international business strategies, the country in which you register your yacht can have an huge effect on the amount of money you will be able to save, as well as your freedom of travel.
Some countries keep you from freely traveling to other jurisdictions, others charge high tax percentages or registration fees, and some do none of that stuff.
When buying a yacht, the choice of yacht flags is 1 of the most important decisions you have to make because it can have a direct effect on your privacy, taxes, and your exposure to liability. Just as you would create a corporate structure to protect your other assets, you should do the same when it comes to your yacht registration.
So, many yacht owners register their yacht in countries to avoid the onerous taxes and regulations of the US and other western governments.
Panama, with its favorable registration policies, is the largest ship registry in the world with over 9,000 ships flying its flag.
Once your yacht is registered in a country, all of the country’s laws will apply to it. Many countries that have attractive tax structures have other issues that you will want to avoid, such as laws that require you to hire a crew completely composed of nationals from that country.
You will want to register your yacht in a country that is respected by the US and the EU.
If you choose a country with a bad reputation, it can limit where you are allowed to travel, or at the very least, make you subject to more detentions and inspections.
The flag state has the responsibility to enforce regulations over vessels registered under its flag, so yacht registration under countries on the Paris Memorandum of Understanding (Paris MoU) on Port State Control’s Black or Gray list will come under more scrutiny in inspections.
Because of this a majority of yachts are flagged in British Overseas Territories, known as the ‘Red Ensign Group’ including Bermuda, Gibraltar and the Isle of Man.
These countries have acceptable safety regulations for travel in EU countries, while also having more attractive tax structures than the UK.
In fact, company tax is set at 0% in the Channel Islands, the Isle of Man, the Cayman Islands, and Bermuda.
This is particularly useful for those who wish to spend time in EU waters, as vessels owned or used by EU residents are subject to the EU’s Value Added Tax (VAT).
Private yacht registration with a non-EU flag allows an owner to operate under a “temporary importation structure” which allows for 18 months free of these taxes or customs duties. After the 18 months are over, the boat owner can re-apply for this status.
Now let’s take a look at some good countries for yacht registration, as follows:
Many consider Holland to be an ideal location for yacht registration because the country is flexible and straightforward, whereas most other European countries follow stricter rules and regulations. The registration process is fast compared to that of other countries and requirements are minimal.
To register under the Dutch flag, the process is easiest if you are either an EU citizen, Swiss, Norwegian, or own a company registered in the EU.
One of the main advantages of the Netherlands is that you can be registered under the Dutch flag in as little as 3 days. That is why Holland is typically preferred over countries like Italy, France, and Spain where there is a longboat registration process in addition to high registration fees. A lot of yacht owners solve this problem by registering under the Dutch flag. Taxes and registration requirements in the Netherlands are minimal, again allowing the whole process to be completed in 3 days, assuming meeting the necessary criteria.
Boat owners do not have to be of Dutch nationality, nor do they have to have a residence in the country. The only documents you must have are an ID card or passport and you must provide proof of ownership of your boat. Because so little documentation is needed, renewing your yacht registration is also a fairly simple process.
There is also no requirement to have your boat inspected, making the vessel documentation process even simpler.
Liberia is the oldest democracy in Africa and 1 of the 1st offshore, Zero tax jurisdictions. The Liberian ship registry is a favorite among owners of large vessels; the country has the 2nd-largest registry in the world and makes up 12% of registered ships worldwide.
The Liberian Yacht Registration is that it is open to any ship-owner in the world and there are absolutely no restrictions on the nationality of your crew or country of construction. This makes Liberia appealing to many ship-owners who either cannot register somewhere because of their nationality or can only register by paying an additional fee.
Liberia has been white-listed on the Paris and Tokyo MoUs and has also been approved by the International Maritime Organization and the U.S. Coast Guard. This, combined with the country’s other features, means that the Liberian Registry is known as “the world’s largest quality registry, renowned for excellence, efficiency, safety and innovative service”.
The Liberian Registry is owned and operated by the United States. Additionally, service is available 24 hrs a day, 7 days a week, making things very convenient for those wishing to do yacht registration under the Liberian flag. There are over 400 nautical inspectors, so there is always someone available to attend to vessels.
