At Credence, through our offices in Malta as well as through affiliates in most jurisdictions which are in their own way advantageous in certain aspects relating to yacht registration and management, we are able to provide comprehensive services to yacht owners and managers, including the planning of international tailor made tax efficient structures, and the legal and tax advice involved from the simple ownership of a leisure yacht, to the commercial ownership on a large scale, finance, insurance and issues related to crew and manning.

At Credence we provide consultancy through the various stages involved in the ownership of a Yacht:

Finance – Purchase – Registration

Whenever finance is needed, or whether it is advantageous to obtain finance in the first place, at Credence we study the various options available to purchasers internationally, and our highly specialised legal team assists clients in negotiating finance opportunities with Marine Finance institutions, taking into consideration all relevant factors in particular those dealing with security, repayment and personal obligations.

As to the purchase of a Yacht of whatever size, and whether it is a new building or a second hand vessel, our legal team provides specialized advice and negotiations to ensure that our clients, whether purchasing or selling, are covered in all aspects and that the intentions of our clients are represented in the terms and conditions of each contract.

At Credence we assist in the choice of the ideal flag taking into consideration a number of factors such as the reputation of the flag, the recognition of the flag internationally (in particular for tax and VAT purposes), the initial and yearly costs, succession implications, employment obligations, nationality restrictions and insurance issues.

Registration is also viewed in the light of international owners wanting to retain anonymity with regard to their purchase, or wanting to settle the shares in the company owning their yacht in a trust to avoid complications relating to succession an inheritance.

Registration of a Yacht in under the Maltese Flag

The advantages of registering a yacht under the Maltese Flag are not limited to the reputation of the flag, and benefits range from financial and fiscal advantages to employment incentives.

Registration and yearly maintenance of the registration are obtained at minimum costs, and the provisional registration of a yacht can be obtained within twenty four hours of the filing of the necessary documents, with the permanent registration taking place within six months from the provisional registration upon all documentation being received by the Authority.

The set up and registration of a company to own the yacht, whenever this is required, are also inexpensive, and the advantages of reduced personal liability, and the anonymity offered by the ownership of a yacht through a company generally attract owners to go for this option. The transfer of shares within the company owning the yacht is also exempt from taxation, and likewise a Maltese company owning a Maltese registered yacht is not taxed on the sale and mortgage of such yacht. Credence offers back office and registered office services at very competitive prices with regard to the company set up to own the yacht, and all related administration is handled by Credence.

Furthermore, Maltese law imposes no restrictions on the nationality of the owner, crew, officers or captain.

Recently, the law has also been amended to allow the ownership of a yacht by what is referred to as ‘International Owners’, without the requirement that a company is set up in Malta, and in this case Credence is appointed as resident agent, enabling us to sign all documentation relating to the registration of the yacht on behalf of the owner.

VAT Advice

As a rule, yachts which are used within the EU waters, and all yachts owned by EU citizens must be VAT paid and must have a VAT paid certificate. At Credence we give tailored advice on all VAT issues, including the possibilities of Temporary Importation of a non-EU vessel into EU waters, and the periods of time which may be spent within EU waters by a non-EU registered vessel in EU waters. Malta is one of the EU jurisdictions offering substantial VAT reductions by means of Lease structures. The jurisdiction offering most over all benefits with regard to this structure is Malta, since the law does not impose that the Lessor and the Lessee must have a different beneficial owner, and nor is it imposed that the Lessor must be a financial institution. Furthermore, Malta offers the lowest base rate of VAT at 18 %.

At Maltese law, for the purpose of VAT, the lease of the yacht is considered a supply of services with the right of deduction of input VAT by the lessor, where such right applies. This supply of services is taxable according to the use of the craft, attributed within the territorial waters of the European Union (EU), provided that the lessor is a Maltese company (including a commercial bank) which is leasing the craft to any Maltese or non-Maltese person or company.

The guidelines issued by the Maltese Vat Department establish the estimated percentage portion of the lease based on the time that the craft is used within the territorial waters of the EU. These percentages are set according to the length of the craft and its means of propulsion (power or sailing).

The standard rate of VAT of 18% is only applied on the established percentage of the lease, deemed to be related to the use of the craft in EU territorial waters. The minimum rate is paid on a yacht of 24 meters or bigger, where the ‘vatable’ portion is established at 30% with an effective rate of VAT and tax of between 5.4 and 6.2 per cent.

In order to benefit from the Maltese VAT lease scheme, the boat must come to Malta, possibly at the beginning of the lease agreement. A financial leasing agreement is drawn up between a Maltese company and any Maltese or foreign person or company. Prior to the set up, approval is sought in writing from the Commissioner of VAT who is to confirm the rate applicable according to the use in EU territorial waters (depending on the size and propulsion of the craft), as well as the acceptability of the value of the craft as declared. For this purpose a valuation certificate of the craft is submitted with the application for approval.

Payments are divided into two phases - An initial contribution is paid by the lessee to the lessor amounting to 50% of the value of the craft. Subsequently, Lease instalments are paid every month by the lessee to the lessor, and the law (guidelines) requires that the lease agreement should not exceed 36 months

Furthermore, the lessor is expected to make a profit from the leasing agreement over and above the value of the boat, and the purchase value at the end of the lease agreement must not be less than 1% of the original value of the craft, and this will is subject to the standard rate of VAT at 18%

If the lessee opts to purchase the craft at the end of the lease, a VAT paid certificate is issued to the lessee provided that all VAT due has been paid.