Since my arrival at Abacus in December 2014, I have had the fortune of staying very close to the world of superyachts both at owner level and through various professional advisers like ourselves.
This year, I have been to ‘Superyacht Management Meeting: Fiscal’ in Monaco in April, a Maltese yachting event in March, EBACE in May (not a yachting event, but you would be surprised how business jets and yachts intertwine during the show), and I have just returned from this year’s Monaco Yacht Show.
The various points I have seen in relation to the buying and selling of a yacht during 2015 have proved very interesting. I have seen messages from the market suggesting; payment of both direct and indirect tax is of prime importance to avoid the scrutiny of the tax authorities… suggestions that the Maltese lease structure for the purchase of private use vessels is finished… that the Russian and former CIS client is a thing of the past; all of which have been delivered with the upmost conviction as the “truth”.
So where is the market? The “truth”, from my perspective, is that none of the above is correct and all of the above are correct! I suppose this should not come as a surprise, as all of our clients are different and all of our clients have a different interpretation of what works for them.
Without question clients are taking more interest in getting their tax planning right and asking more questions about the VAT position and any direct tax impact. This is completely understandable as the misuse of tax planning to buy a luxury asset is the perfect storm in terms of newspaper headlines, and whilst the default position may have been in the past to mitigate any tax issues and battle it out down the line, we are now seeing a more conservative approach. I have, without question, seen clients that are approaching a purchase with the thought that if there is doubt, pay the VAT….something I may not have seen 3 – 4 years ago.
So with the increased fiscal hurdles, what do we recommend? In short, a capable and professional deal team…..I may sound a touch like a broken record on this matter but it is imperative to surround a yacht transaction with the best people.
And who should be in the deal team? Well obviously it would be nice if every deal started with Abacus on the list (actually, we are close to the top alphabetically). I would not flatter myself to assume this to be the case; however a combination of the following is vital:
- A good maritime lawyer
- An indirect tax advisor
- A direct tax advisor (often forgotten, which is an error)
- A capable yacht manager
- A commercial yacht broker
- A corporate service provider
- A “great” captain
The list could be endless if we went on, but it does show the various layers to buying and running a yacht in the right way.
So where would I start? Clearly the yacht is the most important part of the process as without one the deal team is not needed but, once an owner has decided on their purchase, and price etc. is agreed, the initial deal team should be put in place immediately.
In terms of who should be in that team, at minimum it should have a tax advisor (I would have indirect and direct on board), a lawyer and a corporate services business. In terms of the “yacht”, you can add the other professionals as the deal progresses to delivery.
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