Damalion Global Yachting Services
Damalion offers superior yachting services, with the aim of providing the highest standards of first-class service every step of the way. Our yachting services are delivered by selected vetted professionals
We provide a wide range of yachting solutions, including:
- Yachting ownership
- Multi-jurisdictional registration
- Set-up & administration of companies owning and managing yachts
- Assistance with financing
- Corporate structuring
- Import & export services
- VAT/tax consultation
- Marine insurance
- Accounting & bookkeeping
- Crew administration & payroll
- Safety & technical management
Detailed information about our services is enumerated below.
Leveraging our network’s in-depth knowledge in laws, rules, and regulations prevailing in the industry, we help clients in all their yachting needs and concerns. Our specialization in arranging impeccable service and professionalism allows us to position DAMALION as a trustworthy provider of yachting services to high-net-worth and ultra-high-net-worth clients in a number of jurisdictions.
We tailor our yachting solutions based on the discerning needs of our clientele, taking in consideration their preferred jurisdiction and the specific business benefits that their chosen location offers.
Utilizing our network of professionals, including tax consultants, lawyers, and yacht brokers, Damalion expertly facilitates yacht acquisitions, as well as the sale and construction of new builds.
YACHT OWNERSHIP AND REGISTRATION
Yacht ownership is the realization of dreams for clients who wish to sail the world in luxury and style.
It affords quality time spent with family and friends and optimum comfort while sailing in various destinations across the globe.
We act as a reliable liaison on behalf of our clients and work closely with agents and brokers to ensure a successful yacht acquisition, ownership, and yacht registration process. Our Damalion experts assist clients in the preparation of necessary documents to facilitate an efficient title transfer and successful completion of a yacht purchase and/or sale.
We also help in yacht registration under a legal business structure to establish the right solutions of asset protection. Our experts help clients take advantage of the protection inherent in corporate limited liability companies. Yacht ownership under a customized corporate structure deliver a host of benefits in relation to inheritance tax issues, such as reduction of transfer taxes on the future sale of a yacht.
Like all valuable asset ownership through a corporate structure, clients are required to comply with applicable laws in their respective home country.
Our selected experts offer strategic consulting and valuable resources and information to clients.
So, our clients own and operate marine vessels, such as leisure yachts in European Union waters for example.
Yacht Ownership Scope of Services:
- Corporate ownership
- Customs and VAT consulting
- Establishment and management of efficient ownership frameworks
- Financing, management, and VAT reporting
- Multi-jurisdictional, VAT, tax and registration services
- Yacht registration in all interesting flag states
- Insurance coverage and finance
- Crew administration
- Banking and card facilities
- Assistance with surveying and coding
- Emergency Position Indicating Radio Beacon (EPIRB), and ComSat licensing and authorizations
- Payrolls, exchange currency supports, and international payments
- Formal importation into the EU providing free circulation and full VAT recovery
- Formal importation into the EU under commercial exemption
- Formal importation into the EU and VAT payment for private use
- Temporary importation into the EU for non-EU residents
Types of Ownership Structure
- Asset-holding structure that guarantee limited liability for VAT-paid yachts
- Commercial charter structures optimizing VAT recovery
- Leasing structure with reduced VAT rate
- Temporary importation structure for non-EU owners
- VAT-paid-asset-holding company
You can register a yacht in many different locations around the world using various ownership structures. Here are some important points to consider prior to deciding on the ownership structure for your marine vessel:
- Vessel value and dimensions
- Intended cruising ground and use
- Available financing requirements
- Marine qualifications of an owner (for private use)
- Crewing requirements and certifications
- Country of residence of owner
- Chartering solutions
- Yacht certification
Deciding on the right ownership structure will save you money in the long term as it will significantly reduce your costs and enhance the overall value of your vessel. Selecting an ownership structure without professional advice may result in additional taxes and expenses that may limit your financial options, sailing, and chartering activities.
Damalion experts are dedicated to making yacht ownership a simple and straightforward process.
Our firm relationships with experienced lawyers ensure you enjoy premier expertise and access to associate offices in all major shipping jurisdictions. We may fail to bring you fair winds, but we can guarantee plain sailing.
BANKING FOR OPERATING EXPENSES
Yacht owners, be it private individuals or companies, will need a dedicated bank account under a recognized bank to cover for yacht operating expenses. Upon finalization of an operational budget and funding is enforced, your bank will facilitate timely payments to crew, insurance, shipyards, and suppliers.
