As the new season approaches you might find yourself weighing up the pros and cons of chartering your yacht. Yacht charter has seen consistent year on year growth, albeit with a slight decline during Lockdown last year. However, in a post-pandemic world yachts are recognised as one of the most socially-distanced holiday options where interactions with others are controlled in a way not possible if staying at a resort or on a cruise ship. This has resulted in an increased demand for luxury yacht charters.
Chartering your yacht does have many benefits including tax advantages and offsetting running costs, but it’s not as simple as registering the yacht with a charter broker and seeing the income roll in. Commercial registration, EU VAT, Fiscal/Charter licence arrangements, MLC, safety management and insurance all need to be taken into consideration and changing to a commercial status will inevitably create additional paperwork with more stringent regulations to adhere to.
This is where Sarnia Yachts can step in to offer in-house expertise. Our three core services of Ownership, Yacht Management and Crew Management, each of which have many different specialities and skillsets within them, can be combined to deliver an overarching and efficient service to our clients and owners, making us perfectly suited to assist you if you are considering chartering your yacht.
Here are a few areas where we can help.
Bruce Maltwood, Director at Sarnia Yachts, can help identify the most appropriate flag, taking into consideration the area of use, the ownership structure and the ability of the yacht to meet the compliance requirements. Our Yacht Management team can also then provide ongoing support with maintaining the yacht in compliance with flag and classification society requirements.
VAT & Chartering in the EU
Bruce can also advise on the most appropriate structure to meet the charter aspirations of the client. A detailed discussion with the client or advisors is required at the outset to ensure the structure meets both the client’s personal tax objectives and the geographic requirements in all countries where the yacht will operate. Not only is it important to position the correct structure at the outset, but it is critical that a watch is maintained to navigate the ever changing fiscal landscape to ensure no VAT or other tax liabilities are accidentally triggered. Even trips and associated use outside the EU need to be carefully planned and monitored to avoid any tax issues associated with the arrangements in place.
Running a charter yacht is akin to running a small business and all use needs to be treated as such. All use by third parties or owners are treated in the same way with the requirement for charter contracts, market value charter fees and any applicable VAT being paid and evidenced.
For VAT paid yachts and those yachts owned by Non EU residents there are some additional structuring options facilitating a mix of private and commercial use such as the Yacht Engaged in Trade (YET), however there are a number of restrictions which can limit charter opportunities.
Bespoke Yacht Management
To ensure that your yacht operates as efficiently as possible and in accordance with applicable legislative and regulatory requirements speak to Hans Bouman, Head of Yacht Management at Sarnia Yachts. Our Yacht Management service utilises the same system used for the ownership and crew employment aspects of the yacht’s operations, bringing great efficiencies and costs savings for owners. This service also incorporates the management of flag, expense administration and financial reporting, bunkering, vessel maintenance, manning, security and adherence to the International Safety Management (ISM) code.
Lou Billington, our Sarnia Yachts Insurance Manager will provide a support service to ensure that the applicable insurance cover is positioned and maintained for your yacht’s individual needs. Thanks to our 50 years of experience and long standing relationships with niche marine insurance markets, whichever hat Sarnia Yachts is wearing, it is well placed to access the most appropriate cover at the most competitive premium with any negotiating discounts passed directly onto the yacht owner. We can also support owners when considering their insurance needs. As part of our impartial and transparent business practice, Sarnia Yachts does not receive any form of commission from any brokers we work with.
Maritime Labour Convention (MLC) – Crew Certification and Insurance Requirements
Our Crew Management team, led by Louise Holloway, ensures that the crew working on your commercial yacht are suitably qualified in line with all MLC requirements. We undergo a thorough crew screening process, and will let you know of any mandatory certificates which crew would need to complete before employment. All of our SEA’s (Seafarer Employment Agreements) have been Flag State approved, and we will also ensure that the correct insurance is in place for your crew.
As we’ve shown, chartering your yacht is not a quick process with many complex areas needing consideration. We suggest you allow between one and two months to get everything set up so if you would like to benefit from our expertise in these areas, or if you have any questions about chartering your yacht, do not hesitate to get in touch.