yacht financing europe

Is it possible to finance a yacht purchase in the EU

14 October 2015

In most cases, you need to be a fiscal resident in the EU to benefit from a European bank (or leasing company) financing your boat . Whether it’s a new or pre-owned yacht for sale . You may also be required to own commercial activity , assets (property) and a bank account within the EU so that the financial institution is comfortable with your credit guarantees.

Generally, European financial institutions with a nautical program will propose a leasing solution, where you actually rent the yacht for up to 10-12 years with a purchase option at the end. This popular way of financing a yacht will require a 25 to 50% down-payment and the balance will be paid with monthly instalments. You will also benefit from VAT advantages, generally cut in half.

If you do not match these requirements, Allied Yachting may be able to provide alternative yacht finance solutions through different boat financing partners but you should also search for alternative banking solutions in your country of origin or just have your broker negotiate a great cash deal for you.

Boat leasing is a great way to finance a boat and indeed the most popular form of boat financing. With this solution of marine finance, you can make significant VAT savings, on both new and used boats. The schemes offered on the market are recognized marine finance schemes for boats and yachts of all sizes, established by the French, Italian and other European governments.

The Italian and French leasing finance schemes have been established for many years in Europe, and provide a legitimate and safe way to obtain credit and reduce the VAT on your boat purchase. Some other benefits can be found by several clients by not showing wealth and ownership, only the leasing of a boat.

Boat Finance – Yacht Leasing

If you are using your boat in EU waters, including the UK, then this simple form of yacht leasing finance can save you VAT. The process is very simple:

You choose your yacht, boat, or superyacht and negotiate a final price with the seller, boat dealer or manufacturer. This includes all the extras that you would like as part of the overall specification. The deposit is then paid. The leasing company (or bank) then arranges to buy the boat and the balance is financed by them, with the vessel then being leased to you for the agreed period at a contracted rate per month (or quarter). Reduced rates of VAT are paid on these instalments according to the type of boat, its size, navigation area and the type of scheme (Italian or French). At the end of the leasing contract you have the option to buy the vessel, or simply return her to the bank. The residual values vary from lender to lender and currently range between 1% and 5%.

Boat Loans – Chartering

If the ownership of your boat is through a commercial or chartering company, then yacht financing using a lease makes even more sense, as most lenders will offer VAT free leasing which can save considerably on costs. However, it must be emphasized that this is for legitimate chartering companies only, which are exclusively those actually running a rental business and with full-time crews.

For private owners, part-time chartering is permitted within the terms of the lease.

Italian and French Leasing Programs

The two main marine finance leasing programs available on the market are the most popular, namely the French and the Italian. We can also propose the Maltese and Madeira lease options, but we have to study the feasibility of your application before we submit it. The Italian and French programs offer slightly different benefits, depending on the size and class of the vessel, with the first being based on the type and size of the vessel, whilst the second is based on Class. In principle the larger the boat, then the greater the savings in VAT, and for yachts over 24 meters, it is possible to reduce the VAT to 6%.

Please note that the minimum deposit for leasing in excess of 5 years is 30%.

There is no upper limit on the size of boats benefiting from finance using a lease, so boat finance for even mega and superyachts is possible given the right qualifications.

Yacht Leasing (French or Italian) – Key Points

The minimum value of boat (Ex-VAT): € 250,000
No maximum value
Minimum deposit 25%
Maximum deposit 50%
Contract terms from 3 to 8 years, sometimes up to 10/12 years
Residual values from 1% to 5%
The contract can be made through either private or company ownership
Available for both new and used boat finance, please verify the age of boats qualifying
Registration in most EU countries and flags, including UK flag
Chartering is permitted under the terms of the lease
VAT-free leasing available for chartering companies
Avoids showing wealth or ownership
Non-disclosure and confidentiality towards each client
Leasing contracts are frequently possible to recover by future buyers, and even re-negotiable

Our Services

At Allied Yachting, we will direct you to the appropriate bank or leasing company partner capable of financing your yacht and we will help you not only to negotiate the best possible marine finance conditions but also to adequately fill-in and submit your application.

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Headquarters:

34 Rue Caffarelli 06000 Nice, France

Front Office:

Boulevard de La Croisette – Port Canto 06400 Cannes, France

T.: +33 493 43 82 83 Email: [email protected] Website: www.alliedyachting.com

Yacht Dreaming

Boat Financing in Europe: Everything You Need to Know

What is Boat Financing?

Boat financing is a way to secure funds for purchasing a yacht or a boat. It is similar to a conventional car loan, where the lender provides funds to the borrower to purchase the boat. In most cases, boat financing is secured against the boat itself, making it a secured loan.

Understanding Loan Terms

Loan terms and conditions are the most important factors to consider before taking out any loan. In boat financing, there are a few terms you should be familiar with.

Interest Rate

The interest rate is the cost of borrowing the money, expressed as a percentage of the loan amount. Interest rates vary depending on the lender, borrower’s credit score, and the loan amount.

The loan term is the duration of the loan, usually ranging from five to twenty years. The loan term determines the monthly payments and the overall cost of the loan.

Down Payment

The down payment is the initial amount of money the borrower pays towards the boat’s purchase price. Down payments can range from 0 to 20% of the purchase price.

Types of Boat Financing

There are two main types of boat financing: secured and unsecured loans.

Secured Loans

Secured loans are the most common type of boat financing. They are secured by the boat itself, making it easier for borrowers to secure larger loan amounts. The lender has the right to repossess the boat if the borrower defaults on the loan.

Unsecured Loans

Unsecured loans are not secured by the boat. They are riskier for the lender, making them harder to obtain. The interest rates are usually higher, and the loan amounts are smaller than secured loans.

Boat Financing Options in Europe

Boat financing options in Europe vary depending on the country and the lender. The most common options include banks, credit unions, and specialized boat lenders.

Banks are the most traditional lenders and offer boat financing in most European countries. They usually offer secured loans with competitive interest rates and favorable loan terms.

Credit Unions

Credit unions offer boat financing to their members. They are non-profit organizations that offer lower interest rates and flexible loan terms to their members.

Specialized Boat Lenders

Specialized boat lenders offer boat financing exclusively. They are experts in the boating industry and offer flexible loan terms and competitive interest rates. They often work closely with yacht brokers, making it easier for borrowers to find the right boat.

Applying for Boat Financing

The boat financing application process is similar to that of a car loan. Here are the steps to follow:

Determine the loan amount you need and the type of loan you want.

Gather all the necessary documents, including proof of income, credit score, and boat information.

Research lenders and compare their loan terms and interest rates.

Apply for pre-approval to get an idea of the loan amount and interest rate you qualify for.

Once pre-approved, submit a formal application with all the required documents.

The lender will review the application and provide an offer with loan terms and interest rates.

If you accept the offer, the lender will finalize the loan and provide the funds.