More and more banks are becoming stricter in rendering services to industries they do not fully understand or wherein a multi-jurisdictional approach is required. DAMALION will introduce you to the right banks in your preferred jurisdiction that offer accounts in a variety of foreign currencies.
Under the right bank, debit and credit cards can be issued to the captain and other senior crew members with pre-determined spending limits. Cash transfers will be made in requested currency and can be made available to the captain in convenient locations. Depending on the bank account set-up, it may be necessary to open a separate bank account for crew payroll purposes.
As a yacht may be involved in hundreds of financial transactions every month in different currencies, an efficient and trustworthy bank is imperative to meet complex daily yacht operations. This will enable captain and crew members to focus on the efficient operations of the yacht.
- Bank payments
- Cash on board
- Corporate and seafarer’s bank accounts
- Debit and credit cards
- Foreign exchange
Yachts and superyachts are some of the most expensive and luxurious assets that any individual or company may have. They sail across some of the most challenging environments filled with man-made hazards, extreme weather conditions, collisions, and piracy. Insuring your marine vessel with the right insurance product is imperative to reduce the risk of financial and material losses.
There is no standard policy when it comes to yacht insurance. Marine insurance will vary from one vessel to another, but will be tailored to protect the following:
- Furnishings on board such as art and luxury items
- Third parties
- Yacht contents
- Yacht equipment
The specific insurance policy type and associated costs will be influenced by a variety of factors, including:
- Anticipated movements by third-party carriers
- Financing arrangements
- Marine vessel total value
- Number and nationalities of crew
- Shipyard protection
- Size, age, and type of vessel
- Survey requirements
- The locations where it will be cruising
Regardless of insurance carrier, yacht insurance should offer the following coverages:
- Liability insurance coverage
- Protection and indemnity (P&I)
- Protection against legal liability to third parties, guests, and crew
More specialized insurance coverages:
- Kidnap and ransom insurance
- War risks
One-of-a-kind yachts require specialized insurance protection. Our selected accredited professionals have the ability to offer clients with different types of standard and specialized yacht insurance that ensures optimum coverage, including:
- Hull and machinery insurance- offers coverage in the case of physical loss or damage to the hull and machinery. This insurance product is priced based on “agreed”, “actual”, or “replacement” value basis.
- Collision liability insurance, – offers protection to the owner against legal liabilities that may arise in the case of boat collision and other serious damages on another marine vessel.
- Tenders, dinghies, personal watercraft insurance- a separate insurance may be required if not included in the hull and machinery insurance coverage.
- Protection and indemnity insurance – offers legal liability protection against third parties, guests, and crews.
- Personal accident, medical coverage, and salary protection insurance- provide ample protection of someone in a marine vessel is injured or taken ill during time spent on the yacht, including lump sum payment in the case of permanent disability and death.
- Marine environmental damage insurance- offers coverage against potential fines, clean-up costs, and penalties.
- Search and rescue coverage- offers protection against costs in the event of search and rescue operations or emergency aid and assistance cases.
- Charter coverage – offers coverage for risks associated with the charter of a marine vessel and may include potential loss of future income in the case of vessel loss or damage.
- Shipyard coverage- offers protection for the yacht during its refit, maintenance, repair, and conversion activities.
- Legal expenses protection
- Kidnap and ransom protection
- Personal and crew property insurance- offers protection for items of property on the boat.
- Fine arts insurance – offers specialized protection for high-value items such as fine arts and collectibles found on board.
Yacht ownership offers many pleasures and privileges, but it also carries a host of responsibilities. From managing day-to-day operations, associated taxes, accounting, and payroll duties. These activities become more challenging when you’re an owner far away from your homeport and at sea for extended periods.
It is imperative to keep record of all transactions to ensure efficient yacht management. The annual expenditure on operations and maintenance of a yacht is estimated between 10% and 12% of its actual value. It is therefore crucial to maintain financial control and have complete transparency over its expenditure.
There are various factors that take into consideration, including vessel, equipment, and its intended purpose- whether charter, personal, or a combination of all these, as well as primary location, flag, nationality of the owner and its crew members.
Owners need to keep in mind various statutory requirements in the operation of a commercial yacht that must be taken into consideration. This is especially crucial for trading companies that offer yacht chartering services in EU waters, ensuring compliance with VAT and tax requirements.
Damalion takes pride to work with accredited professionals of expertise and experience to keep your yacht running smoothly and efficiently, making ownership streamlined as possible. We closely work with owners and skippers to evaluate yacht operations and set up the appropriate systems to manage the intricacies yacht operations whether in homeport or at sea.
