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Things to Consider While Buying a Yacht

Things to Consider While Buying a Yacht

Lifestyle magazines and movies have romanticized the idea of yachts so much that anyone who can afford it wants one. But before you can head off over the horizon, there’s a hurdle to get over – buying it. Considering the high stakes and technical know-how required, buying a yacht is no easy task. It is easy to get scammed or charged absurdly high rates for a sub-standard yacht. Luckily, we’ve got your back. Keep these tips in mind while shopping for a yacht to make sure you get the best deal.

1. Get Help from the Experts

A yacht has many elements to it. If you want to purchase the yacht that’s right for you, it’s important to familiarize yourself with these items. Ask for help from people who already own some kind of passenger boat. Get them to show you how to operate it, and understand the terminology involved. If you are not aware of any such person, go for online videos, tutorials, and reading the material. Remember, an ignorant buyer is a lot more susceptible to being scammed. If you know the basics of a yacht, you’re more likely to spot a good deal and avoid the fraudsters.

2. Know Your Requirements

How big do you want your yacht to be? Will you use it for traveling, or are you going to charter it out? How many passengers do you expect to have? Do you prefer speed or a luxury cruise? How much are you willing to spend? These are some of the questions you need to ask yourself before you start hunting for a yacht. Once you know what you want, it becomes a lot easier to find something that matches those goals. Another important thing you need to ask is whether you’re happy with a production yacht, or do you want to go for a custom yacht. The prices of both differ significantly, and so does their suitability for you. IMPORTANT NOTE: When counting the number of travelers, do not forget to take crew members into account.

3. Familiarize Yourself with the Prices of Yachts

Yachts are a significant investment, and you should expect to spend a considerable part of your savings on one. Production yachts, i.e., yachts that are mass produced and assembled by factories, using general specifications and requirements, generally start around Euro 100,000 and can go beyond Euro 5 million. Semi-custom or fully custom yachts are considerably more expensive. A semi-custom yacht averages about Euro 25 million, while a fully custom yacht can reach Euro 100 million. Another option to consider is buying a previously owned yacht. This brings the initial cost down, but there is always a risk of it being worn or faulty, so the cost of upkeep and maintenance will go up. Buying second-hand is a good option if you have experience in buying yachts, or know someone who does. This way you can keep an eye out for any mechanical or other faults in the boat. Second-hand is also good if you want a customized boat or a yacht with some character and history attached to it. You can use the money you save on the initial cost to refit and customize it to your taste. Being aware of the many elements involved in a yacht is helpful when you negotiate a price with the dealer. Knowing the value of everything involved can help you assess whether the seller is offering you a fair price or not. When it comes to budgeting, it is important to take into consideration the upkeep and maintenance costs. A yacht requires a proper support crew, fuel, and general maintenance. All this can cost you a lot of money every year. Add to this the insurance costs, and you have a hefty bill.

4. Enlist the Help of a Yacht Broker

Just like a real estate agent, getting help from a yacht broker makes the process faster and less stressful. Brokers can help you find the perfect yacht, but you will need to know your requirements and be able to make them clear. Yacht brokers have plenty of experience in buying yachts for customers, thus enabling them to detect a good buy when they see one. Find a good broker either through referrals or by checking their advertisements – but do make sure you run a background check on them too. You can do this by talking to some of their previous customers, asking about their experience.

5. Avoid Private Sellers or Dealers without a Credible Reputation

It might be tempting to get a cheaper yacht from a less reputable dealer or even an individual private seller, but this will significantly improve the risk of scams and frauds. Always go for reputable dealers, who have a reputation to protect and uphold. The private sellers have far less to lose, as they will usually have only one or two boats to sell, so a bad reputation won’t affect them much. When it comes to reputable dealers, one unsatisfied customer can ruin the image they took years to nurture and build. They will go the extra mile to make sure the customer is happy and satisfied because a satisfied customer significantly improves the dealer’s image.

6. Take Your Yacht for a Test Ride

Once you have decided on a boat, it is important to take it out for a test ride. A yacht will cost you a lot of money, so it’s best to be vigilant. Make sure you’re entirely satisfied with the yacht you are about to buy, because once the contract is signed there won’t be much you can do. Save yourself the regret and test your yacht! If you can take an expert on board with you, so much the better – they can point out any flaws, or tell you if the yacht is not as the seller advertised. Sellers may often charge you for the test ride, but if you’re lucky or have good negotiation skills, you can convince the dealer to waive this. Even if you do have to pay, it is still important to check the yacht – they cost a lot, and if you cut corners now, you might be faced with additional maintenance costs later.

7. Payment

A third party escrow service are designed to provide complete safety to buyers when paying for high value transactions such as when purchasing a yacht. No money changes hands between the two parties until all terms and conditions of the sale have been met meaning that there is no risk to the buyer of not receiving their boat. If you are looking to buy a yacht, contact us today to ensure that your transaction is secured. We look forward to serving all your yacht needs
Once you’re satisfied, you can finally sign that contract. At this point, make sure you have complete documentation and proof of ownership. Only then can you enjoy your boat. If you have no prior experience in sailing, hire a crew and maintenance staff, or get some training.