Boat financing in Europe is an excellent option for those who want to purchase a yacht or a boat. It is important to understand the loan terms and options before applying for a loan. Research lenders and compare their loan terms and interest rates to find the best deal for you. With the right boat financing, you can turn your boating dreams into reality.

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Superyacht Finance

Fortier excels in originating loans for superyachts, supported by a global network of reliable partners.

Fortier excels in originating loans for super yachts, supported by a global network of reliable partners.

Knowledge & Expertise

We specialise in facilitating secured loans tailored to the unique needs of our discerning clients, ensuring that they have the financial support required for their superyacht purchase. Fortier offers a diverse range of financing solutions tailored to meet various situations.

We unlock liquidity in an asset with favourable financing terms to preserve your wealth and investment strategies.

For qualified clients, we provide tailored financing strategies to accommodate various needs, including those purchasing either new or pre-owned superyachts, individuals seeking stage payment financing during construction, or owners exploring options to refinance or monetise their current superyacht holdings.

Purchase Finance

Mortgage range : €2,000,000 – €10,000,000

Up to 70% LTV for European & Schengen residents.
Up to 50 % LTV for most international borrowers.

Mortgage range €10,000,000 +

Up to 60% for European & Schengen residents.
Up to 50% for most international borrowers.

Lender requirements

Creditworthiness subject to age, income and global net worth.
Reputable shipyard or boat of less than 10 years old (case by case).
Valuation and condition survey required.
Comprehensive insurance policy (discuss with broker).

Key Considerations

Registration of ownership, project manager, affordability, selection of lender, legal and tax, value added tax (vat), maritime lawyer, leasing finance.

Mortgage range : €1,000,000 – €10,000,000

Up to 80% LTV for European & Schengen residents.
Up to 60 % LTV for most international borrowers.
Up to 70% for European & Schengen residents.

Lender requirements.

• Creditworthiness subject to age, income and global net worth.

Our committed team possesses expertise in managing the financing requirements of yacht owners, providing customised solutions to optimise financial arrangements in response to evolving circumstances.

Fortier’s commitment to excellence extends to our collaborative partnerships with family offices, challenger banks, and global banking partners. This network enables us to deliver client-focused solutions that align with individual preferences and financial goals. Rest assured, with Fortier, your yacht acquisition journey is not only a pleasure but also an efficiently managed and personalised experience.

At the Helm of Yacht Finance

St julian’s maritime finance is a unique independent european asset-backed yacht leasing company. based in malta and managed by a dynamic team of professionals with long-standing experience within the finance and maritime industries., yacht leasing explained.

Understand why St Julian’s Maritime Finance is the smart solution to yacht financing.

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Financing your yacht

As with many things associated with moving up in class, large yacht finance is a different dance with new steps to learn. Gone are the days when you negotiate a price with a salesman at a boat show and walk down the dock to a stand where you fill out a loan application and receive a floating key fob for your trouble.

Now large yacht finance is a complex transaction typically handled by a bank's private wealth management division or a broker who works with a bank that specialises in this trade. The difficulties that have swept the globe since 2008 have made it marginally more difficult to obtain large-yacht financefewer lenders are engaging in yacht finance and their requirements are tougher but for those with the will and the liquidity, there are ways.

As Lisa Verbit, senior vice president and national marine executive, US Trust, Bank of America Private Wealth Management, says 'Qualified people can still get credit.'

Securing financial packages

Moving up from a small boat to a superyacht involves many layers of added complexity, extra digits in the purchase price and a new financing paradigm. You likely won't be dealing with a traditional lending institution for a 20 year, fixed-rate loan with 20 per cent down based on your credit score.

At values above $5 million or so, you'll likely be dealing with a superyacht specialist to customise a package that accomplishes your goal of acquiring the boat while protecting your liquidity and theirs.

An anecdotal survey of superyacht industry professionals suggests that half to three-quarters of new build and brokerage clients finance some of the purchase price of their yachts, even if they can afford to pay entirely in cash. The decision to finance likely has more to do with a broader financial strategy than the ability to pay.

The decision to finance likely has more to do with a broader financial strategy than the ability to pay

'One of the primary reasons our clients finance is to take advantage of an arbitrage opportunity to be able to earn more by keeping liquid assets deployed into the stock market or some other businesses investment than the cost of borrowing against the yacht,' Verbit says. 'The arbitrage play is more difficult today so we've seen many of our clients pay cash or borrow against their securities portfolios.

'Borrowing against a securities portfolio is less expensive than borrowing against a yacht, but there may also be an opportunity cost to tying up availability under a line collateralised by securities. We expect that some of those clients will seek to monetise their yachts as investment opportunities arise. In fact, we're already seeing a bit of that.'

The yacht finance process generally starts with a conversation about the client's goals, says Verbit. Each client is different, with some seeking truly customised financing, but most fall into one of the bank's standard products.

A typical superyacht financing scenario might involve a loan for 75 per cent of the purchase price of the yacht with payments amortized over 15 years, with a balloon payment due within a period of up to seven years.

A typical superyacht financing scenario might involve a loan for 75 per cent of the purchase price of the yacht

Factors the bank will look at to establish the terms include the size of the loan, the risk profile of the client determined through financial underwriting analysis, and the client's relationship with the bank.

US Trust, Bank of America requires clients provide:

A personal financial statement dated no earlier than three months prior;
The last three years of personal federal tax returns, including Schedule K-1 forms;
Verification of liquidity in the form of bank and/or brokerage statements, including details of account holdings; and
Three years of financial statements for businesses representing 20 per cent or more of the client’s net worth.

Three years of financial statements for businesses representing 20 per cent or more of the client's net worth.

If the yacht will be owned by a separate entity such as an offshore corporation , the bank also will require copies of the formation documents of the ownership entity.

A year or so before the balloon period matures, the owner and the bank will reassess the owner's goals and intentions. At that time, the owner may decide to renew the financing package.

If all is well with the owner's financials, the bank may choose to renew the package, but likely with a shorter amortization.

Setting the cost

Rates in Verbit's division at are based on LIBOR (London Interbank Offered Rate the average interest rate that leading banks in London charge when lending to other banks). She says yacht finance rates range from about 2 per cent over LIBOR to about 3 per cent.

'The key driver on pricing is the overall financial profile of the client,' Verbit says. 'It's not driven by the nature of the purchase, whether the client is buying a new yacht, a brokerage yacht, or is entering into a new build contract. If a client has a current relationship with us, that will factor into pricing, although a current relationship is not required.'

Securities-based lending is an option most large banks offer. Darran Blake of The Blake Group and senior vice president investments, UBS Financial Services, Florida, says her group uses a strategy called 'collateralised portfolio lending'.

Basically, the bank will monetise against a portfolio with lendable assets in it, such as a stock portfolio, to buy a yacht, a jet or real estate.

'Whatever we can hold in a UBS account, we can lend against,' says Blake. 'Every asset has a specific lending value, but not everything is lendable.'