Using our extensive capabilities and leveraging an extensive network of professionals to meet the growing challenges associated with payroll process, foreign-earned income, and international reporting. DAMALION’s network is made of professionals and personnel on all aspects of corporate administration and taxation worldwide, as well the as creation of efficient tax planning solutions for yacht owners.
Our comprehensive accounting and bookkeeping services include:
- Bank statements and card reconciliations
- Company accounts
- Monthly, quarterly, and annual reporting
- VAT registration and returns
CREW ADMINISTRATION AND PAYROLL
Crew members living a nomad lifestyle experience challenges in finding countries that will provide them protection and social benefit provided to normal workers residing permanently in any country.
There are many services that can be utilized to offset the lack of coverage provided by a welfare state in the case of contingency. Coverage may include health care, access to customized banking solutions, savings plans designed specifically for seafarers, as well as residency and nationality programs.
- Access to pension products
- Crew certifications
- Crew health coverage
- Crew payroll
- Residency and nationality program
- Seafarer accounts
- Seafarer employment agreement.
Damalion experts provide you for the right solutions to facilitate the social protection of your crew while they take care of your yacht.
SAFETY AND TECHNICAL MANAGEMENT
Whether your yacht is used privately or for commercial charter, international codes and conventions are applicable to any type of vessel that are navigating in international waters. Additionally, safety on board for passengers and crew is of utmost importance.
The International Maritime Organization (IMO) is a dedicated agency under the United Nations that set the global standards for environmental performance, safety, and security of international shopping. Its primary function is to draw up a fair and effective, universally adopted, and implemented regulatory framework specially for the shipping industry. IMO measures include all aspects of international shipping, including shop design, manning, equipment, construction, disposal, and operations.
DAMALION works closely with a team of independent surveyors and help yacht owners with services enumerated below. Our goal is to prevent any accidents or incidents at sea and ensure that a yacht is fully compliance with all existing maritime codes and conventions when approaching port.
International Management Code (ISM)
The ISM codes delineate the responsibilities of individuals or groups that manage and operate vessels. ISM sets out the international standards for the safe and easy management and operations of marine vessels and aids in the prevention of pollution during operation.
The ISM Code was made mandatory in 1998 as prescribed by the International Convention for the Safety of Life at Sea (SOLAS). The ISM code is applicable to all commercial operated marine vessels with 500 gross tons and above, with the inclusion of commercial yachts.
Furthermore, the ISM Code creates all safety objectives and requires that a Safety Management System (SMS) must be created and implemented at all times to guarantee that all risks related with on-board safety and protection of the environment are adhered to by operating marine vessels.
International Ship and Port Facility Security Code (ISPS)
The ISPS Code is an iteration of the Safety of Life at Sea Convention (SOLAS) that establishes the minimum-security arrangements for marine vessels, ports, and government organizations. It came into enforcement in 2004 as a response to possible threats to ships and port facilities in the wake of 9/11 attacks.
The ISPS Code enumerates all the duties and responsibilities of shipping companies, governments, shipboard personnel, and port facility offices to effectively detect security threats, and take the necessary prevention measures to protect everyone from security incidents affecting ship and port facility operations in international trade.
Designated Person Ashore (DPA)
The ISM Code requires yacht owners to appoint a DPA to ensure a direct connection between a marine vessel’s management and those on board. The DPA will assume the responsibility of monitoring the safety measures and preventative pollution measures are in place for each vessel and ensure the availability of resources and shore-based support.
A DPA provides immediate, first-level shore-based negotiations for any complaints, disciplinary issues, and grievances that cannot be resolved on board. In emergency cases, a DPA will act as leader of the Emergency Response Team, providing yacht captains with a single point of contact.
Emergency and Media Response
An Emergency Response Team (ERT) consists of experience ship management staff that will be activated when needed during emergency situations. They provide the required specialized support to owners, managers, and crew in untoward incident, including pollution, safety, media, and security-related matters.
The ERT offers external support, communication, and organization, thus allowing the captain and crew to concentrate their efforts on events at sea, so they can enforce and maintain the safety of a yacht’s passenger and crew, as well as ensure the protection of the environment while at sea.
The ERT is also responsible for prompt reporting and liaison with the coastguard and emergency rescue services, the owner, an owner’s representative, coastal and port state, flag state, next of kin, hospitals, insurance companies, and other relevant third parties.
