What is the best yacht registration country for you?
Simply purchasing a yacht and owning a passport does not allow you to sail boundlessly. That said, you have options when it comes to yacht sales. The better you geographically plan your purchase, the better foresight you’ll have when it comes to future travel plans.
If all of this seems entirely alien to you, don’t worry. We’ve broken down exactly what you’ll need to know to begin these considerations from an informed position. A summer on a yacht of your own is not so far away!
Why Registration Choice Matters
Where you choose to register your yacht has more to do with legal and regulatory factors than location alone. Your “flag country” determines protocol when sailing in your country of purchase and abroad.
- Legal Factors:
- Visas. Knowing which countries you can enter and for how long is an important factor in deciding where to purchase your yacht. Where is your passport valid? Which countries can you merely sail in, and which can you extend into onshore travel, if that’s something you’re interested in?
- Flag state laws. Each country has its own unique maritime laws. Familiarise yourself with the legal constraints around your yacht size, sailing purpose (pleasure or charter), condition, and VAT payments (among other things). Your yacht’s flag can establish credibility or mean tricky legal considerations. Take this into account when choosing your destination.
- Costs:
- VAT. Each country has its own set of VAT rules and regulations. For instance, spending a certain amount of time in a country will require you to pay that country’s VAT on your vessel. Some agreements, such as the EU’s current setup, allows you to sail freely across the waters of multiple countries once paying one member country’s VAT. Learn more about VAT payments right here.
- Taxes. Lower tax rates and even exemptions can be applicable in some countries. Be sure to look into this when evaluating which country to register your yacht in.
- Costs. Arranging to purchase your yacht offshore can be costly. Beyond the travel itself, organising with specialists and arranging for inspections/surveys can add up.
- Regulations:
- Onshore. Registering in your home country, otherwise known as onshore or domestic registration, is fairly simple in comparison to offshore registration. The downside is that you may be leaving benefits (that registering in other countries offers) on the table. It’s cost effective, straightforward for domestic sailing purposes, and a great option for small pleasure vessels.
- Offshore. An offshore registry may offer attractive benefits that registering domestically won’t provide. Depending on the jurisdiction, these can include better tax regimes, ease of international sailing, and flag prestige.
- Crew regulations. These can vary depending on the country your yacht is registered in. There are a multitude of qualifications out there for skippers and crews, and understanding which countries yours is valid in is a great first step to choosing a country.
- Safety regulations. Some flag countries have inspection procedures and certifications with better reputations than others. A trusted inspection will only make international sailing easier.
- Convenience:
- Location. Where will you be sailing?
- Time. How long will you be sailing in each target country?
- Territory. Do you plan to visit any land territories (as opposed to just waters)?
- Condition. What condition is your yacht in? How thorough was the inspection?
- Yacht size. Will this be a blessing or curse when it comes to taxes? How about regulations?
- Crew qualifications. Will registering in this country require me to adopt another certification? Who am I sailing with?
- Language. Will this inhibit my ability to communicate with my registered country?
- Financials. Am I willing to spend more to purchase offshore in order to save on taxes? Is the domestic appeal worth the hassle of overseas travel should I choose to embark on an international trip?
Popular Flags Explained
When making yacht flag comparisons, be sure to know your own primary values well. Purchasing a yacht and deciding jurisdiction is akin to buying a house; there are some elements that are make or break for you, and some you’ll have to sacrifice.
Our advice: take a second look at that list above. Which of these are you willing to compromise on? How do your answers to each bullet point stack up with your list of target countries to register in?
Of course, each flag country has its own set of meanings, regulations, costs, and laws. A “flag country” or “flag state” is the national jurisdiction under which you register your vessel. It is referred to as a “flag” state because this means flying that country’s respective flag on your craft as proof of your registration. This is maritime law, and some countries you travel to (under specific conditions) will require you to fly theirs as well.
The flag state is responsible for inspecting and authorising their registered vessels. You are obliged to pay taxes, fees, and VAT to your flag state, as well as follow their policies.
Fortunately, the details for 28 maritime authorities are in one place. The Paris Memorandum of Port State Control (PMoU) is a joint agreement between these flag states on the conditions of Port State Control.
Tax & Practical Considerations
Taxes can be a big draw of some flag states, like the Cayman Islands (that sits outside of many tax jurisdictions and doesn’t require VAT). Some countries have recurring fees, like Greece, which requires TEPAI paid once a month (based on the size of your vessel).
You’ll also need to know the level of flag prestige your vessel’s registration country comes with. The PMoU publishes a list of flag qualities, known as the “White, Grey, and Black” list. This details the level of risk each flag carries.
The factors that determine which colour is assigned to each flag are the number of inspections and detentions within a three year period. White-listed flags are low risk, Grey-listed have a higher risk, and Black-listed flags are subject to high scrutiny.
The countries involved in the PMoU are beholden to three types of inspections:
- Initial inspection. Provide documents outlined by the PMoU in Annex 10, including but not limited to Certificate of Registry, inspection reports, safety information onboard, and radio licenses. This is primarily a check of the condition of your vessel.
- More detailed inspection. This further investigation is pursued if reason arises in the initial inspection. If you are asked to undergo this inspection, you’ll need to answer for/provide changes for any of the issues that Port State Control Officers have found.
- Expanded inspection. High Risk Ships and older ships may be subjected to this investigation. Both vessel and human elements will be evaluated.
More information can be found on the PMoU website.
Which Country Should You Register in?
Flag prestige, taxes, costs, laws, size, and purpose of your vessel can all play an active role in which jurisdiction you choose to register in.
When putting flags in comparison with one another, you may find cost vs. convenience to be a larger consideration than you may have anticipated. The Isle of Man, for instance, has great stability, fees, and international possibilities. However, it doesn’t follow EU VAT rules (instead UK), which can make EU travel more of a hassle than countries like Greece or Malta.
If you’re looking to dock in Greece, why not take a look at our new and used yacht range? We help you through successful registration, championing transparency across the whole purchasing process. A reputable yacht broker like One Yacht is the best way to approach the sometimes daunting task of yacht ownership.
Peruse our catalogue today and sail tomorrow!
