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yacht-registration

Have you thought about offshore strategy for your yacht?

Dateline: Belgrade, Serbia

Let’s say you have successfully opened an offshore bank account, got a second passport and are living the lifestyle of your dreams, traveling the world freely and worry-free.

Let’s talk about the next level of flag theory, when your acquisitions go beyond diversification and extend into lifestyle purchases like boating. For many who reach this stage, the next step is to combine travel and leisure by investing in the purchase of a yacht.

Unlike buying a new car – or even a house – buying a yacht is an investment of an international nature, and deciding upon the best country for yacht registration is a decision on which you need professional advice so you do not expose your assets to taxes and liabilities. If you go into things uneducated, your exciting new purchase might become just a hole in the water into which you pour unnecessary amounts of money.

As with other international strategies, the country in which you do yacht registration can have an enormous effect on the amount of money you’ll be able to save, as well as your freedom of travel. You’ll learn as you read this article that some countries keep you from traveling to other jurisdictions freely, some countries charge high tax percentages or registration fees, and others do none of those things.

 

Choose your flag wisely

When buying a yacht, the choice of yacht flags is one of the most important decisions you have to make because it can have a direct effect on your privacy, taxes, and your exposure to liability. Just as you’d create a corporate structure to protect your other assets, you should do the same when it comes to yacht registration.

For this reason, many boat owners opt to do their yacht registration in places like the Cayman Islands to avoid the onerous taxes and regulation of the United States. Panama in fact, is the largest ship registry in the world, with over 9,000 ships flying its flag.

However, it’s also very important to do your due diligence in selecting a country for yacht registration by working with a professional, because once registered in a country, all of that country’s laws will apply to your boat. Many countries that have attractive tax structures have other issues that you’ll want to avoid, such as laws that require you to hire a crew completely composed of nationals from that country. Plus, boat registration in a country that is not well respected by the US and EU can limit where you’re allowed to travel, or at the very least, make you subject to more detentions and inspections.

The flag state has the responsibility to enforce regulations over vessels registered under its flag, so yacht registration under countries on the Paris Memorandum of Understanding (Paris MoU) on Port State Control’s black or gray list will come under more scrutiny in inspections. Because of this, a large majority of yachts are flagged in British Overseas Territories, known as the ‘Red Ensign Group’ — including Bermuda, Gibraltar and the Isle of Man.

These countries have acceptable safety regulations for travel in EU countries, while also having more attractive tax structures than the UK. In fact, company tax is set at 0% in the Channel Islands, the Isle of Man, the Cayman Islands and Bermuda.

This is particularly useful for those who wish to spend time in European Union waters, as vessils owned or used by EU residents are subject to the EU’s Value Added Tax (VAT).

Private yacht registration with a non-EU flag allows an owner to operate under a “temporary importation structure” which allows for 18 months without paying these taxes or customs duties. After the 18 months are over, the boat owner can re-apply for this status.

Bearing this in mind, let’s take a look at some of my favorite countries for yacht registration.

 

1.Cayman Islands

 

yacht-registration-cayman-islands

There are no income, capital gains, or other taxes in place by the Cayman Islands on vessel owning companies.

The Cayman Islands Shipping Registry is a favorite among people who own both pleasure and commercial yachts worldwide.

This ship registry has been at the Port of George Town, Cayman Islands since 1903. There are two other ports in the Cayman Islands as well: The Creek in Canyon Brac, and Bloody Bay in Little Cayman.

There are different types of yacht registration available:

The Merchant Shipping Law, which was revised in 2016, is the governing legislation for all boats registered in the Cayman Islands. The law offers many different types of yacht registration, including full registration, interim registration, provisional registration, ship under construction registration, and demise charter/bareboat registration.

An owner who is having a vessel built might find this convenient so he or she can register it as a boat under construction and then change to full yacht registration later.

Flag grants protection by the British Royal Navy

As I mentioned above, the Cayman Islands are a part of the Red Ensign Group. This means that getting your yacht registration in the Cayman Islands makes your vessels flagged as British Ships, granting them protection by the British Royal Navy.

