Below are ten of the most common pitfalls prospective owners should avoid.
1. Not Planning the Ownership Structure Early
One of the most common mistakes is addressing ownership structuring too late in the acquisition process.
Ideally, the yacht owning company should be established before the sale and purchase agreement is signed, allowing the yacht to be purchased directly by the ownership entity.
Late restructuring can create unnecessary administrative or tax complications.
2. Failing to Consider VAT and Customs Issues
VAT treatment can vary significantly depending on how the yacht is owned and operated.
Owners should consider VAT implications before the yacht enters EU waters, particularly if the yacht will cruise in the Mediterranean.
Incorrect planning can lead to substantial tax exposure.
3. Choosing the Wrong Flag State
The flag state determines the regulatory framework governing the vessel.
Factors such as private versus commercial use, crew employment regulations and survey requirements should be considered when selecting a registry.
A flag state that works well for one yacht may not be appropriate for another.
4. Underestimating Operating Costs
Many first-time owners underestimate the cost of operating a superyacht.
Annual operating costs typically range between 8% and 12% of the yacht’s value, depending on the vessel’s size and operational profile.
Proper budgeting and financial oversight are essential.
5. Overlooking Crew Management Issues
Crew employment involves complex maritime labour regulations and international employment considerations.
Professional crew management and payroll arrangements are often required to ensure compliance.
6. Ignoring Long-Term Maintenance Planning
Superyachts require continuous maintenance and periodic refits.
Owners should plan for major refits every five to ten years, which can represent a significant investment.
7. Not Engaging the Right Professional Advisers
Successful yacht ownership typically involves several specialist advisers including:
- yacht brokers
- maritime lawyers
- tax advisers
- yacht managers
- corporate service providers
8. Structuring for Charter without Proper Advice
Charter operations can help offset operating costs but require specific regulatory and tax planning.
Owners should ensure that the ownership structure supports commercial activity before entering the charter market.
9. Overlooking Insurance Planning
Superyachts require specialised insurance coverage including hull and machinery policies, liability cover and additional risk management arrangements.
Insurance should be coordinated with the yacht’s operational profile.
10. Not Planning for Future Resale
Yacht ownership structures can affect resale flexibility.
In some cases, buyers prefer acquiring the shares of the yacht owning company, particularly if the structure contains regulatory or tax advantages.
Considering resale implications early in the ownership process can simplify future transactions.
How Rosemont Yacht Services Helps
Rosemont Yacht Services assists yacht owners and their advisers with the structuring and administration of yacht ownership frameworks, helping ensure that ownership arrangements are robust, compliant and aligned with the owner’s long-term objectives.