Private vs Commercial Yacht Ownership

Whether a superyacht is owned privately or operated commercially shapes almost everything about her: the VAT she bears, who may use her, whether she can charter and how freely she can cruise European waters. The choice between private vs commercial yacht ownership is relatively complex, and the right answer depends on the owner’s circumstances and how they intend to use the yacht.

Jaffa & Co advises owners and buyers on this decision every day, usually as part of a purchase or new build. We set out the options, explain the trade-offs in plain terms, and then implement the structure, from incorporating the owning company to completing the purchase in the right place.

Commercial operation in brief

A commercially registered yacht needs a charter agreement in place for everyone who uses her, including the owner, who pays a charter fee to the owning company. VAT is charged on those charter fees, but not on the value of the yacht itself, provided the purchase is structured correctly. In our clients’ experience, the costs and administration of a charter business usually make sense only if the yacht charters for six weeks or more each year.

Private ownership in brief

A privately owned yacht cruising in the EU must account for VAT on her value, but that does not always mean paying it in one go. There are three main routes: paying VAT outright, spreading it under the Maltese leasing scheme, or cruising under Temporary Admission if the yacht, her owning company and her beneficial owner are all non-EU.

Why the purchase matters

Several of these options are only available if the yacht is bought in international waters. The structure therefore needs to be settled before completion, not after. We plan the ownership and VAT position alongside the purchase contract so that delivery takes place in the right location and the yacht arrives with the status her owner intended.