You can have the yacht registration process expedited by paying a fee

Because time is crucial for so many people, the Cayman Islands Ship Registry (CISR) can also expedite the registration process for those who need to be registered immediately if you pay their expedition fee.

The CISR has representative offices in Fort Lauderdale, London, Cannes, Athens, Tokyo, and Singapore where you can have ship registry certificates issued immediately if needed.

License to Cruise the water of the United States

Yachts that are registered with the Cayman Islands as pleasure yachts and are not engaged in trade are granted a License to Cruise the water of the United States which will allow them to enter, depart, and cruise within U.S. waters. You’ll only report to U.S. customs when entering the country or changing customs districts.

Assuming you meet all of the required qualifications, there are no restrictions or rules concerning the nationality of the master or the crew of your ship.

 In addition to the Cayman Islands being a tax neutral environment, the jurisdiction provides vessel owners with banking facilities and directorship services.

Overall, vessels registered in the Cayman Islands benefit from all the privileges of the British flag, while simultaneously having the tax-free and confidentiality perks of the Cayman Islands.

2. Netherlands

 

yacht-registration- netherlands

Holland is typically preferred for yacht registration due to its fast and easy process

Many people consider Holland to be an ideal location for yacht registration because the country is flexible and straightforward whereas most other European countries follow stricter rules and regulations. The registration process is fast compared to that of other countries and requirements are minimal.

To register under the Dutch flag, the process is easiest if you are either an EU citizen, Swiss or Norwegian, or own a company registered in the EU.

You can be registered under the Dutch flag in as little as three days

Holland is typically preferred over countries like Italy, France, and Spain because those countries have a long boat registration process in addition to charging high registration fees. A lot of yacht owners solve this problem by registering under the Dutch flag.

Taxes and registration requirements are minimal, allowing the whole process to be completed in three days assuming you meet the necessary criteria.

You do not have to be a Dutch citizen for yacht registration 

Boat owners do not have to be of Dutch nationality, nor do they have to have a residence there. The only documents you must have are an ID card or passport and you must provide proof of ownership of your boat. Because so little documentation is needed, renewing your yacht registration should be a fairly simple process.

The process is easiest, however, for people who are Dutch, Swiss, or Norwegian or have a company based in the EU. If you are not Dutch, Swiss, or Norwegian and if you don’t have a company registered in the EU, you can still register by paying a fee to have a United Kingdom Ltd. set up in your name.

It will cost you 349 EUR up front and 249 EUR every year after that. Once the Ltd. is set up, you’ll receive your registration within three to five days. Documentation needed is still the same.

It’s much cheaper to register in Holland than in other countries.

It only costs about 299 EUR for yacht registration in Holland if you are an EU citizen. It’s 648 EUR for non-EU citizens and your registration license can be delivered overnight anywhere in the world. Those prices include everything – taxes, mandatory Dutch address and all costs for shipping and consultation.

There’s also no requirement to have your boat inspected, making the vessel documentation process even simpler.

 Types of yacht registration under the Dutch flag:

     1. Light registration

Light yacht registration is for people who want fast and easy registration for navigating EU waters. With light registration, you can only sail European Union waters and the length of your yacht may not exceed 24m.

    2. Global registration

Global yacht registration is for yachts that will navigate outside of European Union waters, sail worldwide, or are engaged in commercial chartering. People with Global registration can sail worldwide.

Global registration is also available to Swiss or Norwegian persons regardless of whether or not they have a company in the EU.

 

3.Marshall Islands

 

 

yacht-registration-marshall islands

The Marshall Islands are gaining popularity for boat regsitration due to its 24hr process

The Marshall Islands ship registry was formed in 1988. In 2001, it was expanded to allow those with commercial and private yachts to register as well, which has made the Marshall Islands a popular place to register over the last sixteen years.

The jurisdiction has also gained a lot of recognition over the years by having regional offices in major maritime cities around the world, allowing them to provide same day service to anyone regardless of what location or time zone they are residing in.

The Marshall Islands Registry is the third largest in the world and you can register under a one or a three year program.

