Chris Allix is the man you go to if you’re looking for superyacht ownership expertise. You go to him because he’s always planning two steps ahead. He does this because he has to: he works in a competitive market for clients with high expectations.
Allix is the owner of Dominion Marine, which is part of the ICM Group of companies. The Group includes ICM Wealth Management, ICM Aviation and Martyn Fiddler Associates Limited.
He started in trust banking in the early 1970s with Williams & Glyn’s – now a part of the Royal Bank of Scotland. After some time in the Cayman Islands, he moved to the Isle of Man in 1984. By early 1985, he had registered the first yacht on the Isle of Man Ship Register.
Thirty years have passed since then and Dominion Marine now looks after 300 yachts and superyachts.
Most recently, Allix has been focused on growing Dominion Marine SARL – a VAT solutions subsidiary based in Monaco. The company has been incorporated and VAT registered in the principality and offers a unique VAT-deferment structure for owners.
Allix originally began to develop a structure jointly with the Isle of Man VAT office. However, due to some legislative changes in the UK, the structure was developed to be sited in Monaco.
This new Monaco solution is based on a five-year bare boat rental contract. The owner transfers ownership to Dominion and rents the yacht from the company over a five year period. Payment of VAT on acquisition of the yacht is deferred and VAT is only paid on its depreciation, in accordance with European court rulings.
At the end of that five-year period, the client can choose to enter into a new rental contract. If they wish to sell the yacht, there are no penalties.
Monaco has been a special place for Allix in recent years. In 2012, Allix was focused on Monaco for a much different reason. He kayaked across the Irish Sea from the Isle of Man, down through the canals of England and France, to arrive in Monaco for the start of the Yacht Show. He raised £20,000 ($33,000 or €24,000) for charity. Allix has been attending the Monaco Yacht Show since it started and Dominion Marine has a stand in the Parvis Piscine tent each year.
Allix spoke with OnboardOnline about the complexities of VAT legislation and European law, how he stays ahead of it, and the role of regulation in the current market.
OnboardOnline: So, you just returned from the London Boat Show. How was it?
Chris Allix: “It was fairly busy and we had a lot of very good inquiries about the new Monaco structure. It is a new product so it will take a bit of time for people to fully understand how it works.”
OO: Is it that no one wants to be the guinea pig?
CA: “No I don’t think so. We have four yachts in the structure already – mostly owned by clients who have been working with me for years – and they are all happy with it so far. We did our homework before launching it and worked with different lawyers to ensure the structure was robust. We used to run a very similar structure out of the Isle of Man through Isle of Man Yacht Leasing. With changes to VAT legislation unfortunately that structure became obsolete.”
OO: Is that why you moved it to Monaco?
CA: “Monaco had been on my mind for a while as it is the perfect location for superyacht business. Many of the yachts we deal with on a daily basis are berthed there or along the French Riviera. There have been other leasing structures, such as the Italian and French leasing options through the banks, but those have also dried up. A similar structure was also launched in Malta which has generated a lot of interest."
OO: So a lot of people flocked to Malta. How do you draw them back?
CA: “Malta is working at the moment but who knows in the future? We thought our Isle of Man structure would work forever but things changed. You never know what is round the corner. The Monaco structure has been approved completely. We’ve had legal opinions on the structure, which is indemnified.”
OO: What is the process of figuring out whether these structures will face up to legal scrutiny?
CA: “As I said before we always do our homework. Everything we do is compliant with both VAT and marine legislation. We have had formal opinions from a number of tax advisors who’ve reviewed it under E.U. law. Everything is so regulated these days – which is a good thing – but it does make our work more challenging.
“This Monaco structure was actually put together in conversation with the Isle of Man VAT office. I wanted to revisit the yacht leasing concept, taking into consideration the recent European court judgments.
“Due to changes in VAT legislation that affected the Isle of Man, I took it to Monaco. The Monegasque authorities were very receptive to the idea and after many meetings with them agreed we could go ahead. They understood the concept and the fact that we are deferring taxes not avoiding them.”
OO: Explain the VAT-deferment for me in layman’s terms, if you would…
CA: “Basically, we set up a company – or use a company the client may already have - that lends the money to our Monaco corporation, Dominion Marine SARL. That company takes full legal charge over the yacht and the holding company. This means that Dominion Marine SARL cannot sell the boat without the charge being removed. Clearly we would never remove the charge without the client’s permission. That is all dealt with by our company, Dominion Marine Corporate Services Limited, which is licensed by the Financial Supervision Commission of the Isle of Man. We would never risk losing our license - it would be sheer stupidity. We can only do the work we do because we are fully licensed to incorporate and manage companies."
