Navigating the world of corporate yacht ownership: What it is and when to use it

Often seen as just a way to hold a yacht’s title, using a yacht-owning company or Special Purpose Vehicle (SPV) is a crucial element of effective yacht management.

Various entities can be used to own yachts, with limited liability companies and partnerships being the most popular choices. Each type of entity provides unique advantages tailored to the specific needs of the beneficial owner. Grasping the specific properties and benefits of these entities is essential for optimising yacht ownership structures.

Who provides these structures?

The creation and management of yacht-owning companies or SPVs are generally overseen by corporate service providers (CSPs) or fiduciary companies. CSPs specialise in setting up and managing corporate entities, while fiduciary companies, also offer trust services alongside corporate services.

Benefits of offshore maritime structuring

Utilising offshore structures for yacht ownership offers numerous benefits:

What holding structures should I consider for a superyacht?

When determining the best ownership structure for a superyacht, it’s crucial to assess aspects like direct and indirect taxation and the management of personal liability. Setting up a corporate entity as a holding structure is a popular approach, offering a legal framework for both ownership and operation.

Jurisdiction selection

Selecting the right jurisdiction is crucial, as it will shape the legal and tax framework for the yacht-owning entity. Contemporary offshore jurisdictions, such as the Isle of Man, offer tax-neutral and globally compliant solutions. The Isle of Man provides various structures, including Private Limited Companies and Limited Partnerships, tailored to the client’s unique needs and goals.

Yacht ownership and limited partnerships

Limited Partnerships (LPs) on the Isle of Man are governed by the Partnership Act 1909 and can obtain separate legal personality under the Limited Partnership (Legal Personality) Act 2011. An LP consists of a General Partner and at least one Limited Partner:

• General Partner – Manages the LP and holds unlimited liability, typically a Private Limited Company.
• Limited Partner – Provides capital and enjoys limited liability, contingent on not participating in management activities.

It is crucial for the Limited Partner to avoid involvement in the active management of the LP, as doing so could classify them as a General Partner. This could result in the loss of limited liability protection and disrupt tax planning, causing unforeseen tax implications.

The LP must maintain an Isle of Man Registered Office, ensuring compliance with local regulations.

Yacht ownership and SPVs

A Special Purpose Vehicle (SPV) is a legal entity created for a specific purpose, commonly used to isolate legal or financial liabilities. In yacht ownership, an SPV typically serves as the General Partner in a Limited Partnership (LP), overseeing all operational aspects such as financing, construction, crewing, and maintenance.

Implications for import/export of a superyacht

Handling the import and export of a superyacht involves complex customs and regulatory challenges. For example, non-EU yachts imported into the EU are typically subject to VAT, unless specific exemptions are available. Improper management of these processes can lead to significant costs, making thorough planning crucial.

Crewing considerations

Crew employment is usually managed by third-party agencies that handle vetting, staffing, and contract arrangements with the owning entity. These agencies collaborate with service providers to ensure top-notch crew management and exceptional guest experiences.

Is corporate yacht ownership right for me?

Corporate yacht ownership isn’t ideal for everyone. Each ownership structure should be assessed according to the beneficial owner’s objectives and specific situation. Seeking professional advice is essential to identify the most suitable structure and to avoid the complexities of restructuring in the future.

How can we support your superyacht planning?

Baker Tilly Isle of Man brings extensive experience and robust industry connections to support your superyacht planning. Our expertise in corporate entities, registration, and administration ensures efficient and effective yacht management tailored to your specific needs.

Corporate yacht ownership provides a range of benefits, including risk mitigation and tax efficiency. Nonetheless, each yacht owner’s circumstances are unique, necessitating customised professional advice. By comprehending the details of corporate structures and offshore advantages, owners can make well-informed decisions to enhance their yacht ownership experience.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.