Marpol and SOPEP Services
In 1983, the International Convention for the Prevention of Pollution from Ships (MARPOL) was enforced. It features all regulations designed to prevent all types of pollution, including sea, land, and air caused by oil leaks, dangerous chemicals, harmful substances, sewage, and waste materials. Private and commercial yachts must strictly comply with MARPOL at all times.
MARPOL mandates all marine vessels of 400 gross tons or above should carry an approved shipboard oil pollution plan (SOPEP). This will serve as a guide that instructs a vessel’s crew on how to manage and report oil pollution incidents.
Maritime Labor Convention (MLC)
The MLC is an international labor convention that sets out the minimum working and living standards for all seafarers working on ships that fly the flags of all contracting countries, including all crew members of yachts and superyachts.
The MLC was enforced in 2013 and covers all aspects of a seafarer’s work and living on board requirements and standards, such as:
- Accommodations, food, and catering standards
- Health, safety, and accident prevention
- Hours of work and rest
- Minimum working age
- Onboard medical care
- Payment of annual leaves
- Payment of wages
- Repatriation at the end of contract
- Seafarer’s working agreement
- Seafarer’s complaints and grievances management
- Utilization of licensed private recruitment and placement services
The MLC also delineates important compliance and enforcement standards based on a flag state ship inspection and certification systems, as well as Port State Control.
All seagoing vessels are categorized to a specific class, which defines the specific type of required permits to be kept in place. The class type will also determine the certifications a marine vessel must hold, as well as specify the inspection and survey regime required in adherence to certification. Class types are issued and assigned by the Recognized Classification Societies, an organization that also approves surveys and inspections.
For instance, the operation of yachts in the UK is included in the Codes of Practice. Luxury vessels are not covered by the Codes. Small commercial vessels are those that are no less than 24 meters on length or weigh no more than 150 tones built before July 1968 that are engaged at sea and are not classified as pleasure vessels. On the other hand, large commercial yachts are defined as marine vessels engaged in commercial use for sports and pleasure purposes, with 24 meters load line length or more, vessels with over 150 gross tons fabricated before July 1968, and carry no cargo or no more than 12 passengers.
For a yacht to be successfully registered for commercial use, it must possess valid certifications that are required for its size and type. For yachts weighing more than 500 gross tons, here are a few of its certification requirements:
- Continuous Synopsis Record
- International Ship Security Certificate
- Maritime Labor Certificate
- Minimum Safe Manning Document
- Safety Management Certificate
These certificates should be valid for the duration that the yacht is operating as a commercial marine vessel.
Classification and Statutory Surveys
Classification Societies establish the rules and regulations in the classification and construction of the different types of marine vessels. Upon completion of a satisfactory survey, a Classification Society can issue approval for the appointment of class and issue certificate of classification to a shipbuilder or owner.
When in operation, a yacht owner must submit his or her vessel to a specific program consisting of periodical class surveys and carried out onboard the vessel. This activity is crucial in confirming that a ship continues to meet the prevailing rules and requirements under its appointed class.
The scope of individual statutory survey or inspection increases over time. Surveys and inspections may include the following:
- Extensive examination and checks to verify the integrity of the structure
- Firefighting and pollution prevention assessment
- Machinery inspection
- Systems and relevant equipment such as life-saving inspection
All elements in the smooth operations of a yacht should be in a satisfactory condition and in full compliance with applicable standards.
In between inspections and survey schedules, the Conventions say that the Flag Administration must require yacht owners to maintain their vessel in accordance with prevailing regulations to ensure their marine vessels are fit to proceed at sea without any serious danger to the ship and everyone on board, and no untoward threat or harm is inflicted to the marine landscape.
Port State Control Audit (PSC)
PSC is the inspection of foreign shops in national ports to confirm the condition of a ship and its equipment is following all the requirements of crucial international conventions and associated codes. Additionally, the PSC ensures the ship is manned and operated in compliance to standard rules.
Some of an IMO’s most relevant technical rules include provisions for ships to undergo inspection when they visit international ports to ensure they are in full compliance of international requirements. The standards are primarily set by the flag state, but port state control also provides a safety net to catch non-complying or substandard marine vessels.
The yacht leasing system is one of the most common corporate ownership structures available for marine vessels such as yachts cruising within European Union waters.
The following example is about the use of Malta structures for yacht leasing. This does not mean that there is no other jurisdiction that may be more appropriate for your needs.
