Your 5-Step Guide to Buying a Superyacht
For those fortunate enough to consider purchasing a superyacht, it’s common knowledge that, not only financially, it is no easy feat. This is not to say, however, that making the leap into superyacht ownership does not come with a plethora of benefits and the opportunity to make memories to last a lifetime. But, when it comes to buying a superyacht, what are some of the key factors that may need to be addressed? David Shefford, Director of Client Services at Equiom, examines the industry from a client’s perspective, looking at five key challenges superyacht owners and captains must consider before making a decision as large as the yacht itself.
1. The cost of owning a superyacht
David Shefford: Recently, we have noticed an increase in yacht sales and purchases. Before purchasing a yacht, it is important for an owner to make sure that they are aware of the actual costs of ownership which extends far beyond the mere purchase price. Clients should become familiar with the crew and maintenance costs, EU VAT agents costs, communication and connectivity costs, and expensive 5-yearly class surveys for pre-owned vessels.
2. Yacht ownership complexity
The whole setup of owning a yacht can be complex. It’s about knowing who to contact for what advice, who to trust and who to use for the various components to ensure a smooth operation. New owners should be sure to put an ownership structure in place from the outset to limit personal liability and avail of any cost savings that can be made through appropriate accounting, during the build process.
3. Yacht taxes
The compliance environment around taxes, VAT and customs duty is continuously changing and it is vitally important to keep up to date with all changes to mitigate onerous penalties arising from unexpected tax liabilities and reporting obligations. While new opportunities may open up, complacency regarding tax and VAT complexities may create unexpected and unpleasant situations for any yacht owner. It is vital for new owners to engage early in the process with a good tax advisor.
4. Crew you can trust
Crew will make or break any superyacht experience. I would say to clients: invest in knowledgeable and experienced crew that you trust. Be aware of salary costs and potential social security contributions; the latter is now becoming more demanding as different countries seek to impose localised regulations. Up-to-date employment policies and procedures are also important to ensure all are informed, while utilising the correct HR and legal advice minimises potential risk. Rotational contracts, training agreements, and annual bonuses may also have to be considered to enhance retention.
5. Financing a purchase
The ability to obtain finance to purchase a superyacht remains a challenge. Yacht owners need to ensure that the relevant security for the loan-to-value (LTV) is in place and the choice of jurisdiction for yacht ownership is favourable from both a compliance and risk perspective.
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Ultimately, owning and operating a superyacht involves many factors that are continually evolving. Consequently, it is advisable to engage a trusted provider who can actively guide and address any challenges on your behalf, making for a smoother process. If an interested client has any questions or concerns about any of the above challenges in relation to owning and operating a yacht, don’t hesitate to contact David Shefford, the Director of Client Services at Equiom Isle of Man, or Scott Le Cornu, Head of Equiom Crewing, Equiom Marine & Aviation Services (Jersey) Ltd, or Mark A Hagan, Director of VAT, Equiom Tax Services Ltd.
