FAQ

Many have been heard to say that a yacht will cost 10% of its value to operate on an annual basis. This is rarely the case.

Every yacht has a diversity of operational parameters that will govern the costs incurred to run it:

i. Commercial or Private Registration
ii. Number of Crew required for Safe Operation
iii. Areas and limits of Navigation
iv. Fuel Capacity and Consumption
v. Amount of use per annum
vi. Condition and regularity of maintenance

Typically, crew costs (salaries, food, clothing, insurances) equate to between 35% and 50% of the annual operating costs of a yacht in the 40 to 60-metre range. Therefore yachts with a similar crew requirement will have similar outgoings despite their value.

Rosemont Yacht Management can analyse actual historic expenditure from a range of similar yachts to more accurately predict an operating budget.

Significant expenditure is generally incurred at 5-yearly intervals, coinciding with Classification Society Renewal Surveys, Paint Recoating and Maintenance Works. The OWNER should be aware of such fluctuations in annual operating costs from the outset and plan for them in the budgeting forecast.

This is a very interesting subject from the managers perspective, because we have encountered many yacht owners who have been poorly advised or have purchased yachts through brokers who have been economical with important information on performance, range, functionality and true costs.

We are in a position to assist potential buyers in focussing on the type and size of yacht to suit their proposed use and cruising grounds, as well as their budget, without a commercial advantage in steering them in the most profitable direction.

In advising potential buyers, we need to remain mindful of the following:

- Berth size and draught restrictions of the desired home-base marina;

- Typical proposed use will define the accommodation/cabin numbers, speed, range and capability. Ultimately defining the hull type, construction materials and general appearance;

- Crew costs (inclusive of salaries, clothing, food, insurances, etc..) typically amount to 40 to 45% (for vessels over 35m) of the annual operating costs, so the number of permanent crew a yacht is required to operate with has a big bearing on the overall costs.

There are many elements to consider when choosing a flag for a yacht.

The decision on where to register a yacht is dependent on many factors such as:
i. Nationality, and Residency of OWNER
ii. Commercial or Private Operation
iii. Classification Society certification and Construction Approval
iv. Yacht age and condition
v. Proposed Home Berth and Area of Navigation
vi. Owning Company jurisdiction
vii. Existence of Leasing or Financing
viii. Flexibility of Flag Administration with respect to Commercial Activities
ix. Set-up, Annual Administration and Survey Fees
x. Flag Administration Reputation and Rating with Paris MOU

Rosemont Yacht Services and Management personnel will take all these factors into account before advising on the best Flag Administration and type of registration for the efficient and cost effective operation of the yacht.

As well as considering the impact of the flag on the country where the yacht is cruising you should also consider the following:

- Experience and Reputation - the reputation of the register is vitally important.
- Political Stability - how stable is the government and economic environment?
- Political and consular support given by the Flag State.
- Registration Process - does the jurisdiction provide a convenient and speedy registration service?
- Mortgages - security of mortgages registered in the Flag State.
- Registration Fees - how competitive are the fees imposed by the registry?
- Manning - how flexible is the registry in its manning requirements?
- Services - what is the business infrastructure of the Flag State, are there comprehensive, professional support services?

The right answer will depend on the use of the vessel, and the personal circumstances of each owner.

There are many elements to consider when choosing the jurisdiction of a company to own a yacht. The following important matters need to be thought about:

- The nationality of yacht owner (EU or not EU / Less impact in Asia, importation has more impact than nationality);
- The residence of the yacht's principal user(s) and their guests (more impact within the EU (ie Spain or non EU yacht under TI with EU guests on board);
- The physical characteristics of yacht (age, length and tonnage being particularly important / conformity with any commercial yacht code);
- The existing registration of yacht (if applicable);
- The availability of historical proof of ownership / title documentation for yacht;
- The usage of yacht (i.e. private or for charter);
- VAT or equivalent tax status of the yacht;
- The area of operation and primary homeport/country of use;
- Specific crew and operational considerations.

Once these have been determined the choice of appropriate jurisdiction of the yacht owning company can be narrowed, and costs compared to enable a selection to be made based on the owners personal circumstances.

a. Experienced personnel will guide the buyer through the complex process of acquiring a yacht and advise on the corporate structure best suited to the particular yacht ownership to minimise exposure to taxation and maximise the functionality by analysing the following: the yachts VAT status; financing requirements; flag administration and mode of operation; international rules and regulations; requirements for crew welfare and; the nationality and residential status of the yacht Owner.

b. Efficient management of the corporate ownership structure..

a. Set-up of a corporate structure for ownership.
b. Minimising Tax and VAT exposure.
c. Most suitable Flag Administration under which to register the yacht.
d. Legislation concerning crew employment.
e. Marine finance.
f. Insurance policies for the yacht's hull and machinery, public liability and crew medical.