Yacht size and licence requirements - UK?

Motor_Sailor said:
You wouldn't want to register it here as there would be tax implications. But a lot of our ex- (and not so ex-) colonies offer a 'flag of convenience' to rich people so you can avoid both taxes and regulations.
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Sorry, but not so. Flag is of little relevance so far as tax is concerned. Assuming the OP is Norway-resident and a Norwegian citzen, he would not be eligible for either of the relevant UK registries anyway, unless 'his' boat were owned by a company incorporated in the EU.

(Incidentally, our boat is on UK Part 1. It has never been in UK waters, nor has it every paid a penny of tax to the UK exchequer, save for VAT on spares etc brought from the UK, although it has paid plenty to others.)
 
Tranona said:
You are also wrong in suggesting it is of no value to leisure boaters when exactly the opposite is the case. It was established specifically for leisure boaters to demonstrate their competence when chartering boats, mainly in the Inland waterways, but more recently also for seagoing bareboats charters. As such it is accepted by Greece and Croatia (neither signatories or Resolution 40) as evidence of competence to charter boats under their flag.
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Even more so in Greece since the new DEKPA was introduced this year. The ICC is mandatory for all boat owners registering in Greece (allowing for the usual misinterpretation of rules by certain port police). Owners with higher qualifications are being told they cannot register without one. Thread on Liveaboard on this topic.
 
Motor_Sailor said:
So all the multi millionaires register their boats in the Cayman Isles for fun?
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In most instances, the boats aren't theirs. The company that owns them registers the vessels in the Caymans (often because that's where the company in question calls the bottom left-hand drawer of the third cabinet on the left, "home"). The intricacies in their lofty world are a little different from ours.

Anyone who's spent much time in the Med will have noticed that one of the most common flags of convenience for very large leisure craft is the red ensign. They don't do that so they can donate to The Treasury.
 
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Motor_Sailor said:
So all the multi millionaires register their boats in the Cayman Isles for fun?
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As macd says it is mainly charter boats, often US owned who value the more relaxed crewing and reporting/survey requirements and the fact that the register, although essentially the same as the UK register is more open to non nationals.

The tax advantages they enjoy are not directly related to the flag and can be achieved with other flags. It is the avoidance of US taxes and regulations that is the objective of going offshore.
 
macd said:
Anyone who's spent much time in the Med will have noticed that one of the most common flags of convenience for very large leisure craft is the red ensign.
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But it's not the 'British' red ensign. It's the defaced red ensign of our overseas territories. Over 80% of large yachts are registered with the 'Red Ensign Group' of British colonies and overseas territories including the Cayman Islands, British Virgin Islands, Channel Islands plus Bermuda, Isle of Man, etc.

There are no regulation, crewing or survey advantages because they all operate the MCA's large yacht code. The tax advantages include no VAT so that makes an super yacht 17.5% cheaper which is quite a lot compared to being British Registered.

American yachts on the tax fiddle have traditionally been incorporated in Delaware, but now the Marshall Islands is proving to be their flag of convenience.
 
The big yacht I used to deal with was registered in Panama. Every year I wandered up to the consulate in Lisbon and extended the safety certs for another year. No inspections or other complications, just a fee.
 
Motor_Sailor said:
But it's not the 'British' red ensign. It's the defaced red ensign of our overseas territories. Over 80% of large yachts are registered with the 'Red Ensign Group' of British colonies and overseas territories including the Cayman Islands, British Virgin Islands, Channel Islands plus Bermuda, Isle of Man, etc.
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I am capable of telling the difference. I also know where London is.

It's of little consequence to the OP and his modest ambitions, anyway.

To repeat, the fiscal position regarding liabilities to the UK exchequer of a private leisure craft wearing a red ensign is clear. I have assiduously paid the resulting taxes for the last 12 years. There has been neither evasion nor avoidance, nor any expenses to allow against it. The total paid so far is £00.00.

Nonetheless, that I might reduce this heavy burden further, perhaps you could enlarge on the "tax implications" I have to fear.
 
macd said:
. . . Nonetheless, that I might reduce this heavy burden further, perhaps you could enlarge on the "tax implications" I have to fear.
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If you want to keep a British Registered boat (of the right age) in the EU you have to pay VAT. Hence 80% of all the large yachts in the world choose one of the Red Ensign countries of convenience as 17.5% tax on millions of pounds purchase cost is quite a lot. They are then limited to the 18 month time limit in the EU, but this is of little concern to those doing the Med / Caribbean annual rotation.

