The predominant reaction from industry on the Brexit vote appears to be one of surprise with many speculating on a cautious remain vote being taken, but this was not to be and now we have to consider what impact the leave vote will have on superyacht structuring.
As with most articles being written at this time, no one has the answers, there is a lot of speculation and one can only consider those areas that will most likely be affected and what the likely outcome could be.
One of the fundamental questions being the future status of UK flag registration. For private VAT paid vessels or commercial vessels in free circulation an EU flag would be recommended and a London registration a common and popular solution. Will this work in the future? One assumes not as this will be a non EU flag.
What about the VAT paid status of yachts, which have paid VAT through the UK? Will these yachts’ VAT status be grandfathered in and considered EU VAT paid or will these yachts’ VAT status be considered null and void and liable to EU VAT?
Conversely and if the above is true then UK resident yacht owners could be eligible to operate in EU waters under the Temporary Admission regime and thereby simplify their yacht ownership arrangements – of course avoiding any use in the UK itself.
In the case of the commercial vessels one will certainly need to consider how the relevant EU member states will treat these vessels from a fiscal perspective. It will be quite likely that existing structures will need to be modified and to ensure an EU structure is in place going forwards.
There is clearly a lot to unravel and some time before any changes (if any) would need to be made.
For new vessels it will be best to avoid any uncertainty with the flag, ownership and VAT arrangements and consider utilising Malta instead of the UK. As with most things however, there are a number of other factors that impact on the choice of flag such as commercial compliance and manning requirements that might override the choice of flag, especially as it will probably be a number of years before re-flagging may be required.
For existing structures, if any changes are needed, again Malta offers an ideal solution.
So whilst there is uncertainty and changes may need to be made in the near future for some vessels, if changes are required a tried and tested solution is in place.