South Africa, with its long coastline and superb weather has had a long association with sailing and the sea. This has continued into supporting some of the larger pleasure yacht manufacturers in the world today. Robertson and Caine and Voyage Yachts inter alia have a large manufacturing capability and has led to a constant stream of sailing and power catamarans leaving South Africa en route to the Mediterranean and the Caribbean.
Some of those yachts are owned by South Africans, and they then face the decision as to where to register it. The decision is an important one and it is important to get it right. For a South African owner, it is even more complex given the existence of exchange controls and a world-wide tax system.
For example, are you as a South African allowed to receive charter income offshore without repatriating it, can you pay the crew in Dollars, or give the skipper a credit card? Probably, is the answer, but it is certainly not clear cut. It is also unlikely that you will make a profit from the charter operations (if any), or a capital gain in Dollars, although there might be one in Rands. Furthermore, what happens if you die and your yacht is berthed in a Greek, Italian or French port? What system of law applies to that part of your estate?
In addition to these South Africa specific issues some of the factors that need to be borne in mind in taking this decision include the following:
The registry chosen should preferably be a commercially run one that is responsive and robust;
It should have an acceptable international rating;
The legal system that it operates under should be one that will uphold your rights and make it easy to sort out any issues;
The registration costs should be reasonable, have a low or zero tax cost, and not be unduly bureaucratic;
It should make sense given the country that you are resident in and where the yacht is going to be operated.
VAT will also be an issue, it if has already been paid in South Africa, what happens when the yacht departs for the Caribbean, or even more problematic the Med. VAT is potentially chargeable in Europe both on importation and operation in EU waters, although it is possible for a non-EU registered yacht to operate in EU waters for up to 18months on a temporary importation basis.
Our recommendation is for South African owners of pleasure yachts to use their offshore allowances and to own the yacht in an offshore corporate vehicle. We are able to offer this service in many jurisdictions but would suggest the Cayman Islands and BVI as perfect for this choice given the strength of their yachting registers, although it might also make sense to own the yacht in a Cayman company but register it in the Isle of Man. In addition to all the other benefits this allows access to the red ensign and the benefits it brings. This methodology will obviate all the problems set out above, but also allows for limited liability for you as owner, and also you may sell the yacht by selling the company which means a host of ancillary issues like crewing etc may not be impacted. It also makes estate planning simpler as the choice of law for the winding up an estate will be a lot easier to choose in the event of death.
Osiris marine Air is able to assist with corporate structuring, ownership advice as well as registration in any of the BVI, Cayman Islands, Isle of Man or Mauritius.
For more information contact firstname.lastname@example.org or your usual Osiris contact.