OO: So they sign over ownership of the yacht to Dominion…
CA: “Dominion Marine SARL becomes the official beneficial owner of the yacht. The client’s company lends Dominion the funds to buy the yacht, or they transfer the yacht’s ownership.”
OO: But what if the E.U. has a problem with it?
CA: “The E.U. regulations state categorically that all the taxpayer has to do is comply with the law of the country in which he’s working. If he’s done that, he has nothing to worry about. However, if a country has misinterpreted the rules then the E.U. will come down on it. I’ve seen that happen to France in recent years with the zero-rating of charter boats.”
OO: So you think this might happen to Malta?
CA: “At the moment, the Maltese structure is fine. It’s perfectly okay. I wouldn’t want to give the impression it’s anything but. However, as it is high profile and successful, if the E.U. decided to take action, it would target Malta.”
OO: Are you worried action might be taken against Dominion Monaco?
CA: “No. Well, it could of course happen to any structure but I am confident we will not have a problem. It is in complete compliance with all the recent E.U. laws. Now, the E.U. can change the laws of course, but it takes some time.”
OO: Well, that’s a big part of being good at your job – being ahead of those rules…
CA: “Exactly. We have to preempt the changes and make sure that the clients are safeguarded.”
OO: So how far ahead do you have to plan? Do you already have something in your back pocket in case something were to happen tomorrow?
CA: “I am focusing on this new Monaco product at present. I am busy promoting it across my network of contacts. Once I have this up and running, I will be working on the next solution. It’s very difficult to preempt what changes will come next because there are so many external influences – the economy, political manouvres and new legislation, especially in the E.U. The important thing I have learnt, however, is never tell anyone what you’re going to do next.”
OO: How has the work changed within the E.U.? Has the uniformity of law made things easier for you?
CA: “I would say so, yes. I would say it is easier because previously there were different scenarios for each E.U. country and it was sometimes difficult to advise the client or keep him informed of the different rules if he was continuously moving a yacht from one place to another. Now, although EU legislation is sometimes interpreted differently by the individual countries, there is more cohesion.”
OO: Regulators are really cracking down these days. Where do you see that going from here?
CA: “I can’t see the compliance side of things getting any easier, but I also don’t feel it will get stricter. We’ve reached a point at which people are going to start complaining if it gets tougher.
OO: Sort of like what’s happening now…
CA: “Exactly. But on the yachting side, I think we will see some changes. My prophesy is that due to the way taxation and regulation are going, we’re will end up with two industries within the industry. We’re going to have the pleasure yachts and the commercial charter yachts. And the charter yachts are going to be much more like shipping.
“I imagine a scenario in which you’ll have three, four or five yachts with one owner. He will have a team of crew members and rotate them around those yachts. This will work because they’ll be identical yachts. So the crew will go from one yacht to the next and the owner will do his own central chartering.
“They will work the boats as a true business. Then there will be the pleasure boats which will hardly ever charter.”
OO: Are you seeing any examples of this currently?
CA: “I think it’s going to happen in the next five years. People are talking about it but they’re not doing it. People still buy a yacht because they want to have fun. It’s not a business tool.”
OO: So would the VAT-deferment structure fit in line with this?
CA: “The principle use of the Monaco structure was purely pleasure. We set it up so people could just get back to enjoying their boat as a pleasure boat. However, that said, we have been asked by a number of brokers if we could look into using it for charter yachts too. So now we have legal and tax opinions from top people saying that we can.”
OO: Did you have any exposure to yachting while working in the Caymans?
CA: “We didn’t do yachts in the Caymans in those days. Most yachts at that time, I think, were dealt with primarily in Guernsey.”
OO: Tell me a little about registering your first yacht with the Isle of Man…
CA: “I spoke to the Isle of Man ship registry and discovered they knew as little as me about the luxury yacht business. This was the first yacht they’d ever registered. The Isle of Man Ship Registry was founded in the 1700s but the international register was only set up in 1984.
“The whole process went quite smoothly. I decided I liked the idea of getting involved in the luxury yacht business so started to contact all the different brokers in the industry. I phoned as many as I could, introduced myself, started to visit all the yacht shows…and it just snowballed from there!’”