A yacht is a significant investment consisting of time, effort and money: placing it in a carefully structured ownership entity can offer a number of benefits, including potential tax and VAT savings.
The decision on where to register your yacht will be driven by where and when you intend to use your vessel. Selecting the right jurisdiction is imperative and with so many registers available, each offering different opportunities, the decision can often be difficult and confusing.
The Isle of Man offers yacht owners and operators the possible advantage of favourable taxation rates along with a secure and well respected register.
The Department of Economic Development is responsible for promoting the registration of yachts, whether owned and operated on-island, or from one of the other appropriate territories. These include member countries of the EU and European Economic Area, along with British Dependant Territories. Furthermore in 2007, the Isle of Man introduced legislation to extend the number of countries for accepted ownership of Manx vessels, such as Australia, The Bahamas, Canada, China, Hong Kong, India, Japan, Liberia, Marshall Islands, New Zealand, Pakistan, Panama, Russia, Singapore, South Africa, United Arab Emirates and the United States of America.
The Isle of Man Shipping Register provides high quality customer service dedicated to fast response times and low charges. The registry is also favourably placed on the much sought after “White List” of the Paris Port State Control Memorandum of Understanding which reduces the potential for being targeted for inspection by Port State and Customs officials.
The Isle of Man’s stable political and economic environment provides obvious benefits, the additional benefits as a jurisdiction for ship registry are primarily:
- Manx legislation which includes favourable taxation treatment (both in terms of VAT planning and corporate tax)
- Operating costs – the low costs involved in operations from the Island (i.e. no annual tonnage tax)
- The prestige attached to the British Red Ensign which Manx vessels fly, and subsequent entitlement to the support of the United Kingdom Government – including consular services throughout the world
- A Registry which is prepared to assist the owner in matters relating to safety, prevention of oil pollution, manning and officer certification requirements for the yacht
- Exceptionally efficient and high personal service standards from an internationally respected registry which is available 24/7
The beneficial tax regime afforded by the Isle of Man is arguably the most significant benefit. Like the Channel Islands, the Isle of Man has retained a 0-20% tax regime for companies with the standard rate of corporate tax being 0%, and no capital gains tax. The Isle of Man, unlike the Channel Islands, is treated as part of the UK for VAT purposes. It is this unique combination that has primarily made the Isle of Man so attractive for ship registry.
An Isle of Man VAT registered business may enjoy the following benefits:
- Zero rate corporation tax
- No capital gains taxes
- No stamp duty (including on share transfers)
- Zero rate insurance premium tax on asset insurance (9.5% in the UK)
Some further benefits of registering in the Isle of Man are:
- Potential for a low effective VAT rate using leasing
- No inheritance tax or death duties
- Part of the EU for VAT purposes
- Independent of UK for direct tax purposes
- British Isle but not part of the UK
There are a large number of vessel management and administration businesses on the Isle of Man to cater for the growing demand for Manx registered vessels. These businesses can assist with the likes of ensuring local management and control remains in place, VAT administration, insurance and brokerage arrangements, chartering and all manner of registration and structure maintenance.
As a highly experienced corporate service provider, with significant knowledge in the establishment and administration of structures holding luxury assets, Abacus is well placed to assist private and commercial companies through the complexity of yacht ownership. Clients and their representatives will benefit from a support team that we will assemble to work alongside their family offices and intermediaries, Abacus gives the owner the freedom to enjoy their vessel.
Where VAT may be an issue, Abacus Yachts can offer ownership structures and leasing services that can reduce the effective VAT rate. Working closely with a specialist VAT advisor, we can also facilitate VAT importation of yacht and source professional tax advice to ensure that optimum structuring is used. We offer multi-jurisdictional registration and will assist in finding the most suitable jurisdiction, based on individual needs and requirements.
Abacus offers the experience, skills and contacts to assist with the purchase and administration of yachts, their associated toys and the necessary supplies for its operation. Due to our longevity within the yachting industry, we have built up a good network of reputable providers including those required for insurance needs, and will manage the relationship on your behalf as part of our insurance administration services.
“We can’t stop the waves of change, but we can safely steer you in the right direction”