Vessels registered in Liberia are taxed with a fixed fee, whichdepends on the tonnage of your ship. The tax is applied yearly, so there should be no surprises. However, there are no taxes on operations and your profits are not assessed.
The Liberian flag is accepted in many EU countries. In addition, Liberia is highly rated for safety and accident prevention, which makes this country even more attractive for yacht registrations.
The Maltese ship registry is the largest in Europe and 1 of the largest in the world, and it is 1 of the most popular countries in the world for pleasure yacht registration. The country has EU compliant legislation, clear laws relating to yacht mortgages, low registration costs and is well respected worldwide.
Malta became a member of the European Union in Y 2004, so yacht registration there comes with the perks of sailing an EU flag, including protection by the British Royal Navy. Malta has been white-listed, providing ship-owners with a sense of security when you go through the yacht registration process under the Maltese flag.
If an EU, EEA, or Swiss national, you can hold your yacht in your personal capacity. However, if you are a non-EU/EEA/Swiss citizen you must hold your yacht through a Maltese or foreign company.
When it comes to taxes, it is important to note that companies operating commercial yachts out of Malta are exempt from income tax on any income generated by the operation of their yachts. They are also exempt from any VAT tax on the high seas. What sets Malta apart from many other countries besides tax policy is that there are no restrictions on the nationality of the master, officers, or crew of the ship.
The British Virgin Islands is the latest country to join the Red Ensign Group. Now, the British Virgin Islands can register any type of ship and any size. Plus, yacht registration under the BVI flag grants access to all the ports in the world. There are restrictions with almost all other registries when it comes to this, so the fact that a BVI flag gives you access anywhere sets the country far apart from the rest.
Another advantage that makes the jurisdiction 1 of the most attractive is that the British Virgin Islands is tax neutral. The islands are outside the scope of the EU value added tax (VAT) laws, meaning that there is no sales tax when purchasing goods or services.
As is the case with the Cayman Islands and Malta, the Red Ensign Group flag grants protection by the British Royal Navy to those vessels registered under the British Virgin Islands flag.
You can register under the BVI flag even if you are not a citizen and even if you do not own a company there, you will need to register a company in the BVI to do so, but this can be completed in a matter of hours.
When it comes to the registration process, it usually takes 2-6 months, meaning that it is not as short as some of the other countries, and not too long.
Panama is not only a popular place when it comes to offshore banking or getting a 2nd passport, it also holds the largest ship registry in the world, having over 9,000 ships registered under it’s flag.
Most countries require a minimum amount of weight, but Panama does not. The only exception to this rule is if your ship is older than 20 years, requiring that the ship is inspected in order to be registered.
There is usually some downtime when someone transfers their ship from 1 flag to another, but that is not the case when you are transferring to Panama.
Panama has a very simple transferring process; for example, numerous other countries make you dry dock for inspection and Panama does not. Because their process is so easy, it eliminates the concern that ship and business owners have concerning downtime.
The good news for all the shipping companies, ship owners, and merchant shipping companies is that you can have dual ship registry in Panama, but if you were registered in the other country 1st, you must have consent from that country to register in Panama, too.
Instead of taking your ship’s size or tonnage into consideration, Panama charges a flat yacht registration fee to keep things simple. If you are not a Panamanian or an owner of a Panamanian business, you will pay a flat fee of $1,500 to register your yacht. If you are Panamanian, it costs $1,000 to register your yacht. Once you are registered, you will have access to Panama’s round-the-clock service.
Plus, once you are assigned provisional yacht registration, you have 6 months to provide the proper vessel documentation to transfer your provisional yacht registration to permanent registration. Your yacht registration certificate is valid for 2 years and renewal costs are low.
Many countries require yacht owners to pay taxes when they register their ship, but Panama does not. There are also no taxes on profit that is made through international trade. You do not have to pay taxes on wages for your crew members either.
The Key reason ship owners choose to register in Panama is this lack of taxes. When registering in Panama, people are legally reducing tax costs and that would not be the case if they were to register in many other jurisdictions.
There is no best ship registry in the world, but there are many you can choose from to keep your investment safe. Finding the right 1 for you will depend on what you value when it comes to naval protection, taxes, privacy, and ease of travel. Consult an expert, choose carefully,
Have a terrific weekend