ADVERTORIAL
IT’S ALL IN THE DETAILS
Dr Clayton Fenech takes a look at some important considerations needed during the journey towards yacht ownership
focusing on the long-term reward will help do away with any lingering hesitation on the lifestyle investment, one should not overlook the less exciting pre-acquisition considerations necessary to avoid unpleasant surprises in the future.
A
The contractual framework of the sale/purchase transaction will largely depend on whether the yacht is a newbuild or a used yacht. In the former case the yard would typically have its own standard form contract which, particularly in the context of larger yachts, will be revised based on negotiations between the parties. The sale and purchase of used yachts, where the involvement of one or more yacht-brokers is standard practice, is invariably regulated by a standard form agreement, typically the MYBA MOA, where the focus will be on any special conditions to be added and the documentation to be exchanged between the parties for the completion of the sale.
There are also a number of considerations to be made which are not directly related to the contract regulating the sale, and which are relevant irrespective of whether the yacht is a newbuild or a used yacht.
High on the list of such considerations is the intended use of the yacht by the prospective owner. If, for instance, the yacht is intended for private use within the EU, one would need to manage the related VAT implications and structure the acquisition
in a manner that facilitates the preferred course of action, with the two main options being outright payment of VAT upon acquisition or importation of the yacht, or the setting up of a leasing arrangement which could alleviate the VAT outlay.
The choice of flag is also materially relevant in the context of financed yachts, where the financier will inevitably insist on a flag backed by a robust legal framework
If, on the other hand, the intention is for the yacht to be operated commercially, whether exclusively or in conjunction with private use, one would need to ensure that she is compliant or capable of compliance with the commercial yacht code of the desired flag. The choice of flag is also materially relevant in the context of financed yachts, where the financier will inevitably insist on a flag backed by a robust legal framework regulating the enforcement of secured rights in the event of default on the part of the borrower.
Another aspect to be considered is the ownership structure, with special purpose vehicles (SPV) often being the preferred option for a variety of reasons, including limitation of liability and operational flexibility. The place of incorporation of the SPV typically, albeit not necessarily, follows the choice of flag to optimise efficiencies, particularly those relating to eligibility for registration and centralisation of certain administrative functions.
With these and other legal, technical, and fiscal facets of the yacht acquisition process in mind, one cannot but conclude that the best piece of advice a prospective owner can probably get is to engage the services of experienced professionals early on in the journey towards yacht ownership.
For more details Tel: + 356 2125 2893 or visit
www.credence.com.mt
ONBOARD | WINTER 2021 | 17
decision to purchase a yacht is often propelled by the prospect of a memorable and relaxing time on board with family and friends. Whilst
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