The UBS program is aimed at those who may have accumulated a healthy stock portfolio or other liquid assets over the course of their careers. The client presents it to the bank, which assesses its value and potential.

If it meets their tests, the owner is presented with what amounts to a credit line with a chequebook he can use to pay for anything he wants (except to buy stocks) be it a new build, a brokerage yacht, or operating expenses.

Among the advantages, says Blake, are that the client doesn't have to sell the stock to pay for the boat and take the tax hit. The loan rate can be locked in at the outset for up to five years, be variable or fixed.

The minimum amount the program will accommodate is $55,000. The maximum is $50 million, although Blake says that limit is not set in stone. The maximum is authorised on the higher side on a case-by-case basis by UBS.

Cash buyers

Those who do choose to finance, might finance up to 80 per cent of the cost of the boat, but that number can vary widely. In a reflection of the diversity of superyacht owners and their individual financial strategies, some industry sources say that nearly all their new-build clients finance some part of their yachts, while others say nearly all pay cash.

Michael Joyce, chief executive of Hargrave Custom Yachts, says prior to the economic downturn in 2008, most of this firm's clients paid cash for construction of a new yacht, but would take notice if loan rates were low enough.

Now, he says, probably half look at the option of financing some, of all, of the actual construction. With brokerage boats, that number may be 35 per cent. He estimates 80 per cent of the buyers of Hargrave vessels, which range in length from 21m to 42m, pay all cash.

'The decision to finance has to do with the personality of the buyer,' says Joyce. 'Many have grown up with the philosophy that if you can't afford to write the check, you shouldn't buy it. [Our yachts] run from $5 million to $20 million, and we don't see any price point that impacts the decision to finance.'

Alternative credit sources

While dealing with institutions that specialise in large-yacht lending and know the vagaries of the business may be a wise course to pursue, a prospective owner can approach his own bank, which may hold his investment portfolio and other loans and with whom he has a strong relationship, or he may consider financing through an engine builder assuming he's talking to one in particular.

Cat Financial, a division of industrial giant Caterpillar, offers ground-up consumer financing for yachts, provided they are equipped with Caterpillar engines. According to Vern Patterson, senior international account manager, Cat Financial, the division offers yacht financing with no ceiling on size.

Verbit says her bank's appetite for yacht loans has not changed since before 2008, nor have approval rates. What they experienced was a lack of demand for yacht loans.

'I can say that we are still in the construction lending business,' she says. 'We're careful about it, as we always have been, but our appetite remains.

'As for brokerage, within the last year we've seen some one-off yacht loan fundings, and some very large deals at that, by banks that are not typically involved in the yacht business. The reason: We all need good loans, and the clients purchasing superyachts are people we all want to bank.'

Milestone Payments

Yacht construction loans are often structured around 'milestone payments'. A lending institution may enter an agreement with a client where the bank finances 70 per cent of the build cost.

The bank will release payments to the yard at clearly defined stages of the build, such as when the keel is laid, the engines are installed, the superstructure is completed or the fairing and painting are done.

At each stage, or milestone, the banks will require a surveyor or project manager to verify the work has been done properly before releasing the funds. The loan will be interest-only during construction.

Irrevocable Commercial Letter of Credit

International commerce revolves on letters of credit (LCs).

An LC means that a bank ensures that the yard or seller will not be paid the buyer's money until the bank receives confirmation that the yacht has been delivered in the agreed upon condition and within a specified time frame. It also serves to assure the yard or the seller that the necessary funds will be available when the transaction is complete.

If for some reason the buyer is unable to complete the transaction, the bank is required to cover the full or remaining amount of the purchase, which protects the yard or seller.

In today's global market with the commercial laws differing from country to country and/or a yard's lack of a known track record, an irrevocable LC is generally seen as a safe way to protect the interests of an owner and a lender during yacht construction or a brokerage transaction. A solvent yard can use the buyer's LC as a form of collateral to obtain its own construction financing from its regular lender.

LCs require that the conditions for any draws and final payment are well detailed by someone experienced in construction and contracts rather than a banker or attorney determining if the yard has met the requirements.

One yacht owner told us the LC absolutely protects the yacht owner, not just by minimizing risk, but by eliminating it completely.

'Only when the yacht owner is happy with the product can the bank release money for an LC payment,' he said. 'Your signature is the only way an issuing bank will pay for product.'

Meanwhile, the owner's funds on deposit have been earning interest in that bank.

The caveat is that an LC should be prepared by an lawyer specialising in financial instruments with properly defined trigger terms and key objectives stated within them.

The issuing bank makes payments only when terms are met, taking the owner out of the fray, and in the case of draw payments, frees the owner from having to visit the yard on demand.

Every LC should be tailored to a final execution date and a reasonable delay clause. Any specific quality standards, such as class compliance, should also be stated. Sometimes, stage payments and LCs have been combined to advance capital to the builder with a nominal payment of 15 to 20 per cent. This compromise increases the LC's liquidity for the builder.

Originally published: Superyacht Owners Guidebook 12

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Superyacht Financing Loans

Enness brokers yacht finance for global high-net-worth individuals. From smaller yachts all the way up to mega yachts, Enness has experience brokering every kind of yacht finance.

Why Finance a Yacht?

Yachts – especially superyachts and mega yachts – are only accessible if you are a high-net-worth individual, even if you are using superyacht finance. It’s important to note that yacht financing is never about making a boat more affordable or buying on ''credit.'' The sheer sums of money needed to purchase a yacht and the risk for lenders will require that you have significant wealth and that your financial position is very strong. In other words, a yacht needs to be a highly affordable purchase for you, even if you want to finance it.

Yacht financing is usually used when you have very significant assets invested or tied up in such a way that it doesn’t make sense to liquidate them to buy your yacht. Lenders will want to be assured of this before they will even consider lending. Generally, you will need to have assets, wealth, and sources of income (properties, shares, securities, businesses, etc.) that far surpass the value of the yacht you are looking to buy for yacht finance to be an option.

The running costs of yachts vary, but they won’t come in at less than about 10% of the cost of your yacht per year, and these can be significantly higher if you have a large boat with lots of crew. Yacht financing is always about the vessel rather than these additional costs, so you will need to ensure you can comfortably cover these in addition to repayments and other running costs and loan repayments.

Depending on your citizenship, it may also be more advantageous to finance a yacht for creditorship and personal liability reasons.

Yacht Finance FAQs

How does yacht financing work.

The overarching principles of yacht or superyacht financing are much like a more ''normal'' loan. Your lender will release a pre-agreed sum to you that you will use to buy the vessel. You will be required to pay back the loan and interest over several years. This system is often used if you are purchasing a second-hand yacht.

