You only have to watch a Bond movie or open a high-end lifestyle magazine to see how much superyachts are romanticised, so much so that anyone who can afford one, wants one. It is the non-essential toy of the rich, say Siobhan Silk, Managing Associate, Yachts & Superyachts, Ince, and Matthew Biles, Partner & Head of Private Wealth, Ince. 

However, they are not toys; they are incredibly expensive moveable assets that need to be purchased and structured according to the buyer's requirements. In order to do this, every buyer will need to surround themselves with experienced professionals.

From the outset, any prospective buyer should work with an experienced broker and lawyer who can work in conjunction with other advisors to secure the right yacht at the right price. 

Ince has a dedicated yachts and superyachts team with over 25 years of experience operating across a network of international offices.

Yachts and superyachts are high-end luxury assets which are subject to changing laws and regulations, often across multiple jurisdictions. It is essential that any buyer has an experienced professional who understands their goals and protects their interests at every stage of ownership. 

Our yacht team advises ultra-high net worth individuals with all yacht-related queries included buying or selling new build or second-hand yachts, financing options and refitting of yachts. 

It is invaluable to have a lawyer involved as early as possible in a yacht transaction so that any sale and purchase contract can be tailored to the client's needs and protect them should the worst happen.

How to structure the ownership of a yacht 

If you are purchasing a yacht, one of the main areas to consider is how to structure the corporate ownership of the asset. How and why a particular corporate structure is put in place to hold the asset is driven by the specifics of the Ultimate Beneficial Owner (UBO) (i.e. who ultimately owns the yacht).

Typically, yachts are owned by a company specially incorporated to hold this one asset known as a Special Purpose Vehicle (SPV). This SPV is ultimately owned by the UBO.

The type of corporate structure depends on factors such as where the UBO is tax resident, where their business or properties are located, what they intend to do with the yacht etc.  

Indeed, many of our clients also utilise trust structures to hold such SPVs in order to incorporate succession planning and tax mitigation strategies and we have extensive experience of advising on such matters.

Private vs commercial yachting

Another area to give consideration to when looking to purchase a yacht is whether you intend to operate the yacht privately or commercially under your ownership. This will narrow down the yachts you assess in the initial viewing process.

To operate a yacht commercially (i.e. to charter (rent) the yacht out to others), the yacht will need to be meet higher technical and regulatory requirements. If you wish to offset some of the costs of yacht ownership, operating the yacht commercially may be an avenue to explore.

It is a common misconception that chartering the yacht will make the owner money. From our clients' experience, charter income can only really help to offset running costs. If you wish to operate the yacht privately, this means that only you and your friends and family will enjoy the yacht (with limited exceptions) but bear all of the costs. 

Flag jurisdictions

Once you have purchased a yacht, she (yachts are referred to as feminine) must be registered under a flag jurisdiction. Most large superyachts tend to lean towards the Cayman Islands as a ‘flag'. This is because as a British Oversees Territory, the Cayman Islands is part of the Red Ensign Group and has a Red Ensign flag which is highly regarded in the Superyacht Industry with a prestigious, international reputation..

However, the choice of flag also needs to be decided in conjunction with the new owner's personal position, the corporate ownership of the yacht and other considerations. Other popular flags for superyachts include Malta and Marshall Islands.

Crew considerations 

One of the most important considerations when purchasing a superyacht is hiring the right crew. It is a truth universally acknowledged that the crew make the yacht! The experience you have on board is primarily down to the crew on board. Hiring and retaining good, reliable and well qualified crew can be tricky.

Ultimately, all the same rules apply for putting together your superyacht crew as for interviewing someone for a job, so it is essential to have access to an employment law specialist.

At Ince, we have a dedicated Employment team who can assist with everything from the drafting of employment contracts, dealing with the requirements for crew joining yachts in Europe post-Brexit, to advising you when there is any disagreement. 

Pitfalls to consider 

Some of the common pitfalls when looking to purchase a yacht can include being pressured into signing a Letter of Intent or an MOA, instructing your go-to lawyer rather than a specialist who has the relevant expertise to guide you, to name just a few.

We have had a couple of occasions in the past few years when our yacht team have been contacted by fellow lawyers, who have promised their client that they can advise on a yacht sale or purchase, but have quickly found themselves out of their depth. On each of these occasions, we have stepped into the breach and assisted the end-client, making sure they are properly advised and protected. 

By Siobhan Silk, managing associate, Yachts & Superyachts, Ince, and Matthew Biles, Partner & Head of Private Wealth, Ince.