YACHT FLAGING & REGISTRATION
If you’re considering purchasing a yacht, there’s a lot more to contemplate than simply where you’ll be cruising. Your choice of flag state, the nation where your yacht is registered one of the most important decisions you will make as a yacht owner. Your choice of flag may affect the taxes you pay regarding the purchase and operation of your yacht, how your yacht is crewed, where it may sail and how often authorities may board and inspect your yacht.
Understanding Yacht Registration
Flag, Ownership and Use..... Upon deciding to purchase a new yacht, one must seek to choose the most suitable jurisdiction(s) from which to operate, own, and register it. Many people assume they need to pick one jurisdiction in which to do all of this, but this is not the case. Indeed, picking just one severely limits your options as an owner or manager. In some cases, the ideal structure may use three separate jurisdictions.
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Typical questions for the prospective owner.....
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1. What is your nationality/residence status?
2. Where do you wish to use your yacht?
3. Where will the home port be?
4. Will the yacht be used for pleasure, commercially chartered, or occasionally chartered?
5. Will finance be required for the purchase?
6. Who will employ and pay the crew?
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“Many European nations, and the United States, have onerous and labyrinthine maritime laws and codes"
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Most US and EU yacht owners choose to register their vessels under foreign flags. The flag of the vessel determines who is responsible for regulating and inspecting the vessel. The flag nation also determines under whose laws and jurisdiction the vessel operates (local port state laws may also apply). Due to this, most US and EU yacht owners prefer to register their yachts under jurisdictions that have streamlined taxation and registration procedures and lower tax rates, and also allow for multiple registrations of vessel names and owner anonymity.
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Let’s start by clarifying what we mean by flagging, ownership, and use.
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Use Jurisdiction
The country the vessel will operate from, such as the state from which it is chartered or leased or where the home berth is located.
Ownership Jurisdiction
The country where the ownership structure is incorporated or where the ownership structure maintains its principal place of business
Flag Jurisdiction
The country or governmental entity under whose laws a vessel is registered, which has authority and responsibility to enforce regulations.
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