If you are planning a new build, your lender will agree to release finance to you in stages. Financing commissioned yachts is marginally more complex as lenders only release funds to the shipbuilder after each part of the build is finished. Work on each stage will need to be verified (often by third-party specialists) and certificates issued against the completion of the phase before your lender will release funds. Your shipbuilder can then continue with the next stage of the build. Both you and your lender will want to consider extra financial safeguards in the case of yacht construction. Usually, these include provisions and structuring in a way that will protect you from bankruptcy or litigation against your shipbuilder that would halt the construction of a ship partway through the projects. Again, you will be required to pay back the loan and interest over several years.

While it is possible only to use the yacht as security for superyacht finance, increasingly lenders will want something in return for offering this type of loan. Yacht-only collateral is likely to be a reality for much smaller boat purchases, rather than vessels that cost multiple million pounds, i.e., superyachts and mega yachts.

Lenders will most likely want to form professional relationships to manage your personal and/or business assets in return for superyacht finance. What kind of relationship you will enter into with a lender and what you will need to put under management will generally depend on your profile, background and wealth. Also, expect to be required to sign a contract that pledges that the lender can claw back any defaulted payments from your corporate interests and personal assets if you don’t make repayments on time. Again, this means that lenders will circle back around to your ability to pay for the yacht in the first place: if you can’t – or won’t – make comprehensive contractual assurances to cover the loan, expect this type of finance to be more complicated.

Loan-to-value ratios vary from lender to lender but generally sit at around a maximum of 50%, although it can sit on either side of this, depending on your background. Generally, the more diverse and liquid your assets, the more willing lenders will be to consider financing your yacht.

Nuances of Yacht Finance

Before considering you for superyacht finance, lenders will want to know more about your experiences with yachting. If these questions come up unexpectedly, this can seem overly intimate: professional relationships rarely venture into the details of how you spend your vacation and what kind of places you stay in. However, yacht finance is a world unto itself, and lenders will want to ensure you understand the asset you are buying and that you have a long-term interest in yacht ownership. Generally, having chartered a yacht a few times will suffice. Principally, lenders want to ensure you will enjoy the vessel you’re buying and won’t want to sell it immediately and that you have grasped the basics of operations and costs.

You will also need to think about the long-term involvement of your lender throughout your ownership of the yacht. Your lender will want to ensure that the boat (i.e., their security) remains in good condition for the loan period. They will want to do this to ensure that should you ever default on the loan, the yacht can be sold relatively quickly and that it’s in good condition at all times. Practically, this will probably mean it will need to be inspected regularly (at least once per year) by the lender, who will want to check that appropriate upkeep is being carried out and that the vessel remains in good condition.

The lenders will also have comprehensive covenants that will cover a wide array of terms that relate to the yacht, its upkeep and its use. Lenders are relatively free to stipulate these, and they will be able to set out clauses and provisions for different aspects of ownership. You will need to understand what these are, how they will affect what you can do with your yacht (i.e., the terms under which you can charter, should you lease the boat) and how it will affect the operation and regions in which you can sail. These details will affect your use of the yacht, and you will need to either negotiate these or reflect carefully on these before signing terms.

For larger, more expensive yachts, you will essentially be entering into a long-term business partnership with your lender, given you will be looking at paying back your vessel over several years. Remember that lenders will be involved and hands-on in more than just your yacht ownership: they usually require updates and at least some oversight of your finances to ensure that you remain in a solid financial position. For this reason, the lender you work with is critical to smooth, enjoyable yacht ownership. While they are subtle details, borrowing from a lender that you like, want to work with for several years, and that has offered you a fair deal is paramount to success.

Structuring Yacht Finance

Whether you are buying a superyacht second hand or commissioning a build from scratch, you will need finance to be structured in a way that meets both your financing and broader requirements. Alongside specialists and your advisors, your broker will also consider how to structure finance in a fiscally advantageous way. Enness will also consider how your package fits your other corporate and private structures.

Yachts are rarely – if ever – owned by an individual. Instead, you will most likely hold your yacht through a corporate structure. Corporate yacht ownership is most efficient from a fiscal perspective and facilitates elements like the employment of your crew and things like how you pay VAT.

Yacht finance is, therefore, not just a simple question of taking a specialised kind of personal loan and using it to buy a yacht – there are broader and more complex elements to consider. Your ownership structure will need to be thought out and set up before lending occurs, and specialists will need to advise on the best way to structure your ownership. Enness will be able to source in principle offers for you, but lenders will need to understand your proposed structure to be able to do this.

Lenders will lend to the corporate entity that owns the yacht (and of which you are UBO) rather than you personally. However, you will generally be expected to provide a personal guarantee using your own accounts or money against the yacht to provide additional security to your lender.

Loan Agreements will be very detailed. Your nationality, plans for the boat, if it is a new build or you are buying second hand, plus where it will be registered, and the boat’s size will all affect how a lender will want to structure what you borrow. Enness will consider fiscal implications, where you live, the domicile of the corporate entity, currency, potential resale and so on. Enness handle sourcing finance and negotiating terms, but they will work alongside other experts and your advisors to deliver a yacht financing package that meets all your needs.

Enness will also ensure your finance package is ''futureproof''. For example, where your yacht will be registered will also make a difference to how finance is structured and which lenders Enness will approach. Likewise, what you do with the yacht will also come into play. If the yacht will be chartered, lenders may be more willing to let you borrow, given the vessel will generate income. In some cases, however, lenders may require that any revenue generated from charters is paid directly to them as part of your financing agreement, although this requirement may not be the same for every lender. If your yacht is used exclusively for private use, you may need to provide more security or guarantees, given it will not generate income.

Terms will also come up at the initial stages of negotiating finance. Lenders will need assurances that they can take control of the yacht if you default on your loan. Sailing to jurisdictions where it would be impossible for them to impound the boat will usually be a non-negotiable for lenders, and you will need to consider how terms like these affect your ownership and enjoyment of your vessel.

How Will Enness Organise Yacht Finance?

While it is tempting to try and emulate a similar structure or approach the same lender your associates use for their own yacht financing, doing so will not get you the best finance deal. Every aspect of yacht finance needs to be personalised, or you risk missing out on the best package. Enness will analyse every element of your background and identify how to get the best deal. This deal will be completely customised and will be dependent on what you can bring to the table, what you can offer lenders and the broader intricacies of your situation.

Enness always start by asking you questions to understand how much you want to borrow and by when, what type of yacht you want to buy or commission, your financial situation and background. Your broker will also ask about any ''non-negotiables'' you have too – these tend to centre on any specific terms you are aiming for in terms of lenders, rates and so on.

Yacht finance is complex to arrange, but it is essential to remember that you are entering into a long-term relationship with a lender. Much like a mortgage, you will be looking at paying back your loan over several years, especially if you are making a high-value yacht purchase and placing assets under management with your lender. Ensuring that you benefit from the right financing and that the deal is structured in a way that will be advantageous over several years is imperative. Having access to a choice of lenders and negotiating the deal that’s right for you is central to success.

