Important Considerations Before Buying a Yacht

Buying a yacht is a significant investment, and not just in terms of money. The decisions you make before the transaction can affect everything from tax exposure to liability, ongoing compliance, and resale value. Here are the key considerations every buyer should review before purchasing a yacht.

1. CHOOSING THE RIGHT YACHT OWNERSHIP STRUCTURE

There are two main ways to own a yacht: personally or via a company.

• Personal ownership is simple but exposes the individual to full liability.
• Company ownership, often through a Special Purpose Vehicle (SPV), offers protection. The Ultimate Beneficial Owner (UBO) is not personally liable for any legal or financial issues linked to the yacht. This setup is commonly used to safeguard assets and streamline operations.

Another option is to own the yacht via a leasing company, which can offer tax and operational advantages depending on jurisdiction.

It’s essential to establish your ownership structure before the yacht purchase. Choosing the wrong model can have long-term legal or financial consequences. At breezeYachting.swiss, we help our clients select and set up the right structure tailored to their goals.

2. UNDERSTANDING VAT IMPLICATIONS FOR YACHT OWNERSHIP

VAT (Value-Added Tax) is a crucial factor in any yacht purchase, especially within the EU, which operates as a single fiscal territory.

• If you’re an EU tax resident using your yacht privately in EU waters, VAT is due on the purchase price. It’s a one-time payment, and proof of VAT-paid status must be kept for resale or inspections. 
• If the yacht is used commercially (e.g., placed on the charter market), it may qualify for VAT exemption, provided it meets EU criteria. However, if the UBO uses the commercially flagged yacht, that use is treated as a service, and a proper charter agreement must be in place, VAT applies to the charter fee. 
• Non-EU tax residents have another route: the Temporary Importation (TI) regime. This allows a non-EU flagged yacht to stay VAT-free in EU waters for up to 18 months, provided the yacht is used only privately. The TI status resets when the yacht exits EU waters and re-enters.

Understanding your tax residency, intended use, and flag state is essential to avoid penalties or unexpected VAT obligations.

3. YACHT CERTIFICATION AND COMPLIANCE

All yachts must comply with international maritime regulations, which depend on:

• Length overall (LOA)
• Gross Tonnage (GT)

What is Gross Tonnage (GT)?
GT is a measurement of a yacht’s internal volume, not weight. It includes all enclosed living and technical spaces onboard. Think of GT as the yacht’s usable area: a higher GT typically means more generous interior layouts, taller ceilings, and larger cabins.

Why GT and Length Matter?

These two factors determine:

• Certification requirements
• Minimum safe manning levels (number of crew)
• Safety equipment and operational procedures
• Flag state rules and inspections

For example, a yacht exceeding 24 meters or 500 GT may fall under different compliance categories like SOLAS (Safety of Life at Sea) or MCA Large Yacht Code, triggering additional requirements.

Working with a broker ensures you’re fully informed about what regulations your chosen yacht must meet, especially important if you plan to charter or operate across multiple jurisdictions.

FINAL THOUGHTS

A successful yacht purchase goes beyond choosing the right model, it starts with the right foundation. From selecting the most effective ownership structure to understanding VAT, and ensuring the yacht complies with all maritime regulations, every detail matters. By getting these considerations right from the start, you not only protect your investment but also ensure smoother ownership from day one.