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Malta offers great diving, deep harbors

Malta offers great diving, deep harbors

 

 

Malta is a southern European island country comprising an archipelago in the Mediterranean Sea. It lies 50 miles (80 km) south of Italy, 176 miles (284 km) east of Tunisia, and 207 miles (333 km) north of Libya. The country covers just over 122 square miles (316 square kilometers) and has a population of just under 450,000, making it one of the world’s most densely populated countries.

The capital is Valletta, which, at 0.8 square kilometers, is the smallest national capital in the European Union.

Malta’s location has historically given it great strategic importance as a naval base, and a succession of powers, including the Phoenicians, Romans, Moors, Normans, Sicilians, Spanish, Knights of St. John, French and British. Malta was admitted to the United Nations in 1964 and to the European Union in 2004. In 2008, it became part of the Eurozone.

Malta is a popular tourist destination with its warm climate, numerous recreational areas, and architectural and historical monuments, including three Unesco World Heritage Sites, and seven Megalithic temples, which are some of the oldest free-standing structures in the world. If old churches are of interest, Malta has 365 of the most exquisite churches, one for each day of the year.

Malta has three large natural harbors on its main island:

  • The Grand Harbor at the eastern side of the capital city of Valletta, has been a harbor since Roman times. It has several extensive docks and wharves, a cruise liner terminal, as well as a number of marinas. Grand Harbor Marina accommodates the largest yachts. It also has a terminal that serves ferries that connect Malta to Pozzallo and Catania in Sicily.
  • Marsamxett Harbor on the western side of Valletta has a number of yacht marinas, Manoel Island Yacht Marina being the largest, able to accommodate yachts to 80m. It is centrally located in Gzira so chandlery shops, shopping malls, supermarkets and tourist services are all accessible within a short walking distance. In the vicinity, one also find numerous restaurants, bars and convenience shops.
  • Marsaxlokk Harbor (Malta Freeport) at Birżebbuġa on the southeastern side of Malta, is the island’s main cargo terminal. Malta Freeport is the 11th busiest container port in Europe and 46th busiest in the world.

There are also two manmade harbors that serve a passenger and car ferry service that connects Ċirkewwa Harbor on Malta and Mġarr Harbor on Gozo. There is a marina in Mgarr that accommodates smaller yachts to about 22m.

Depths are not an issue in and around Malta. Anchoring is difficult, though, as depths reach 40m and more just 4.5m from shore.

Malta is a huge dive destination for Europeans. There are many artificial reefs made by sunken ships and numerous cave dive sites. Although the waters are extremely clear, do not expect as much coral and sea life as one would see in the Caribbean. Many seaside resorts in crystal clear water-bays surround the islands.

The food generally has an Italian influence and in most places, one can order in Italian language, as it is the third unofficial language, after the official languages of Maltese and English.

Fishing is not one of the islands’ advantages, as we found out on our research. Most fresh fish is from multiple floating farms strategically placed around the islands. Beware of them as they are moved around and may cause navigation hazards.

There are plenty of other things to do and one should tour all three major Islands, as each has different things to offer.

Visitors total about 1.5 million a year, so traffic can be unpleasant. Local transportation, on the other hand, is organized and affordable.

Crew/Tutor roles and trends on a yacht

For some owners who wish to take extended trips over a number of months, having a tutor on board means that children can enjoy the experiences world-wide cruises can bring, while not negatively affecting their educational progress. There has been a growing trend where yacht owners are organizing cruises for their family – sometimes for over a year – and taking their children out of school. Not only do these trips offer the unique opportunity for children to live aboard a yacht, but also experience a non-traditional educational platform.

When bringing a new teacher on board the yacht, it can be difficult for a tutor to assimilate themselves into the existing crew dynamic. Of course, the tutor would not be seen as a member of the family, but also neither would they be a traditional crewmember.

Tips for tutors and yacht owners

 

  • Tutors are encouraged to become a multi-faceted member of the yacht’s crew. They should be able to offer a range of skills so they are a useful member of the team.
  • Hiring should only be to those who have trained professionally as teachers. For those that have actively chosen to teach children, this could be a way to combine their vocation with an unforgettable opportunity to travel the world.

The advantages of education on a yacht

The children’s education often surpasses any that they would have in schools. Whereas a round-the-world trip would have previously been seen as damaging to child’s schooling, a dedicated onboard tutor offering four hours of teaching per day is often more effective than a full day at a ‘normal’ school. There are a lot more people doing this, and a lot more people considering it. There’s a sense that it’s not detrimental to the child, it’s actually good for them. Schools are also supportive of that.