You said the commonest flag on large yachts in the Med is the Red Ensign and now added that they are registered in London. Well you must have been seeing a British club rally, as UK registered boats are part of only a 20% in total, and that 20% included all those registered in Panama, the USA, France, New Zealand, Hong Kong, etc, etc. The bottom line is there's not very many British registered large yachts as few owners choose to pay VAT on them to our chancellor.
 
Motor_Sailor said:
If you want to keep a British Registered boat (of the right age) in the EU you have to pay VAT. Hence 80% of all the large yachts in the world choose one of the Red Ensign countries of convenience as 17.5% tax on millions of pounds purchase cost is quite a lot. They are then limited to the 18 month time limit in the EU, but this is of little concern to those doing the Med / Caribbean annual rotation.

You said the commonest flag on large yachts in the Med is the Red Ensign and now added that they are registered in London. Well you must have been seeing a British club rally, as UK registered boats are part of only a 20% in total, and that 20% included all those registered in Panama, the USA, France, New Zealand, Hong Kong, etc, etc. The bottom line is there's not very many British registered large yachts as few owners choose to pay VAT on them to our chancellor.
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No you don't. Payment of VAT is nothing to do with flag of registration. VAT is due when there is a chargeable event, and reclaimable if the boat is used commercially (in some cases). There is no linkage between VAT payment and registration.

You have really confirmed this by describing ways in which VAT is avoidable. Non EU residents use the other red ensign registries because they are more open whereas using the British registry requires the boat to be owned by a UK citizen or company which could make avoiding VAT more difficult.
 
Motor_Sailor said:
1. If you want to keep a British Registered boat (of the right age) in the EU you have to pay VAT.

2. You said the commonest flag on large yachts in the Med is the Red Ensign and now added that they are registered in London.
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1. Actually, you don't. I didn't. Nor, I suspect, did most of the boat owner's visiting this forum. In most cases, the person who buys the boat new pays the VAT, and that person wasn't me. Moreover, they pay the VAT in the country in which they bought the boat. My point was that flag state is irrelevant, as Tranona also writes (and will remain so after Brexit, although inevitably a non-EU flag may arouse greater interest from EU officialdom).

You could have worked out for yourself that registry and VAT are unrelated from the simple fact that many British boats aren't registered at all. Do you think for an instant that this exempts them from VAT?

The OP, of course, asked only a hypothetical question. But before cautioning him about a non-existent peril of British registration (and you were the one who kicked off on the issue of taxation on a thread actually about qualifications), you might have checked out the rate of VAT in his home country. He'd bite your arm off to pay only 20%.

2. No -- and this perhaps says something about your comprehension skills -- I wrote "one of the most common", which is rather different. Nor did I write that "they are in London", but that I know where London is. By that I meant that if I see the name of a British port written large on the stern of a vessel, I find myself leaping to the conclusion that it's British-registered. London, incidentally, is a large city at the far end of the M11 from you. There are other Londons, but this is the only one consistent with a red ensign.
 
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If there's no tax advantages in registering your large yacht in the Red Ensign countries of convenience, why do these countries make a point of claiming that they offer 'tax advantageous regimes'? They claim that the ability to seamlessly move a boat's registration from one jurisdiction to another is very helpful in being 'tax efficient' (they cite the ability of moving easily from say Gibraltar - in the EU but outside EU Vat area to Isle of Man which is outside both the EU and EU VAT areas and back again, for example, is 'very helpful').

MACD is obviously happy having his large yacht registered in the UK, but very few other people are. Over 80% of all other large yacht owners seem to think that being registered in the Cayman Islands or Bermuda for example makes financial sense. If there's no practical advantage (as they all require compliance with the MCA's large yacht scheme), and now we're told there's no tax advantage, why don't they all register in the UK?
 
Macd never indicated he had a large yacht. For the record it's 13.25m. Quite ordinary in this day and age.

Facts still aren't your forte. The Isle of Man is in the EU VAT area.

Do please read what is written. No-one suggested there is no tax advantage in flagging with countries of convenience. We merely pointed out that the advantage is not so simple as you seem to think, and not realistically available to most ordinary mortals like us.