Negotiating superyacht finance requires finesse, consummate access to specialist lenders and an ability to generate healthy competition between the different players in the space. Operating alone, it is very challenging to create the right environment to ensure you enjoy the best deal. A broker like Enness will also be able to open superyacht finance negotiations.

Regardless of how much finance you want for a superyacht purchase, this kind of specialist financing deal is a two-way street. Everything is negotiable, especially if you have a high profile or a lot of business that your lender can benefit from. Enness will open up negotiations and will be able to entice lenders to offer the best rates and terms.

How Long Is Yacht Finance?

The length of your loan will depend on how much you want to borrow. Superyachts and mega yachts that cost several million pounds will be repaid over more years than a smaller, less expensive boat. For large vessels, terms are usually twenty years, but your broker may be able to negotiate longer or shorter terms. Smaller vessels will typically be repaid over five to seven years.

Yacht Finance Interest Rates

Interest rates are usually fixed rates, which helps to safeguard against fluctuating interest rates over the course of your loan. Interest rates vary significantly from lender to lender. Because you will benefit from a hand-crafted deal, there is no fixed rate or standard interest rate that can act as a guide. Your wealth, profile, what income you generate and what other assets you own will all play a part, as will the size of your yacht and how much you want to borrow.

Enness will source and negotiate the very best interest rates available in the market.

Contact Enness to Discuss Yacht Finance

With access to more than 500 global lenders, Enness will be able to negotiate the best superyacht finance deal for you.

Contact Enness to have a no-obligation chat about your plans for purchasing a super or mega yacht and explore how Enness can help you structure and streamline yacht finance.

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Marine or Yacht Finance is an extremely convenient and flexible way to purchase a yacht. With interest rates remaining at historic low levels, the ability to borrow money secured against the yacht allows a buyer to free up capital for other investments or leave current investments intact.

Whilst the number of primary marine lenders in the market is much smaller than it was in the early 2000's, the flexibility of the loan products has increased greatly. Marine lenders fully understand the finances of yacht owners and also how they like to buy, use and sell their yachts, and can tailor plans to suit.

Grabau International Yacht Brokerage & Conveyancing is delighted to work closely with a majority of the primary lenders in the UK marine finance market in addition to having good contacts within the European lending markets.

** PLEASE NOTE ** Grabau International are not a lender, but simply act as an introducer for selected marine lenders. Grabau International may only make such introductions to clients who are buying or selling yachts directly through Grabau International.

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FINANCING YOUR LUXURY YACHT

If you are looking to finance a yacht and fulfil the dream of a lifetime, our trusted financial partner for over 15 years, akf bank, provides personalised, confidential, tailor-made solutions, catered to your individual needs. Benefit from the wealth and knowledge of maritime expertise akf bank has garnered, having been in business as a leading private bank for more than 50 years, and rest assured that your yacht financing is in safe hands.

Akf bank has created a number of bespoke yacht finance options for those looking to purchase a yacht, to ensure complete flexibility for its clients. Akf bank’s maritime specialists are on-hand every step of the way to ensure a fully personalized service, so you can make your vision of having your own yacht a reality, much sooner than you think.

Whether it’s a motor yacht, superyacht or sailing yacht you are looking to buy that is under construction, new or pre-owned, you can place your trust in akf bank to provide a marine finance solution that perfectly suits your requirements.

Ready to purchase the luxury yacht of your dreams? Lengers Yachts will gladly introduce you to our esteemed partners at akf bank, who will secure you yacht financing that works for you.

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BOAT FINANCE by SGB FINANCE

SGB Finance is one of the largest providers of boat financing in Europe.

SGB Finance has 20 years experience. Its team of experienced marine boat financing experts is available to provide you with personalised advice and tailored finance solutions suited to your project:

Credit solutions are available for new and used boats , for terms of up to 15 years, with a deposit of up to 50 %. Credit solutions enable you to immediately acquire ownership of your boat.

For more information on credit solutions:

WWW.SGB-FINANCE.COM

LEASE WITH OPTION TO PURCHASE (2)

This financing solution is reserved for new and non-VAT paid used boats , for a duration of up to 15 years, with a contribution of up to 50%.

In the long term, you can choose to become the owner of your boat. SGB Finance purchases the boat of your choice, and you lease it for a determined period of time. At the end of the lease agreement, you have the choice of returning the boat, according to the conditions agreed upon in the contract, or acquiring it by exercising your option to purchase.

(1) Terms and conditions apply. Loans will be subject to a customer approval, a satisfactory affordability assessment and a good credit history. A security will be placed over the boat in the form of a mortgage. The boat may therefore be at risk if customers do not keep up the repayments on their loan.

(2) Product only available to residents of France, Germany, Italy, Spain and Portugal. Terms and conditions apply. Finance will be subject to a customer approval, a satisfactory affordability assessment and a good credit history.

SGB Finance is a subsidiary of CGL (Societe Generale Group) and the Beneteau Group.

SGB Finance SA, a finance institution incorporated under French law with a share capital of Euros 6,054,250, registered on the French Register of Commerce and Companies at the Registrar of the Commercial Court in Lille Metropole under number 422 518 746, has its registered office at 69 Avenue de Flandre 59700 Marcq-en-Baroeul, France.

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Buying a Yacht in Europe: Tax and Legal Considerations

We are often asked about applicable taxes in Europe for boat owners because there is a lot of confusion surrounding VAT Tax. While buying a yacht outside the US has benefits for some, it also has lots of complexities and nuances that you are probably less familiar with. So, if you are planning to buy a boat in Europe, make sure you understand the tax implications, especially if you plan to cruise in Europe for an extended period of time. Here we share information that will offer you guidance on the right questions to ask. Always employ a tax professional, legal counsel, and other assistance to ensure you are getting the correct guidance for your specific situation.

vat tax on a yacht in the european union

All EU residents who own a boat and use the boat within the EU are required to pay a 20 % Value Added Tax (VAT), which will hike up the sales price considerably. It’s important not to underestimate the complexity of VAT on vessels, especially for higher value yachts. As a matter of course when you check into an EU country or when you sell the boat, you will be required to provide evidence of VAT paid much like a Federal Duty paid certificate in the US.
For non-EU residents, the laws state that they are permitted to use privately owned yachts in the Mediterranean under “Temporary Admission” for up to 18 months without being liable to pay VAT. So if you want to cruise in the Mediterranean for a few months after taking possession, you can temporarily import the boat for up to 18 months.
If you are planning to transfer residence to the EU and it coincides with the permanent importation of the boat, you may be eligible for VAT relief.
After extended cruising outside the EU, a VAT paid boat exported from the EU may also qualify for relief on its return if it’s returned to the EU within three years of export. It must be imported by the person who exported it from the EU and cannot have significant upgrades that will increase its value substantially.
Boats that are kept outside the EU for more than three years may be required to pay VAT again so be careful about keeping good records.
A VAT paid boat could lose its VAT paid status if it’s sold outside the EU and VAT must then be paid if the boat is brought back into the EU, even if the buyer and seller are EU residents.
A European Union (EU) resident who buys a new boat or a used boat for personal use that did not have VAT paid will be responsible to pay the VAT rate applicable at the place of delivery as well as transfer tax or import duties. However, if the boat is acquired for commercial purposes or leased, the rules apply differently.
An off-shore registered yacht owned for commercial purposes in the Mediterranean is exempt from VAT, if the boat was imported into the Med per the applicable regulations.