For many, the lessons learned on board, as well as the undivided attention of the tutor, means that the pupils often return from their voyages with superior knowledge to their classmates. The children usually come back ahead of where they left. By the time the child returns from that trip, they’ve not only had the life experience, the worldliness, but they also have all their academics fixed.

This career route could be an opportunity for teachers who wish to change their environment for something a little different, or for a crewmember looking to add another string to their bow.

The concept of education is becoming more fluid, with schools and parents moving away from the traditional regimes found in established institutions. If qualified teachers are looking for a change in environment, becoming a private tutor on board a superyacht could offer a once-in-a-lifetime experience. Similarly, if crew wish to pursue a career that ensures longevity, becoming a certified tutor is a way to stay in the yachting market and adopt new skills. The market may begin to see a crew/tutor role as a more viable option and common part of any yacht’s team.

 

Tax Guide to Leasing of Yachts

Your Guide to Leasing of Yachts

Where leasing arrangements of yachts do not fall within the scope of Legal Notice 369 of 2005 and where the aforesaid lease is deemed by the Commissioner of VAT to be in accordance with guidelines issued by the VAT department from time to time, the Inland Revenue Department has decided that in such special case, the following tax treatment is to be adopted for each year for the duration of the lease:

  1. the lessor is charged to tax only on the annual finance charge, namely the difference between the total lease payments less the capital element divided by the number of years of the lease;
  2. the lessee is allowed a deduction in respect of the (i) the finance charge; (ii) maintenance; (iii) repairs; and (iv) insurance;
  3. the lessee is allowed capital allowances in respect of the yacht and the parties may not opt to shift the burden of wear and tear onto the lessor;
  4. where the lessee exercises an option to purchase the yacht on the termination of the lease, the purchase price received by the lessor shall be considered to be of a capital nature and no tax thereon shall be payable by the lessor.

Malta owes much of its maritime history to its strategic location in the centre of the Mediterranean, its natural harbours and its extensive range of maritime services including excellent yachting berthing, repair and servicing facilities. Malta offers interesting tax planning opportunities for operators and owners of commercial yachts and owners of pleasure yachts.

Commercial yachts
It is possible to register eligible yachts in the Maltese Commercial Yacht Register. Registration in this type of register allows the operation of the yacht on a commercial basis in international waters including chartering. Registration under the Commercial Register may lead to an exemption from income tax on profits from commercial yacht operations, an exemption from capital gains tax on the transfer of shares in a commercial yacht-owning company and VAT exemptions on:
• importation and acquisition /sale of yachts used for commercial purposes; and
• hiring, leasing and chartering
• repairs, refits, maintenance and related services

VAT reduction on Yacht Finance Leasing
Where a yacht is not registered in the Commercial Register, either because the owner does not wish to register an eligible vessel commercially or because the vessel is not eligible for such registration, the acquisition of importation of a yacht into the EU will, in general, be subject to VAT in the member state of importation or acquisition.
Maltese VAT legislation contains special rules based on the EU VAT Directive dealing with finance leasing of yachts. These rules are attractive for yacht owners who use Malta as a base for the importation or purchase/acquisition of a new yacht into or within the EU. Finance leasing is a contract which provides for the lease of a yacht by the lessor to the lessee in return for a fee and also provides for an option by the lessee to purchase the yacht at the end of the lease period at a price which is calculated as a percentage of the value of the vessel.
A yacht under a finance leasing transaction is treated as used partly in EU waters (including Maltese waters) and partly outside EU waters and consequently, only the portion of lease payments that is attributable to the use of the yacht in EU waters is subject to Maltese (EU) VAT. In view of the difficulty in calculating the exact time spent in EU and non-EU waters, the rules provide for a simplified deemed percentage of the lease that is attributable to the use of the yacht in EU waters. These percentages are based on the length of the yacht and propulsion method.

Conditions

In order to qualify for the above reductions in VAT, the rules prescribe a number of conditions, mainly :
• the lessor must be a Maltese limited liability company and registered for VAT in Malta
• the Lease agreement must be for a period not exceeding 3 years
• the contract must provide for an option of the lessee to purchase the yacht at the end of the lease
at a percentage of the value of the yacht – the price payable upon the exercise of the option to
purchase the yacht is taxable at the standard rate of 18%
• the finance lease agreement and the value of the yacht must be approved by the VAT Department prior to the commencement of the finance lease.
This opportunity is of interest to owners or prospective buyers of yachts on which no EU has been paid and is open to new and second-hand yachts.

How can we be of help?
We can assist yacht owners or operators by –
• identifying an optimum VAT structure for the intended acquisition or operation of the yacht in
question (commercial yacht or private yacht)
• obtaining the required VAT clearances
• assistance in the corporate set-up and registration of the yacht under the Maltese flag (where
required )
• providing ongoing and annual yacht registration maintenance services and support
• handling of VAT payments and back-office support