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Updated: Aug 24, 2022

Tuesday 24 May, 2022

After a yacht purchase, choosing with which flag state the yacht belongs to is one of the more important decisions to be made if choosing it not to be registered to your home country.

There’s lots of factors to consider, the residency and nationality of the owner, the area of navigation, the yachts use, the tax status of the yacht, the characteristics of the yacht, the crew nationality, the place of delivery etc.

It’s important to choose a registry with a respectable reputation, as they often work with both classification societies and government agencies to meet safety and practice standards.

If operating within the EU, it important to note that the Paris MoU (Memorandum of Understanding) on Port State Control, has a ‘White List’ of flag states with a history of high compliance and therefore are subject to far less inspections and boarding’s. The MoU also maintains a grey and even a black list.

Lenders and insurance companies will review a flag state’s enforcement of international environment and safety and procedures and standards, compliance with international regulations and casualty record as well, which is another important thing to consider.

Approximately 80% of large superyachts fly a ‘Red Ensign Group’ flag. The group is termed after a collection of British Overseas Territories like the Cayman Islands, Gibraltar and the British Virgin Islands.

This is attributed to the protection of British maritime law, tax status, commercial confidentiality, consular services and Royal Naval protection.

Many American yacht owners often wish to flag their yacht in the United States but are often struck by the many difficulties presented in doing so for a large yacht.

The US Coast Guard, which maintains the MoA for the United States fails to differentiate between merchant vessels and commercial yachts, applying US regulated Seagoing Motor Vessel requirements, which essentially applies SOLAS requirements on yachts over 300GT.

Other problem’s for US flagged yachts is that they’d be subject to US sales and/or use tax, make use of only US national crew unless outside of US waters, and that US corporate structures are much more transparent.

Other popular flag states include Malta and the Marshall Islands. To hear more about choosing a flag state for your yacht, yacht consultation or how we can manage your yacht more effectively get in touch with the yacht management team at SWM Yachts.

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