Getting back to VAT, the crucial test in the EU is the country of residence of the owner(s). (Note: not their nationality, not the flag state of their vessel, but where they are established. Most of us are not in a position bodily to uproot to the Caymans, and probably wouldn't want to even if we were. But companies, which can also own yachts, are a great deal more mobile, and can happily live in the bottom drawer of someone's desk almost anywhere, as I suggested earlier. This, for instance, is why the state of Delaware has rather more companies than people. For most of us the benefits of such a fiscal device aren't worth the trouble and expense.

And, back in the real word, taxation isn't everything. Ordinary owners looking to change their flag to a less onerous one do so for all sorts of reasons. For instance French (and other) owners have favoured Belgian registry because, I think, it reduced their annual licence fees. And this very thread was initiated by someone asking if a particular flag might reduce or remove the level of qualifications he might need. Or didn't you read that, either?

Isn't there anyone who can relieve you of your shovel?
 
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Facts are very much my forte.

The OP was looking to buy a 90 foot yacht if he won the lottery. Therefore my comments refer solely to those who own what are legally defined as large yachts.

He thought he would then register it in the UK. My advice was to do what the vast majority of large owners do and that is don't go anywhere near the UK, but instead use one of our colonies, known collectively as the Red Ensign Group as they offer all the safety and security of British registration but with additional tax advantages and ability to move the port of registration between themselves for the 'tax efficiency' of their owners.

This is the reality for those people who own large yachts. If this has no relevance to people like you me, then that is neither here nor there; the OP is going to inhabit a different world after his lottery win and my advice was to do what 80% of all the large yacht owners in the world have chosen to do, and that is register within the Red Ensign Group. And they do that because it saves them money.

(Out of interest the quote about the Isle of Man being outside both the EU and VAT area for the purposes of large yacht registration, came from a firm of lawyers offering their services. The IOM ship register themselves simply state that they can offer a ' highly beneficial VAT arrangement' to vessels registered with them.)
 
"Flag of convenience" is not a term that is only associated with large yachts (or ships). There are many other reasons why ordinary mortals with ordinary boats may want to register in a country other than their own. Most EU states have punitive regulations for owning and operating yachts, and some, particularly the "new" states and other ex communists states have no mechanism at all.

one of the consequences of freedom of movement is that as we are told every day that over 3m EU citizens now reside in the UK and all are eligible to buy a £25 ticket that enables them legally to register a yacht in the UK, irrespective of where the boat is located. So a quick call to your cousin, Pedro, Jose, Yannis etc and your boat is on the UK register and no longer subject to local laws.

Going back to your millionaires, there are indeed tax advantages in having a boat owned offshore, but it is only associated with the flag of registry because it is easy, and easier than using the UK flag because of the more restricted eligibility. It is not the flag that gives the tax advantage, it is being offshore and many registry will not register an offshore boat.
 
Tranona said:
one of the consequences of freedom of movement is that as we are told every day that over 3m EU citizens now reside in the UK and all are eligible to buy a £25 ticket that enables them legally to register a yacht in the UK, irrespective of where the boat is located. So a quick call to your cousin, Pedro, Jose, Yannis etc and your boat is on the UK register and no longer subject to local laws.

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The essence of it all! If I should qualify and obtain the Norwegian licence D5LA (Valid for privately owned "ships" up to 24 meters), it will be valid for Norwegian registered boats only, but worldvide. Hence likewise, if a boat is British, one can then operate it without a licence, worldwide, because it's considered under British law.
-I can therefore operate a British 60 footer IN Norway without a license, but not a Norwegian boat...
 
H35 said:
The essence of it all! If I should qualify and obtain the Norwegian licence D5LA (Valid for privately owned "ships" up to 24 meters), it will be valid for Norwegian registered boats only, but worldvide. Hence likewise, if a boat is British, one can then operate it without a licence, worldwide, because it's considered under British law.
-I can therefore operate a British 60 footer IN Norway without a license, but not a Norwegian boat...
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More complicated than that, as a Norwegian you should pay VAT when going into Norwegian waters, so doing the D5L would probably make more sense.

from: http://www.toll.no/en/goods/boat/import-of-recreational-boats/
Tourists and others with temporary stays in Norway

If you are a tourist or are in Norway temporarily for other reasons, you may bring a foreign recreational boat temporarily without paying taxes. The boat must be for personal use, and it may not be used by persons with permanent residence in Norway. If you meet these requirements, you do not need to report to Norwegian Customs upon arrival.
The boat must be taken with you when you leave the country. It may nevertheless be left behind under certain conditions.
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Norwegian here: http://www.toll.no/no/varer/bat/import-fritidsbat/
 
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