You must be a Marshall Islands citizen, national, or qualified foreign maritime entity to register in the Marshall Islands. The terms “citizen” and “national” refer to Marshall Islands corporations, limited liability companies, partnerships, and associations of individuals. (You can easily complete the process to have a Marshall Islands company registered in your name so you can register your ship here.)

Registration can be completed in as little as 24 hours

Assuming you complete all the necessary documents and meet all requirements, you can have your ship registered within 24 hours; you can also register your ship as a ship under construction if needed.

 You can obtain a U.S. cruising permit and commercially compliant yachts can charter in Europe, meaning, you’re not confined only to Marshall Islands waters, which is convenient for those who want to see more of the world.

 You can be chartered out for up to 84 days at a time

As long as you meet proper flag requirements, yachts of 18m or longer that weigh less than 500 gross tons can be chartered out for up to 84 days as a private yacht limited charter (PYLC).

The Marshall Islands are white-listed under the Paris and Tokyo Memorandum of Understanding (MoUs)

In addition to being white-listed under Paris’s and Tokyo’s MoUs, the Marshall Islands also meet the flag criteria for a low risk ship under the Paris New Inspection Regime. Additionally, the Marshall Islands have been a part of the U.S. Coast Guard’s Qualship 21 roster for 11 consecutive years.

The registry is low tax and respected worldwide

The Marshall Islands are a country with a presidential republic in free association with the United States and enjoy similar benefits to its British Overseas Territory counterparts.

 

4. Cyprus

 

yacht-registration-cyprus

The costs of yacht registration and management in Cyprus are the lowest in Europe

 

Cyprus is the third largest island in the Mediterranean after Sicily and Sardinia; their ship registry ranks 10th in the world with a gross tonnage of over 21 million pounds.

A ship can be registered in Cyprus if more than 50% of shares are owned by a Cypriot or if your company is registered in the Republic of Cyprus. An offshore company can also be registered in Cyprus if the company’s control is in the hands of Cypriots.

The Republic of Cyprus can easily register your company under their flag so you can register your yacht there. The costs of yacht registration and management  are the lowest in EuropeThis makes the jurisdiction an ideal, convenient place for many owners to register their ship.

No tax on profit made / no income tax on wages of your crew / no stamp duty

There are many tax benefits that come with yacht registration under the Cyprus flag. A ship-owner whose ship is registered here is fully exempt from income taxes from operations in international waters.

Additionally, no tax is payable for wages of the crew that operates in international waters. No tax is payable on any dividend received from a shipping company in Cyprus.

Cyprus has maritime offices around the world, allowing them to work with anyone anywhere at any time. The locations of some of their offices are in New York, London, Rotterdam, Piraeus, Brussels, and Hamburg.

Furthermore, you’ll have the benefits of flying an EU flag, which is respected worldwide. According to EU registry, “Sailing under EU flags demonstrates strength and represents a strong reputation.”

 White-listed under Paris and Tokyo MoUs

Like some of the other countries I’ve mentioned today, Cyprus has been white-listed among the Paris and Tokyo MoUs, meaning it’s a high-quality flag with a low-risk compared to many other countries who’ve been gray or black-listed.

Cyprus is excluded from the “list of targeted flag states”

This is a list kept by the U.S. Coast Guard. Since Cyprus is not on the list, inspections are kept at a minimum and less delays occur when entering and leaving ports

Types of yacht registration:

Cyprus offers three types of registration, including provisional registration, permanent registration, and parallel (bareboat) registration.

       1. Provisional remains in effect for 6 months; after expiration, it can only be renewed once more for 3 more months.

       2. Permanent Yacht Registration must take effect 6 to 9 months from the date your yacht was provisionally registered.

      3. For Parallel / Bareboat Registration your ship must hoist the Cyprus flag and “Limassol” must be marked as your port of registry. Parallel-in lasts for two years and is renewable. For parallel-out registration, your ship must hoist the foreign flag rather than the Cyprus flag and your port of registry must be the port of the foreign country. Parallel-out lasts for three years and is also renewable.

 

5. Liberia

 

yacht-registration-liberia

When registering your boat in Liberia you are taxed with a fixed fee

 

 

Liberia is the oldest democracy in Africa and one of the first offshore, zero tax jurisdictions.

