With the boat chosen, three questions remain. Which country's flag will it fly, in whose name will it be registered, and what will its tax position be? The answer to all three depends on your own circumstances, and it decides where the boat can be used, by whom and at what cost. So these questions are discussed before the sale agreement.
Registration and flag
Registration means entering the boat on a country's register. The boat flies the flag of the country where it is registered and comes under that country's maritime rules. The register shows who owns the boat and whether there is a mortgage or a debt against it.
Flags differ from one another. Some registers are open only to that country's citizens or to companies set up there. Some ask a foreign owner to appoint a local representative. The documents required, the time the process takes and the annual obligations vary too. Which flag suits you depends on your citizenship, your place of residence and the waters where you will use the boat.
A boat that will be used in Turkey
If you will use the boat in Turkey, both the Turkish flag and a foreign flag can be considered. The two come with different conditions, costs and obligations. How long a foreign-flagged boat may stay in Turkish waters, and who may use it, are covered by separate rules, and those rules change from time to time. You confirm the current position at the time of the decision with your tax adviser or your lawyer.
In your own name or a company's?
A boat can be registered to a person or to a company. Which is right depends on where you live, your tax position, how you will use the boat and your plans for selling it one day. Buying through a company takes extra time, for setting up the company, certifying its documents and dealing with the bank. It is best to decide before the agreement. Left until afterwards, some of the documents have to be prepared again.
Leaving the old register and joining the new one
On a pre-owned boat, the new registration begins with closing the old entry. Before the purchase we ask for a current transcript of the register, which shows whether there is a mortgage or a debt on the boat. After the sale the boat is deleted from the old register and an application is made to the new one. Registers issue these documents under different names and take different lengths of time. If there is a loan on the boat, the order in which the debt is settled, the bill of sale signed and the deletion carried out is written down at the outset. We plan the registration timetable together with the handover and the delivery of the boat.
Tax
Tax on yachts comes in several layers: the VAT status in the country where the boat is bought, the entry rules of the country where it will be used, your obligations in the country where you live and the annual fees of the flag state. Whether tax has been paid can affect which waters the boat may be used in and how, and the way it is sold later. We ask for the seller's statement of the boat's tax status with the document behind it, and write it into the agreement.
The tax outcome varies from person to person. You take this decision with your tax adviser and your lawyer, and we put together the documents they need.
Questions to answer in advance
- In which country's waters will the boat be used, and for how much of the year?
- In whose name will it be bought, and if a company is used, in which country?
- Does the flag you have in mind fit your citizenship and your place of residence?
- Can the boat's tax status be shown by a document?
- If you expect to sell one day, how will the flag and tax status you choose look to a buyer?
When these questions are answered early, completion is straightforward.