It's All About Location

The location of the yacht, the residence of the buyer, and where the yacht will be operated as a business. Each aspect impacts not only taxes and duties at time of purchase, but also taxes related to collecting revenue. Some examples will help you better understand just how intricately entwined the location of the yacht, buyer, and business are:

Non-EU residents are permitted to use privately owned yachts in the Mediterranean under “Temporary Admission” for up to 18 months without being liable to pay VAT.

As you can see, to determine the appropriate legal and tax implications and rules you need to follow in your situation, it is vital to do deep due diligence to analyze the operational tax and flagging issues, cruising waters, nationality and residence of the vessel’s users, and any planned chartering operation.

*The information above is for general purposes only and should not be relied upon as a legal or tax advice.

Wanda Anglin

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Hi I am Swiss and looking to buy a used boat in the Schengen (EU) are. What are my VAT tax implications? Thank you.

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HOW TO FINANCE SUPERYACHTS IN EUROPEAN WATERS

Posted 08-01-2017
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The yacht finance market is a true niche market accessible only by high net worth clients. Typically, they don’t need financing to acquire the yacht they have set their eyes upon, but they are looking for a facility primarily for cash flow purposes (or possibly looking for gap finance for a limited period of time).

The present yacht finance market

Since 2008, any person seeking yacht finance has had to approach this finance market with a different frame of mind than he is accustomed to with when dealing with finance requirements for his business. He must realize that financing the acquisition of a yacht is a risky business for any bank and credit policies are very tight. Furthermore, the banks view yachts as private assets of their clients, not as a business, so any person seeking to finance an acquisition, or a refit, must be aware that the bank will not be impressed by any business (charter) plan, even if intended only to support, and not to replace, a repayment program provided by the owner.

Nowadays there are a number of finance options in the superyacht sector for yachts worth over €10 million. For less expensive yachts, lending becomes more regional as international banks tend to consider that it is not worthwhile spending effort, time and money on smaller deals. In this segment, knowledge of specialized banks or branches close to the jurisdiction where the client resides is the paramount consideration. Leasing would be easier to obtain for such yachts.

With regards to the acceptance of a “dossier”, if before 2008 the primary assessment during the application procedure was security, now the emphasis has switched to two main areas: the ability to meet payments and legal matters. Financial institutions want much more detailed information than before, which results in an application taking considerably longer to process.

Marine products available in Europe

1. Marine mortgage loan : This is the most frequent way to finance commercial and offshore registered yachts. Main features: The loan terms available will obviously be dependent upon various factors such as the creditworthiness of the owner, the age and value of the yacht, and any other collateral security that is available. However, typically terms offered are likely to be as follows:

• Available for both new or used boats of less than 5 years preferably and from renowned shipyards

• Available for both private and company ownership

• 5 to 7 years repayment loan. Some banks accept to finance up to 20 years depending on the profile of the client

• Maximum loan to value ratio is 75%

• No VAT in case of a commercial registration / offshore registration when possible

• Variable and fixed terms available

• Typical interest margins: Euribor + 3 to 6.5 % depending on client’s net worth and type of finance;

• Arrangement Fees similar to Margin: 0.35 to 1.5% + legal costs

• Monthly or quarterly repayments

• Prepayment penalties TBC depending on the bank

• Minimum security is personal liability of the owner and first ranking Marine Mortgage over the vessel + assignment of earnings and insurances and assignment of building contract in case of a new construction + possibly pledge on the shares of the holding company of the yacht

• Valuation and condition survey could be requested if the yacht is more than 12 months.

The owner may also be required to covenant that his or her net worth will never be less than a specified multiple of the amount of the loan.

The particular terms of any loan are then likely to be set out in a detailed loan agreement including the various conditions required to be satisfied prior to any drawdown and the ongoing covenants with which the owners would be required to comply until the loan is repaid (e.g. concerning the use, condition and operation of the yacht).

2. Leasing schemes

Using a leasing scheme is a very attractive way to finance the purchase of pleasure yachts as it allows minimizing the VAT impact. In simple terms, a lease involves a bank or finance house buying the asset and then effectively renting it back to the client for an agreed period at an agreed price. For VAT purposes a yacht lease is a supply of services and is deemed to take place where the person who makes the supply is established: i.e. French bank in France, Italian bank in Italy etc. At the end of the lease, the client has the option to buy the asset which then becomes a transfer of goods. In this event, a VAT paid certificate will be issued to the lessee provided that all the VAT due has been paid.

They are simple to set up and administer and can be in individual, joint, or company names. France, Italy and Malta schemes are the most popular.

French and Italian leasing

Main features :

• Leasing facility available usually from 300,000 euros (no maximum)

• Initial deposit between 20% to 34%

• Lease maturity usually from 1 to 8 years

• VAT rate on deposit and installments will vary from 6.6 % for yachts over 24m to 19.8 % in Italy and be fixed at 10% in France

• Residual value is usually 1% and will be subject to the standard rate of VAT (22% in Italy, 20% in France, 18% in Malta)

• Available for both new and used boats In two cases it is possible to have a VAT-free lease as follows:

• A charter business buying a vessel that is used 100% for chartering in EU waters

• An individual buying a vessel for use 100% outside EU waters.

The bank will arrange to buy the yacht, finance the balance, settle the VAT, and then lease the yacht to the client or to the company for the agreed period at an agreed rate per month (or quarter).

Maltese leasing

Such schemes may be set up by incorporating a Maltese company, duly registered with the Maltese VAT authorities, to act as Lessor. The said company will then be in a position to contract with any client acting as Lessee on a Maltese Yacht Lease, preferably another Maltese company to create more links with Malta.

Upon the conclusion of a Leasing Agreement a letter is written by the Lessor to the Maltese VAT Department informing them of the Leasing Agreement. The VAT Department will thereafter confirm by means of a reply letter that a Leasing Agreement is in place and that VAT will be accounted for in Malta.

Conditions:

• The yacht is required to enter Maltese waters at the beginning and termination of the Lease Agreement

• 40% of the VAT due must be paid upon setting up the leasing (VAT on leasing installments will vary between 5.4% for yachts over 24m and 16.2%) and the balance on quarterly basis

• The leasing must be for a period not exceeding 3 years The Maltese company shall make a profit out of the transaction (typically 5% of the value of the yacht) which shall be taxable at 35% (effective rate falling at around 5%).