Malta is one of the many EU member states that offer an excellent leasing plan for interested parties.
A yacht leasing plan devised by our Damalion experts typically go through this step-by-step process:
- We formulate a tailored yacht leasing structure for each EU owners that satisfies all prevailing EU tax requirements, specifically under one’s home country, thus avoiding unwanted tax consequences. In most cases, the most common leasing plan used is based on Maltese Law and may not be as tax compliant in other EU member states.
- Our Damalion experts is geared towards optimizing the utilization of yachts in full compliance of the law. Apart from the fixed quota in the “use of land” of a marine vessel such as a yacht, we work closely with our clients and their respective captains to plan routes and vehicle use provided all journeys within EU waters will be assessed of full VAT.
- During the first or second quarter of a yacht in use, a lessee is required to cover the full VAT amount on leasing rates, a figure that is calculated based on a yacht’s prevailing driving conditions. Excess tax will be fully refunded if a leased yacht is used outside the EU or offshore. The proven quota will be used as the base rate for the VAT advance for the following year. Driving quotas will be re-evaluated at the end of each leasing year but are calculated based on the previous year. The tax adjusted will form as the new basis for advance tax to be paid during the next leasing year.
- A leasing contract can be terminated at any point in time if the yacht is to be sold or through purchase by Ultimate Beneficial Owner (UBO).
- The yacht may also be considered as ex VAT for commercial purposes.
- The new yacht leasing guidelines control the way how yachts will be delivered as per existing VAT principles under Article 59a of the VAT Directive based on their actual use. These new guidelines are based on a system that showcases the actual use and enjoyment of yachts based on the total number of distance traveled. If a lessor can prove that the yacht was used by the lessee through logbook records and GPS documentation of coordinates outside EU waters, then appropriate VAT adjustment can be implemented, as state under the Guidelines, to ensure VAT will not be due during this time period.
Relevant tax authorities reinforce those guidelines are followed, correctly implemented and with greater level of transparency. Furthermore, authorities expect a realistic look of a yacht’s use and benefits in EU waters annually, except in cases where lessees can prove the yacht has spent cruising outside EU waters, as such is the case of marine vessels navigating the Pacific or traveling across the globe.
A leasing contract between lessor and lessee is terminated upon contract expiration or by a cancellation agreement between two parties in accordance with the terms stated in their leasing agreement. In the case of a loss or sale of a yacht, yacht ownership will be reinstated under the name of the lessor who can take on a new lease or sell the yacht. Finally, a yacht lease may be renewed if both parties decide to proceed with a new or same arrangement after the deadline.
A lessee may also purchase the yacht even before lease termination or after its date of expiry. In case of acquisition after a leasing period, a lessee will receive a VAT PAID certificate if sold at a market value. Both parties are required to show responsible authorities that the yacht sales conditions are similar to those drafted by third parties and that all VAT payables have be fully paid. Legal authorities provide guidance in the determination of a yacht’s market value- a figure that is typically determined based for income and custom purposes.
All parties are free to oversee their contracts and relationships based on their preferences and in compliance with EU rules and VAT guidelines.
A standard VAT rate of 18% is assessed on the established percentage of lease related to the use of the boat in EU waters. Deemed VAT rates will be calculated based on the size and type of boat, following the formulas listed below:
|Boat Type||% of lease in the EU||VAT Computation|
|Sailing boats or motor boats over 24 metres||30%||30% consideration X 18%|
|Sailing boats between 20.01 and 24 metres||40%||40% consideration X 18%|
|Motor boats between 16.01 and 24.00 metres||40%||40% consideration X 18%|
|Sailing boats between 10.01 and 20 meters||50%||50% consideration X 18%|
|Motor boats between 12.01 and 16.0 metres||50%||50% consideration X 18%|
|Sailing boats up to 10 meters||60%||60% consideration X 18%|
|Motor boats between 7.51 and 12 metres (registered in the Commercial Register)||60%||60% consideration X 18%|
|Motor boats up to 7.5 metres (registered in the Commercial Register)||90%||90% consideration X 18%|
|Boats permitted to sail in EU protected waters||100||100% consideration X 18%|
Lastly, maritime management professionals conduct PSC Verification Audit aboard marine vessels, including yachts to reduce the chances that a PSC inspection could lead to deficiencies or detentions. Accredited experts will support you in the smooth and efficient preparation for a PSC audit. Contact us today and our Damalion experts will be more than happy to answer your queries about our yachting services and other consulting solutions.
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