flag state on yacht

If you are planning on purchasing a luxury motor yacht to put into a charter fleet, did you know that choosing her “flag” could impact your charter income?

Where you chose to flag your yacht could directly impact everything, from your taxes, your exposure to liability, and your personal privacy. In fact, choosing your charter yacht’s flag could even make the difference between your success or failure as a charter enterprise! Whether you are considering charter as a commercial endeavor, or merely to offset expenses, the flag you choose to fly has significant influence.

Choosing a Flag for Your Yacht

Your choice of flag state really can be one of your most important decisions as a yacht owner, particularly if you are interested in a charter income program. Your yacht’s “flag state,” represents her country of “registry.” That means the nation or government under whose jurisdiction your yacht is “registered” or “licensed.” That does not necessarily have to be your country of origin or residence. In fact, most yacht brokers or maritime lawyers will tell you that you are probably better off with an offshore ship’s registry, preferably in a country that is well-familiar with the complexities of owning and operating a luxury yacht for charter purposes.

For example, yacht owners who intend to charter their yachts in and around the world’s most popular charter destinations, such as the Mediterranean, and the Caribbean, will traditionally choose on offshore registry and offshore incorporation as a commercial vessel, to gain the many privacy and tax advantages.

American yacht owners will rarely choose an American flag, and patriotism has nothing to do with it! Our own flag is not very attractive for yacht owners due in large part to the many regulations and specific manning requirements for US flagged vessels.

Many US yacht owners choose registry in the Cayman Islands. The Caymans offer the unique advantage of flying the British Flag, while at the same time having the attractive tax advantages and privacy perks typical of the Cayman Islands. Known as “the Red Ensign” the flag of the Cayman Islands is generally recognized as the most popular flag for large upscale yachts. There are other countries that also fly the Red Ensign, including: the Isle of Man, Bermuda, Gibraltar, Anguilla and the British Virgin Islands. Registry with any, provides similar advantages.

Cayman Island Flag

Flying the Red Ensign has Many Advantages

Another popular ship’s registry for luxury yachts is the Marshall Islands. The number of superyachts flying the flag of the Marshall Islands almost rivals that of the Caymans. The country is currently a presidential republic, with a long-standing association with the US. The registry is low cost, has low taxes, and is respected worldwide.

yacht registry Marshall Islands

Many Yachts Choose the Marshall Islands for a Flag State

Malta and Liberia are also popular flag state choices.

Choosing a particular flag can be a very complicated matter, involving detailed knowledge of international maritime law. Beyond the taxation and regulation issues, you need to consider things such as if the flag you fly increases, or decreases the chances of your yacht being a targeted by pirates, or even by authorities! There are “good flags” and “bad flags,” and many of the “good ones” will “compete” for your registration, offering various incentives.

Again, the decision of where to flag your charter yacht is complex, and is best made between yourself, your yacht broker, your attorneys, and tax advisors.

 Making Flag Choice and Everything Else Easier

Deciding to put your yacht into a charter program is a great idea to offset expenses, but doing so requires many often complex decisions, not the least of which is choosing a flag state. However, as part of our On Demand Yachting solution, FYM’s charter income program is designed to take all of the hassles out of placing your yacht in charter. We will work with you, and help with everything from choosing a flag, to matching you with a charter program that works best for you.

If you already own a yacht, and she is already flagged. No problem, you can still put her into our charter income program, and sign-up for the many advantages of On Demand Yachting.

 

Some of the World's Most Popular Flag States

Some of the World’s Most Popular Flag States

 

Operating a motor yacht can be costly. Putting your boat in Charter can earn income, and defray some of the costs of ownership. On Demand Yachting from FYM can show you how. If you would like to learn more, or if you have any questions or comments about this blog post, do not hesitate to contact our Yacht Management specialists, or call us at (954) 900-9968.