Structuring and managing a complex luxury asset
The Monaco Yacht Show brings together some of the world’s finest yachts and the people who design, build, sell, manage and own them. For Artemis, it is also an opportunity to talk about the ownership structure and the practicalities of looking after a substantial and complex asset. The ownership of a superyacht raises many of the same questions we encounter when looking after other significant family assets: who should own it, how should it be protected, how should it pass between generations, and who will take responsibility for the considerable administration that surrounds it?
Why own a yacht through a company?
Holding a yacht through a company creates a legal owner separate from the individual or family. The company provides an established framework for purchase or build contracts, finance, insurance, management arrangements, expenses and charter income. Limited liability can help contain contractual and operational claims, although it will not protect against personal guarantees, wrongdoing, statutory liabilities or a failure to respect the company’s separate identity.
For larger yachts, ownership, chartering and crew employment may be separated between different entities. Properly implemented, this can reduce the risk of an employment or operating claim affecting the yacht-owning company or other family assets. It does not automatically remove owner or operator liabilities: flag-state, Maritime Labour Convention, employment, social security, tax and insurance requirements must still be addressed.
A corporate wrapper provides continuity on death or incapacity and can make financing and a later sale more manageable. A lender may take security over the shares and, depending on the flag, a registered mortgage over the yacht. A share sale may preserve title and contracts, but a buyer also acquires the company’s history; tax, VAT, registry, financing and change-of-control provisions must therefore be checked.
The company can provide an orderly record of acquisition and operating costs, owner funding and private use, charter income and the yacht’s VAT and customs history. That audit trail supports budgeting and governance and assists banks, insurers and a future purchaser.
Why Guernsey?
Guernsey offers mature company law, a stable legal and regulatory environment and an experienced, regulated fiduciary sector. Professional administration brings governance, documented decisions, compliance oversight and a single point of coordination for the owners, directors, bank, insurers, yacht manager and captain.
Depending on the owner’s circumstances and the yacht’s use, Guernsey’s generally tax-neutral company regime may avoid a further layer of Guernsey taxation. It is not, however, tax-free everywhere. The owner’s residence, place of effective management, private use, chartering, importation, cruising patterns, VAT or customs status, economic substance and reporting obligations require specialist advice. Corporate ownership does not itself confer VAT-paid status or entitlement to temporary admission.
The jurisdiction of the owning company and the yacht’s flag are separate choices. Subject to eligibility rules, a Guernsey company may own a yacht registered elsewhere. Guernsey also operates a Category 2 British register within the Red Ensign Group, principally for pleasure yachts up to 150 gross tonnes and certain small commercial vessels. Many larger superyachts will therefore use another flag while retaining a Guernsey ownership structure.
The advantages differ between owners and extend well beyond tax. A well-designed structure can provide governance, continuity, risk management and more orderly administration of a significant international asset.
Should a trust own the yacht-owning company?
For some families, a Guernsey trust can sit above the yacht-owning company, with the trustees holding its shares while the yacht remains a company asset. The shares do not pass personally on an owner’s death, providing continuity on death or incapacity, reducing probate disruption and facilitating succession without repeatedly transferring title to the yacht.
A trust can establish a durable framework for family use. The trust deed, letter of wishes and a use policy can address access to the yacht, allocation of costs, private use and charter periods, budgets, refits, replacement or sale and dispute resolution. Professional trustees can coordinate these decisions and help prevent fragmented family ownership.
A properly constituted trust may also offer protection from risks affecting an individual family member and a degree of lawful confidentiality. These benefits are not absolute: the trust must be genuine, funded and properly administered, and may still be affected by insolvency, divorce, forced-heirship or other mandatory rules.
Confidentiality should not be confused with anonymity. Guernsey’s beneficial ownership register is not open to the general public, but information is available to competent authorities and qualifying obliged entities, and legitimate-interest access is being developed. A trust does not remove beneficial ownership, tax, sanctions or other disclosure obligations.
A trust is not automatically appropriate. A yacht is normally a depreciating asset with substantial costs and private-use benefits, so trustees must be satisfied that holding it is permitted, funded and consistent with their duties. Clear powers, a budget and liquidity reserve, insurance, personal-use and conflict rules, and appropriate tax and indemnity advice are important. Direct ownership of the company may be simpler where the owner wants unfettered control or expects an early sale.
The same approach can extend to aircraft, property, art and other significant family assets, although each requires its own analysis.
The practical side of ownership
For a first-time owner in particular, acquiring a superyacht can be a complex undertaking, and completing the purchase is only the start. Ownership involves coordinating a wide range of professional advisers and specialist suppliers, managing contracts, payments and budgets, and dealing with regulatory, VAT and reporting requirements. Ongoing maintenance, refits and yard periods add another layer of complexity and require careful planning and oversight. This is where a fiduciary relationship can add value beyond simply establishing a company or trust.
Artemis can take care of the ownership and financial administration associated with the yacht, giving the owner a single point of contact for the structure and its affairs. We can oversee its finances, coordinate with specialist insurance brokers, monitor renewals and maintain records of valuable contents. Where the yacht is chartered, we can administer the associated income and expenditure and maintain the records needed by the owner’s tax and VAT advisers.
We can also help owners navigate the wider network of professionals involved in owning a yacht. During an acquisition or sale, we can work with the lawyers, brokers and other advisers to help keep the transaction moving. Once the yacht is operational, we remain part of the owner’s professional team, working alongside the specialist yacht manager, captain and other providers as required. When the time comes to sell, we can help manage that process too, whether the owner is moving on to another yacht or choosing to invest in other significant assets.
Partnering with Hill Robinson
At Monaco this year, we are delighted to be collaborating with Hill Robinson, one of the world’s leading yacht management businesses.
Between us, we bring together extensive experience in looking after both the yacht and the structure around it. Artemis brings fiduciary, structuring and private wealth expertise, while Hill Robinson brings exceptional knowledge and experience of the yachting world. Our capabilities complement each other naturally, with the flexibility to build the right team around each owner and their particular needs.
Just as importantly, we share a commitment to high standards, personal service and taking responsibility for the detail which makes for a strong collaboration and a great experience for the client.
Our shared aim is simple: to make yacht ownership as straightforward and enjoyable as possible. By working together, we can coordinate the financial, practical and operational aspects of ownership, giving the client confidence that everything is being taken care of while they concentrate on enjoying their yacht.
All of this explains why Artemis is looking forward to attending the Monaco Yacht Show alongside Hill Robinson. A superyacht is an extraordinary asset, but owning one brings complexity that should not detract from the enjoyment of it. For owners looking for an experienced, high-quality service provider to support them throughout that journey, we would be delighted to meet you in Monaco. Please contact @DebbieGuillou or @IanDomaille to arrange a meeting, or contact Belinda Windsor at belinda.windsor@artemisci.com.