• To create more links with Malta it is recommended to register the yacht under Malta pleasure flag.

At the end of the Maltese Leasing, the Lessee may exercise a purchase option on the yacht – the price of which must not be less than 1% of the value of the yacht. The purchase will be subject to VAT at the normal rate in Malta: 18%. Upon exercising the purchase option and fulfilling the other prescribed conditions including the payment of all VAT due, the Lessee will be given a VAT Paid Certificate.

Noteworthy is that in terms of the Guidelines it is possible to benefit from the above reductions without involving a bank or finance institution to the contrary of the Italian or French leasing schemes. This information is for general purposes only and should not be relied upon as a legal advice. Specific guidance should always be obtained on ownership structuring, registration and operation of a yacht.

For more information contact Janet Xanthopoulos, Rosemont Yacht Services at [email protected].

Article Author: JANET XANTHOPOULOS

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Superyacht Financing

We understand the personal benefits of owning a superyacht, as well as the beauty and craftsmanship it represents. As a recognized provider of yacht financing, we can assist you with your purchase of a new or pre-owned yacht, or unlock the liquidity in a yacht you already own.

As a recognised provider of yacht financing, we understand the personal benefits of owning a superyacht—as well as the beauty and craftsmanship that a luxury superyacht represents.

At J.P. Morgan Private Bank, we can assist you with your purchase of a new or pre-owned yacht, or to unlock the liquidity in a yacht you already own. You can benefit from our high level of diligence and experience, as well as our ability to offer flexible, cost-effective options that can address your cash flow, tax position and lifestyle needs.

Yachting is a passion for many of our clients. So they can spend more time setting sail, we partner to support them on all aspects of their yachting journey.

Why leverage a yacht?

Find liquidity in a traditionally illiquid asset Fund your purchase of a new or pre-owned superyacht through a bespoke financing strategy, or refinance the superyacht you currently own.
Preserve your equity capital Make additional higher-yielding investments, direct additional funds toward your business, or increase liquidity to meet expected or unexpected cash flow requirements.
Maintain your investment strategy Optimize and increase your assets without disrupting your investment portfolio.
Diversify your sources of liquidity Superyacht financing offers a different source of borrowing, potentially freeing up other secured lines of credit for more tactical purposes.

Yacht Financing Services

Key Services: As with specialty assets, the purchase of a superyacht brings together many highly skilled professionals. Our lending advisors have a consultative approach with an understanding of the complexities of building, purchasing, managing and chartering superyachts. We will help you consider the implications based on our knowledge of the superyacht industry and understanding of your financial condition, cash flow and balance sheet, so that you can make the right financing decision with confidence.

Financing a yacht purchase

Working with us, you can expect:

Niche access and experience: In a business that relies heavily on relationships and trust, we can connect you to key specialists: leading shipyards, brokers and yacht managers, as well as legal and insurance specialists.
Registry Guidance: We can help coordinate guidance on choosing the appropriate jurisdiction for registration yacht financing terms—in consideration of the Tax & VAT implications, chartering requirements and your financing needs.
Efficiency and effectiveness: We seek a streamlined process, keeping you fully apprised of each step.
Collaboration with your other advisors: We coordinate with your other trusted professionals to help ensure the best outcome for you.

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Please contact the Data Protection Officer of Societe Generale Private Banking France by sending an email to the following address: [email protected] .

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For customers residing in Italy, please contact BDO, the external provider in charge of Data Protection, by sending an email to the following address: [email protected]

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Please contact the Data Protection Officer of Societe Generale Private Banking Switzerland by sending an email to the following address : [email protected]

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Your private banker is your privileged contact to receive and process your claim.

If you disagree with or do not get a response from your advisor, you can send your claim to the direction of Societe Generale Private Banking France by email to the following address: [email protected] or by mail to:

Société Générale Private Banking France 29 boulevard Haussmann CS 614 75421 Paris Cedex 9

Societe Generale Private Banking France undertakes to acknowledge receipt of your claim within 10 (ten) working days from the date it is sent and to provide you with a response within 2 (two) months from the same date. If we are unable to meet this 2 (two) month deadline, you will be informed by letter. In the event of disagreement with the bank or of a lack of response from us within 2 (two) months of sending your first written claim, or within 15 (fifteen) working days for a claim about a payment service, you may refer the matter free of charge, depending on the nature of your claim, to:

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The FBF Ombudsman will reply directly to you within 90 (ninety) days from the date on which she/he receives all the documents on which the request is based. In the event of a complex dispute, this period may be extended. The FBF Ombudsman will formulate a reasoned position and submit it to both parties for approval.

The FBF Ombudsman can be contacted on the following website: www.lemediateur.fbf.fr or by mail at:

Le Médiateur de la Fédération Bancaire Française CS 151 75422 Paris CEDEX 09

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The Ombudsman of the Autorité des Marchés Financiers (AMF - French Financial Markets Authority) is also competent for disputes relating to investment services, financial instruments and financial savings products.

For this type of dispute, as a consumer customer, you have therefore a choice between the FBF Ombudsman and the AMF Ombudsman. Once you have chosen one of these two ombudsmen, you can no longer refer the same dispute to the other ombudsman.

The AMF Ombudsman can be contacted on the AMF website: www.amf-france.org/fr/le-mediateur or by mail at:

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Or by email to [email protected] an d for customers residing in Italy at [email protected]

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The Bank will acknowledge your request within 2 working days after receipt and provide a response to your claim within a maximum of 30 working days of receipt. If your request requires additional processing time (e.g. if it involves complex researches…), the Bank will inform you of this situation within the same 30-working day timeframe. In the event that the response you receive does not meet your expectations, we suggest to contact the Societe Generale Private Banking Direction that handles the claims by mail at the following address:

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Financing my exceptional assets

Understand your needs.

Sailing the seas with your family and friends can be quite an experience. And what best than a luxurious and comfortable superyacht to offer them moments they’ll never forget ? We can turn your dream to reality by helping you with the financing of this special project.

If your business requires flying around the world, why not own your medium- or long-range private jet for greater flexibility and comfort? Or maybe you already have one and just want to replace it ?

Societe Generale Private Banking experts can assist you at every stage of the acquisition process:

Pre-delivery financing (construction)
Monitoring of the superyacht’s construction by selected maritime experts
Financing on delivery or second-hand financing

We can also refinance the superyacht’s market value.

We will finance superyachts of 40 metres or more in length, built by the most reliable shipyards in Europe. We also provide amortising loans with a balloon payment * (larger final reimbursement payment), in euros and US dollars, with fixed or floating interest rates.

(*) A balloon payment is when the final repayment at the end of the loan period is larger than the previous, enabling the capital to be amortised more gradually than with a standard loan.

