Choosing a yacht ownership structure has never been a simple matter but, with recent changes in legislation, a minefield of tax laws and fierce competition, along comes Brexit to really shake things up.
According to Bruce Maltwood, Director of Sarnia Yachts, these changes present a wave of opportunity, putting Malta firmly in the spotlight as a preferred jurisdiction. Having recently opened an office there, we met with Bruce to get his views on why Malta is becoming more attractive year on year.
Why has Sarnia Yachts consolidated its presence in Malta with a new office?
For many years, Sarnia Yachts has been providing a range of Malta services to its clients through Malta-based agents from our offices in Guernsey. This has worked well in the past but the Malta business is growing and a few years ago we determined that there is now sufficient business activity to have our own licensed operation here.
The quality of service is paramount to Sarnia and our clients, so having our team in Malta ensures that we remain competitive while providing a first-class service.
What advantages does Malta have as a jurisdiction for yacht ownership?
Malta is now clearly the preferred jurisdiction for both private and commercial yacht ownership structures. Private yacht clients wishing to operate a VAT paid yacht can take advantage of the Maltese Leasing Scheme with attractve VAT rates as low as 5.4%, so its popularity has been growing year on year.
For commercial yacht clients wishing to operate charters in the Med, a Malta company has the requisite double tax treaties with the prime jurisdictions where the yacht will be operating to ensure that withholding tax is not applied to charter income.
Malta is well positioned in the central Mediterranean for yachts transiting east or west and it has extended its shipping registry and legislation to become one of the most popular flag states for EU-flagged yachts.
Why has Malta become so important?
There are some essential elements to every structure including company, VAT, flag and importation which Malta can provide. Historically the Isle of Man was the favoured jurisdiction for some of these elements but, following recent changes in legislation, Malta is becoming a more attractive option.
Does Brexit mean that Malta will grow in popularity?
I certainly believe so for flagging requirements as the UK is currently a very popular choice of EU flag. The Brexit vote means that eventually the UK flag will no longer be an EU flag, which will have ramifications for many yachts currently flying the UK flag. We would expect most to re-flag in Malta.
Other aspects to consider are the suitability of UK companies and partnerships acting as yacht owners and Malta provides both company and partnership offerings.
On the flip side, if the UK becomes non-EU, then UK residents operating private yachts will be able to take advantage of temporary admission rather than utilising Maltese Leasing. However, everything is speculation at this stage until UK arrangements with the EU are finalised.
Do you think that Britain’s exit from the EU will have a negative or positive effect on the UK’s yacht industry?
It depends on which of the many facets of the UK yachting industry you refer to. Within our line of business, I see UK-owning companies, partnerships and flag losing out to the likes of Malta. Then again, will the UK flag become a favoured non-EU flag usurping the likes of Cayman, British Virgin Islands (BVI) and so on? Probably not, due to differences between the flags in areas such as crew manning.
There are a lot of uncertainties, but we are confident between our Guernsey and Malta offices that we have solutions for every eventuality.
Dan Armsden - Yacht & Crew Technical Manager and Director Bruce Maltwood
What do you think a yacht fiduciary company gives an owner that a yacht manager does not?
Quite simply a yacht manager, manages the yacht for a client or owner whereas, a yacht fiduciary company forms and administers the structure which owns the yacht.
It is through that choice of ownership structure in the appropriate jurisdiction that a yacht fiduciary company ensures that the structure and the yacht are run in the client’s best interests from the perspective of structure integrity and also economics.
Our clients often lead busy lives, so a yacht fiduciary provides them with peace of mind; they know that all aspects of their yacht ownership and operation are in safe hands under the control of what is a regulated business.
What experience does Sarnia bring to the client?
Sarnia Yachts, as the name suggests, just handles yachts and has done so for over four decades. Many of Sarnia Yachts' 27 staff members have been with the business for over 20 years.
The business conversation in our office is all about yachts; including insurance, registration, ownership structures, crewing, management, operations and chartering.
Yachting spans the whole office; it is not just another section tucked in the corner. We have never tried to be a “jack of all trades” and admit that we are less knowledgeable about other types of assets such as investments, aircraft or property. We like however to think that the depth or experience we have around yachts means we are as close as you can get to being “master of one”.
Patrick Spiteri, Director (Malta)
There are a lot of regulations to be observed, and the due diligence process can be painful what can be done to make it all easier?
You are right; the due diligence process can be painful, and it is not helped by a lack of recognition that the provision of corporate services is a regulated financial service, in the same way as opening a bank account.
Another issue for clients is that due diligence is required by all parties to varying levels so there are numerous separate requests from lawyers, brokers, finance companies, insurers, shipyards and corporate service providers for such documentation.
It may be unrealistic but by gathering together the requirements of each party, the due diligence could be collected at once rather than piecemeal as happens now. If documents need to be notarised or similar then this would be less stressful, more economical and take up far less time.
What services will the new office in Malta offer?
The suite of services provided by Malta will include Maltese leasing, corporate yacht ownership, VAT management, yacht importation and flag registration.
Having the team on the ground in Malta provides the additional benefit of yacht support for the many yachts that are required to physically go to Malta as part of the structure arrangements. With time often of the essence, we can ensure that every procedure runs smoothly and efficiently to ensure that the yacht can depart promptly.
Who should people contact at Sarnia Yacht’s office in Malta?
Patrick Spiteri is our Managing Director in Malta.
He is the client’s first point of contact in the Malta office, and he is on hand to help with establishing Maltese companies, Maltese flag registrations of both private and commercial yachts, commercial VAT structures, Maltese leasing and other locally-based services. He can be reached on Patrick.Spiteri@sarniayachts.com or +356 212 40806