The Liberian ship registry is a favorite among owners of large vessels; the country has the second largest registry in the world and makes up 12% of registered ships worldwide.

The Liberian Yacht Registration is open to any ship-owner in the world

There are no restrictions on the nationality of your crew or country of construction. This makes Liberia appealing to many ship-owners who either can’t register somewhere because of their nationality or can only register by paying an additional fee.

It’s been white-listed by the Paris and Tokyo MoUs

Because Liberia has been white-listed on the Paris and Tokyo MoUs in addition to the International Maritime Organization AND the U.S. Coast Guard, and combined with the country’s other features, the Liberian Registry is known as “the world’s largest quality registry, renowned for excellence, efficiency, safety and innovative service”.

 The following types of vessels can be registered in Liberia:

Vessels under construction, newbuildings, vessels being transferred from other flags, offshore vessels, vessels in lay-up, and vessels involved in international, coastal, or domestic trading. You may also have a dual flag if your ship is bareboat registered.

 First class customer service operated by the U.S.

The Liberian Registry is owned and operated by the United States. Additionally, service is available 24 hours a day, 7 days a week, making things very convenient for those wishing to do yacht registration under the Liberian flag. There are over 400 nautical inspectors, so there’s always someone available to attend to vessels.

Vessels registered in Liberia are taxed with a fixed fee

The fee depends on the tonnage of your ship and it’s taxed yearly, so there should be no surprises.

However, there are no taxes on operations and your profits are not assessed.

 The Liberian flag is accepted in many EU countries

United Kingdom, Germany, and Holland are only a few countries in the European Union that accept the Liberian flag.

Liberia is top rated in safety and accident prevention

Liberia is recognized every year for having a high-quality reputation of standards. The country has an above average performance in safety and accident prevention as well as in independent statistical reports. Liberia also has a network of 100 security inspectors to inspect ships when necessary; this is something that was implemented post-9/11.

 The Liberian registry was named the winner of Lloyd’s List Americas 2017 “Maritime Services Award”

According to information provided by the Liberian Registry website, “The “Maritime Services Award” is for exceptional achievement or contribution to any service sector of the Americas maritime industry by a company, individual, or organization. According to Lloyd’s List criteria for this award, “The winner must be able to demonstrate how they have set themselves apart, going above and beyond best practice to offer the shipping industry something exceptional.”

 

6. Malta

 

yacht-registration-malta

If you register your yacht for commercial purposes in Malta you are exempt from paying income tax

 

The Maltese ship registry is the largest in Europe and one of the largest in the world; it’s one of the most popular countries in the world for pleasure yacht registration. The country has EU compliant legislation, clear laws relating to yacht mortgages, low registration costs and is well respected across the globe.

EU flag

Malta became a member of the European Union in 2004, so yacht registration here comes with the perks of sailing an EU flag, including protection by the British Royal Navy.

It’s on Paris’s MoU white-list

Like the other countries I’ve mentioned, Malta has been white-listed, providing ship-owners with a sense of security when you go through yacht registration process under Maltese flag.

Anyone can register under the Maltese flag

If you’re an EU, EEA, or Swiss national, you can hold your vessel in your personal capacity. However, if you’re a non-EU/EEA/Swiss citizen you must hold your yacht through a Maltese or foreign company.

 Commercial yachts are exempt from income tax

Companies operating commercial yachts out of Malta are exempt from income tax on any income generated by the operation of their yachts and are exempt from any VAT tax on the high seas.

No restrictions on the nationalities of the master, officers, or crew of your ship

This sets Malta apart from many other countries who do have restrictions on your nationality.

24 hours, 7 days a week service

Another perk that Malta shares with Liberia is that there’s around the clock service, so you can generally feel safe and secure registering here.

All types of vessels may be registered

As long as you meet all flag requirements, any type of vessel can be registered – that means pleasure yachts, oil rigs, vessels under construction, and anything in between.

No restrictions concerning age or trading

However, boats between 10 and 15 years must pass inspection by an authorized inspector within one month of provisional registration.

Ships over 15 years old must pass inspection before being provisionally registered.

