In this cutting edge period of innovation most Flag States have devoted sites that can be utilized to explore Flag requirements for superyachts
Legislation and requirements.
Some useful sites are listed below:
www.cishipping.com Cayman Islands Shipping Registry
www.gov.im/ded/shipregistry/ Isle of Man Shipping Registry
www.register-iri.com Marshall Islands Ship Registry
Flag States tend to publish their requirements in the form of Notices.
Different flags mean different rules and responsibilities, which can have a direct impact on privacy, taxes, functionality and use of a yacht.
There are many factors to consider when flagging a yacht.
- The place of residence of the owner – is this EU / Non EU?
- Area of navigation
- Designation as Pleasure, commercial or dual?
- Date of build, length, tonnage, conformity with any commercial code and international conventions
- Place of delivery
- Crew nationality
- Financial arrangements – marine mortgage loan or leased
The chosen jurisdiction is a trade off between political and economic stability, reputation and regulation and bureacucracy. A registry with a poor reputation or one that is targeted by Port States and Customs will negatively impact on the operational efficiency of the yacht. A Flag State’s compliance with international environmental, safety, procedures, standards, compliance with international regulations and casualty record will be evaluated by insurance companies and lenders . A poor compliance history will inevitably affect the decisions of the lenders and underwriters.
Popular flag choices for registering a yacht
British Red Ensign jurisdictions
The political stability and reputation associated with the British Red Ensign offer political stability and enjoys a high reputation. These offshore jurisdictions include: Bermuda, Gibraltar, Jersey, Guernsey, Turks and Caicos, Isle of Man, British Virgin Islands and Cayman Islands – the last three being the most popular offshore jurisdictions within the yachting Industry. Added to a reputation for efficient management and administration, British Red Ensign also enjoy British Consular support. This can be very useful for crew issues.
The differences in the Red Ensign jurisdictions
Not all Red Ensign jurisdictions are alike with variations in registration fees and more different levels of manning ; others require vessels to be within a certain age range to be eligible for registration. Each jurisdiction have relative merits to be considered.
The Marshall Islands & St Vincent & the Grenadines
The Marshall Islands is another popular offshore choice. This jurisdiction has adopted many of the IMO regulations. Working closely with the US Coast Guard ensures that Marshall Islands’ registered yachts have automatic rights to a cruising permit for sailing in US territorial waters. St Vincent & the Grenadines, and the Marshall Islands allows qualifying private yachts to charter up to 84 days a year, subject to detailed surveys on lifesaving, safety, firefighting and a minimum safe manning levels when on charter. These two registries are optimum for yacht owners who charter part time within and outside EU waters.
Within the EU, besides the UK, the relaxed approach of Malta in offering tax advantages for commercial yachts and a leasing scheme for pleasure yachts is a popular flag choice.
Hong Kong is a very popular registry for sailing in Asia, even though at present it does not distinguish between pleasure and commercial yachts. Langkawi a yacht friendly regime is the only registry in the South East Asia to operate a real commercial yacht registry. Most of the main offshore registries have enhanced their presence in Asia including the Marshall Islands, Isle of Man and Cayman .
Commercial yachts vs. private yachts
Stricter rules for commercial yachts
Pleasure vessels used for charter(i.e. commercial yachts) need to comply with stricter rules than yachts that are only used privately. Private yachts are defined as being used exclusively for recreational purposes by their owners and guests, while commercial yachts are on charter for a maximum of 12 to 36 passengers. The exact number of commercial passengers depends upon the registry. Commercial yachts are subject to stricter safety requirements.
Additionally, commercial yachts must be in Class – with some exceptions depending upon the Registry for yachts below 24m or below 500 GT – and comply with the Commercial Yacht Code Regulations, in accordance with the chosen registry, and International Conventions and Regulations (ie: SOLAS, MARPOL, Load Line, STCW 1995, ISM, ISPS, MLC 2006…). |Minimum safe manning requirements apply for yachts over 24m.
Owners of such commercial yachts with Non EU flags navigating in European waters would also need to appoint Fiscal representatives or agents in the several countries where the yachts start their charters.
Advantages of commercial yachts
Commercial registration enables yacht owners to profit from the chartering activity of their boats and to take advantage of all the other fiscal benefits derived from commercial operations. These may outscore the stricter set of rules and regulations imposed on the commercial sector.
Superyachts must usually meet the same requirements as a commercial vessel, if they host helicopters.