SOVEREIGN MARINE SERVICES (SMS)
Gibraltar-based Sovereign Marine Services (SMS) provides a wide range of marine and professional services to yacht owners, yacht managers and yacht brokers worldwide.
SMS registers, administers and manages both private yachts (pleasure) and commercial yachts on a worldwide basis. It also specialises in the provision of ownership structures, VAT and tax planning, yacht importation, safety and technical management, marine insurance and finance, crew administration and payroll, accounting and banking, foreign exchange and international payments.
As the maritime division of the Sovereign Group, SMS combines the expertise of a dedicated team focused on meeting the needs of yacht owners with Sovereign’s core capability in respect of corporate ownership and tax planning. It also gives SMS access to the group’s global office network, which includes Cyprus, Dubai, Hong Kong, the Isle of Man, Malta, London and Singapore.
YACHT REGISTRATION
Registering a newly acquired yacht is often one of the last steps that a yacht owner needs to complete before the vessel can actually be sailed and enjoyed. But that does not mean it is simply an administrative procedure. In fact it is one of an owner’s most important decisions because registering a yacht is like obtaining a passport. You are effectively choosing the yacht’s nationality – with all the benefits and obligations that this can entail.
A yacht owner will want a flag that is competitive, accessible, and one that enjoys a good reputation around the world. The choice of flag should be guided by the following factors:
- Internationally recognised legal system and constructive legislation
- Effective administrative framework and good functionality
- Signatory to key international rules and conventions
- Tax efficient in respect of VAT and other taxes
- Political stability and diplomatic clout
- Access to full suite of yacht insurance products
The Red Ensign Group (REG) is a group of British Shipping Registers that is synonymous with ‘quality shipping’ by maintaining high technical, social, and administrative standards. The most popular REG jurisdictions are the UK, Gibraltar, the Cayman Islands, the British Virgin Islands, Bermuda, the Isle of Man, Guernsey and Jersey.
Beyond the REG, other flag states, notably Malta, Cyprus and the Marshall Islands, have been very successful in providing yacht registration to yacht owners and yacht management companies. The yacht registration process will vary according to the flag selected, but SMS has yacht registration expertise across multiple jurisdictions.
For a yacht broker or an owner who has just taken delivery of a yacht that has to make passage on completion of the sale, it is possible to obtain a provisional registration to cover the vessel for navigation immediately after purchase.
CORPORATE OWNERSHIP AND VAT
Corporate ownership offers many advantages to a yacht owner. Yachts are necessarily movable assets and this involves a significant element of potential risk. The most substantial benefits offered by corporate ownership are:
- ‘Limited Liability’ – this allows the beneficial owner to protect their other personal assets should the vessel be involved in an accident and subject to a claim against it.
- National yacht registries will generally only accept yachts that belong to their own citizens or a wider economic territory of which they are part. If a yacht is owned through a company that is registered in an appropriate jurisdiction, it can be registered in virtually any flag state of the owner’s choosing.
- A corporate structure can further provide opportunities for legitimate tax mitigation, as well as simplifying estate and succession planning.
- Indirect ownership through a company will avoid the need for the ultimate owner to enter into agreements and contracts directly when negotiating the purchase or construction of a vessel, employing crew and generally contracting with third parties.
Value Added Tax (VAT) is chargeable on boats purchased and owned by residents of the EU VAT Zone. VAT is also chargeable on vessels, irrespective of ownership, that spend more than six months in any calendar year cruising in EU VAT Zone waters.
Legitimate mitigation of potential VAT liabilities is generally available for both pleasure and commercial yachts, particularly if the yacht is purchased through a corporate structure. The options will depend on a comprehensive assessment of a yacht’s ownership structure, operational requirements and the personal financial circumstances of the owner.
FINANCIAL MANAGEMENT
Yachts, especially superyachts, are among the most luxurious and expensive assets in the world but they operate in an environment that is full of natural and manmade hazards, from extreme weather events to collision and piracy.
SMS has the expertise and experience to keep your yacht running smoothly, making ownership as straightforward as possible. We work closely with owners and skippers to assess the operation of each yacht and can then set up appropriate systems to handle all the financial complexities of your yacht’s operation while in homeport or at sea, including banking, budgeting, bookkeeping, accounting and reporting.
As part of the Sovereign Group, we also have access to expertise on all aspects of corporate administration and taxation worldwide, as well as efficient tax planning options for yacht owners.
YACHT INSURANCE
There is no standard policy when it comes to yacht insurance. The required cover will vary on a case-by-case basis but should generally be tailored to protect everything from the vessel itself, to the guests, crew and third parties, equipment and tenders, as well as the contents and furnishings on board. Through Sovereign Insurance Services, SMS can provide clients with multiple coverage options to ensure the yacht has the best possible insurance package.
CREW ADMINISTRATION AND PAYROLL
Given their peripatetic lifestyle, many crew members have difficulty in establishing a jurisdiction that will provide the protection and social benefits that would be standard for a typical employee living permanently in one country.
Sovereign is a market leader in the provision of retirement planning and offers a range of services that includes payroll processing, access to healthcare, bespoke banking products and saving plans, as well as residency programmes.
SAFETY AND TECHNICAL MANAGEMENT
Whether a yacht is used privately or commercially, a number of codes and conventions apply to any vessel navigating in international waters. Safety on board, for both passengers and crew, is also of paramount importance.
SMS works closely with a team of independent surveyors and can assist owners to prevent any undesirable situations at sea and to ensure the vessel is fully compliant when approaching any port. Our services can address any or all of the following: International Management Code (ISM), International Ship and Port Facility Security Code (ISPS), Designated Person Ashore (DPA), emergency responses, International Convention for the Prevention of Pollution from Ships (MARPOL), Maritime Labour Convention (MLC), commercial certifications, classification and statutory surveys and Port State Control (PSC) audits.
The information provided in this document does not constitute advice to clients or any third party and no responsibility will be accepted for any loss occasioned directly or indirectly as a result of persons acting, or refraining from acting, wholly or partially in reliance upon it other than for its intended purpose.
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Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.
