Commercial Yacht Ownership

Commercial yacht ownership turns a superyacht into a charter business. Done properly, it can remove VAT on the value of the yacht and help fund her running costs. It also brings obligations that every owner should understand before choosing it.

How it works

In simple terms, everyone who uses a commercially registered yacht needs a charter agreement in place, and that includes the owner. When the owner is on board, they pay a charter fee to the yacht’s owning company. The fee can be discounted, as for a repeat client, but it still needs to be close to market value. Paying it is not usually a problem, because it is simply a means of funding the yacht’s annual operating costs. VAT is charged on the charter fees, however, and the owner cannot recover it.

The VAT advantage

The good news is that VAT is not chargeable on the value of the yacht itself, which is a substantial saving. As long as the acquisition is structured correctly, by completing the sale in international waters, no VAT liability is triggered on the yacht. She is imported into Europe once and can then move freely within EU waters.

Is charter worth it?

The costs and administrative burden of running a charter business are generally only feasible if the yacht charters for six weeks or more a year. That is not true for every owner, but it reflects the experience of our clients.

Flag and compliance

A European flag is preferable for a commercial yacht, but not essential. Whatever the flag, the yacht must comply with that flag state’s commercial code, and some codes are easier to meet than others. We advise on the flag, the owning and chartering structure, charter agreements and the yacht’s management arrangements, and coordinate with her managers and surveyors on compliance.