Last updated 14 October 2020
We examine the industry from a client perspective by looking at five challenges yacht owners and captains must consider.
1. The cost of owning a superyacht
Recently, we have noticed an increase in yacht sales and purchases, including distress sales of such assets, brought on by the pandemic. The perception is that a superyacht can be a Covid free bubble in this changing world. Make sure you are aware of the actual costs of ownership which go far beyond the mere purchase cost. Become familiar with the crew and maintenance costs, communication and connectivity costs and be aware of expensive 5-yearly class surveys when buying pre-owned.
2. Yacht ownership complexity
The whole set up of owning a yacht can be complicated. 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. Be sure to put an ownership structure in place from the outset as cost savings can be made through appropriate accounting during the build process.
3. Yacht taxes
The environment around taxes, VAT and customs is continuously changing and it is vitally important to keep up to date with all changes to manage any tax liabilities. Particularly for yacht owners with a UK connection, matters become more complex after December 2020 when Brexit’s transition period ends. While new opportunities may open up, added tax and VAT complexities can create unexpected situations for any yacht owner.
Crew will make or break a superyacht experience. Invest in knowledgeable and experienced crew that you trust. Be aware of salary costs and also of national insurance contributions. The latter is becoming more demanding as different countries seek to impose localised regulations. Connectivity is important; Covid restrictions have shown that there are situations where crew and/or guests cannot leave the yacht so make sure that links to home remain intact and secure, for everyone’s mental wellbeing.
The ability to obtain finance to purchase a yacht is becoming more and more challenging. 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 a compliance and risk perspective.
The considerations when owning and operating a yacht are numerous and constantly changing. Consequently, it is advisable to engage a trusted provider who will actively advise on and deal with any challenges on your behalf, making for a smoother process. If you have any concerns about the challenges you, or your clients, might be facing in relation to owning and operating a yacht, contact Ian Petts or any other member of our yachting or crewing team.