 

7. The British Virgin Islands

 

yacht-registration-british-virgin-islands

Anyone can register under the BVI flag

 

The British Virgin Islands are the latest country to join the Red Ensign Group (2014). Now the British Virgin Islands can register any type of ship and any size.

It’s a tax neutral environment

The fact that the British Virgin Islands are tax neutral is one of the things that makes the jurisdiction the most attractive. The islands are outside the scope of EU value added tax (VAT) laws. That means there’s no sales tax when purchasing goods or services.

Access is granted to all ports in the world

That’s a pretty attractive feature for yacht registration under the BVI flag. There are restrictions with almost all other registries.

Protection by the British Royal Navy

As is the case with the Cayman Islands and Malta, the Red Ensign Group flag grants protection by the British Royal navy to those vessels registered under the British Virgin Islands flag.

Anyone can register under the BVI flag

Similar to the other countries listed, you can register under the BVI flag even if you are not a citizen and even if you do not own a company there; you will have to have a company registered in the BVI to do so, but this can be completed in a matter of hours.

Registration process only takes 2 to 6 months

So it’s not as short as some of the other countries, but it’s still not too terribly long. You can have your yacht registration under the BVI flag in as little as 2 to 6 months and the process is very easy.

Stable government and economy

The British Virgin Islands have one of the most stable governments and economies in the world, which makes ship owners who register here feel very safe and secure when compared to other countries who have more enemies or corruption within the government.

 

8. Panama

 

yacht registration-panama

Vessels registered under Panama’s flag do not have to pay taxes

 

 

Panama holds the largest ship registry in the world, having over 9,000 ships registered under their flag.

Most countries require a minimum amount of weight, but Panama does not. The only exception to this rule is if your ship is older than 20 years and the ship will have to be inspected in order to be registered.

Transferring offshore vessels is a simple process

There’s usually some downtime when someone transfers their ship from one flag to another, but that is not the case when you are transferring to Panama. Panama has a very simple transferring process; for example, numerous other countries make you dry dock for inspection and Panama does not. Because their process is so easy, it eliminates the concern that ship/business owners have where downtime is concerned.

Dual registry is allowed

This is especially helpful for shipping companies, ship owners, and merchant shipping companies. You can have dual ship registry in Panama, but if you were registered in the other country first, you must have consent from that country to register in Panama, too.

Flat registration fee

Instead of taking your ship’s size or tonnage into consideration, Panama charges a flat yacht registration fee to keep things simple. If you are not a Panamanian or an owner of a Panamanian business, you’ll pay a flat fee of $1,500 to register your yacht. If you are Panamanian, it costs $1,000 to register your yacht.

Additionally, once you are assigned provisional yacht registration, you have six months to provide the proper vessel documentation to transfer your provisional yacht registration to the permanent one. Your yacht registration certificate is valid for two years and renewal costs are low.

Many countries require yacht owners to pay taxes when they register their ship, but not Panama. There are also no taxes on profit that is made through international trade. You do not have to pay taxes on wages for your crew members either. The main reason people choose to register in Panama is because of their lack of taxes. When registering in Panama, people are legally reducing tax costs where that would not be the case with various other jurisdictions.

24 hour a day, 7 day a week assistance

Another thing that Panama has in common with some of the other countries is around the clock service. There’s no one best ship registry in the world, but there are many you can choose from to keep your investment safe. Finding the right one for you will depend on your values when it comes to naval protection, taxes, privacy and ease of travel.

Where did you choose to go for your yacht registration and would you recommend it to others? Feel free to comment below.

If you liked this article and are curious how to apply the Nomad Capitalist lifestyle for yourself, check out the quick video below. Then, if you’d like some help doing it, click here to let me know.

If you liked this article and are curious how to apply the Nomad Capitalist lifestyle for yourself, check out the quick video below. Then, if you'd like some help doing it, click here to let me know.



Andrew Henderson

Andrew Henderson

Andrew has been internationalizing since 2008, and has learned what works and what doesn't work when it comes to reducing taxes, increasing personal freedom, and creating wealth. Click here to work with him personally.
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