Your support and professionalism were highly valuable both during construction and post delivery. You oversaw every stage of the project, which is rare in your field of expertise.

Mandated aeronautical experts at delivery

We can also refinance the private jet’s market value.

Through us, you will be able to acquire medium- and long-range private jets from leading manufacturers. We also provide amortising loans with a balloon payment * (larger final reimbursement payment), in US dollars, with fixed or floating interest rates.

Step by step

Societe Generale Private Banking’s team of experts in Monaco – the place to be for private jet and superyacht financing – is always available and reactive. They can handle your project, whatever your country of residence.

You expose your project and requirements.

We discuss financing and draft terms and conditions.

Our legal and technical experts validate the project.

We keep close track of the jet/superyacht’s value all along the financing process.

Attractive financing conditions : we offer you attractive conditions for this special purchase, making sure the debt/equity ratio is optimal.

Proven expertise : you benefit from the expertise and support of a dedicated team with a strong background in financing private jets and superyachts.

Customised support : our experts follow every stage of construction up to delivery.

Rigorous monitoring : we monitor your jet/superyacht’s market value all along the financing process. We also analyse insurance policies and take care of annual renewals.

Questions/Answers

Our superyacht team in Monaco will support you from the start. We have been connecting clients with superyacht experts since 2010.

No. We will assist any prospect with financing. More generally, our objective is to help you manage your wealth by giving you access to the widest possible range of products and services.

We finance 40m+ motorised superyachts built by leading European shipyards. We can finance yachts whether they are still under construction, already delivered or even second-hand. We provide amortising loans in euros or US dollars of variable durations with a balloon payment.

We support you throughout the purchasing process. We maintain strong relations with key players in the jet industry to offer you the best possible experience. Beyond that, our objective is to help you manage your wealth by giving you access to a wide range of products and services.

We provide financing solutions that suit the specific requirements of each prospective or existing client. We offer loans in US dollars over a flexible timeframe. We only finance medium- and long-range private jets manufactured by key players. Our financing is structured in the form of amortising loans with a balloon payment – i.e. a larger final repayment – allowing the borrower to maximise the leverage effect and keep cash available.

Important information

The wealth management and financial solutions, offers, products, services and activities mentioned on this website depend on each client’s personal situation, the legislation applying to them, and their tax residence. Accordingly, the present offer may not be suited to, or approved for, all Societe Generale Private Banking entities. Furthermore, access to some of these products, services and solutions is subject to specific conditions, notably in respect of eligibility.

Please contact your private banking adviser to check that these offers meet your needs and are suited to your investor profile.

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SGB Finance

Sgb finance makes dreams come true ….

Since 1999, SGB Finance is the European Expert in boat finance.

As a credit institution owned by the Groupe Beneteau and CGL (Groupe Société Générale), SGB Finance offers stock finance solutions to boat dealers and retail finance solutions to private individuals and professional clients.

SGB Finance can finance the whole range of Groupe Beneteau products (sailing boats, motorboats and catamarans) in most European countries thank to tailored finance solutions ( Loans (1), Leasing (2), LOCASSURANCE (3), and LEASYBOAT (3) ).

Obtaining finance implies taking on contractual obligations and all amounts must be paid in full. Verify your ability to repay prior to entering into such a contract.

No payment of any kind may be required from a individual before obtaining finance.

(1) Terms and conditions apply. Loans will be subject to a customer approval, a satisfactory affordability assessment and a good credit history. A security will be placed over the boat in the form of a mortgage. The boat may therefore be a risk if customers do not keep up the repayments on their loan.

(2) Product only available to residents of France, Germany, Italy, Spain and Portugal and not available to residents of the United Kingdom. Terms and conditions apply. Finance will be subject to a customer approval, a satisfactory affordability assessment and a good credit history.

(3) Products not available to fiscal residents outside of France. Subject to the terms and conditions defined in the insurance poolicy details of the insurance and the maintenance service are given in the information leaflets.

Yachting World

Digital Edition

Second hand boats: buying a yacht in Europe

Will Bruton
October 19, 2022

Buying a yacht in the EU is more complicated than it once was, following Brexit, but there’s now a growing bank of knowledge on how to smooth the process. We get expert advice on some of the key questions.

Double VAT, the Schengen zone, the 180-day rule; the list of considerations when considering buying a yacht in Europe is long and, in some cases, very complex. Crucial to understanding is having a grasp of some of the legal and tax principles that govern making a purchase. The following is not intended to be comprehensive and we advise getting specialist guidance from a tax adviser or similar.

Linda Jacques, partner at LA Law, a firm specialising in marine law and yacht transactions, says the first thing you should consider is where you are going to use the yacht you’re thinking of buying. “Since leaving the EU, it is true that things have got more complicated, but the principal legal questions surrounding ownership and tax haven’t changed that much. A lot revolves around the location of the yacht,” explains Jacques. “First, before you start looking to buy, consider where you are going to flag moor the yacht.”

Jonathan Hadley-Piggin, a partner at Keystone Law, explains that location is also crucial to the transaction. “Making a purchase of a yacht within an EU country isn’t the problem people often see it to be, but you need to be clear if you are paying VAT or if VAT is already paid and provable. Under some circumstances VAT can be avoided by concluding the sale outside EU territorial waters.”

UK Border Force reporting form C1331

The VAT factor

VAT is often the first concern that comes to mind for potential buyers because it can make a 20% difference in price.

As Jacques explains, one of the challenges of Brexit is that you can end up having to pay tax again when you return your yacht to the UK.

“ Buy a yacht in Europe and keep it there and you don’t have a problem, as long as EU VAT has already been paid and can be clearly proven. Yachts within EU waters must be EU VAT paid and have proof unless the owner is able to qualify for customs relief. Customs relief includes Temporary Admission or a VAT exemption for a yacht that is operated commercially. Commercially operated yachts have their own specific requirements and need to prove the nature of their operation is truly commercial.”

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However, if you are purchasing the yacht in Europe and bringing it back to the UK, proof of where the yacht has been in Europe and on what date the transaction concluded is crucial. “If you are the new owner, even if VAT has been paid before, you will be liable for import tax coming into the UK,” Jacques advises. “VAT must be paid again on all EU VAT-paid yachts being brought into the UK. In the UK the UK Border Force form C1331, where you declare the VAT status of the boat, where it has been and at what time, is an important document.”

The non-VAT paid yacht is a more complicated prospect, as Jonathan Hadley-Piggin explains. “We get calls from people thinking that a non-VAT paid yacht can’t be bought, or it’s simply too risky. It can, you just need to understand how to go about it and, if necessary, the new owner might need to pay the VAT to use it in the way they want to.

“It’s also worth considering how, as a new owner, you are proving VAT has been paid. For example, if the boat was initially purchased by a company and VAT was paid, but as a company they claimed the VAT back through their corporate accounts, it might be considered by the authorities that VAT has not been paid. It is this kind of issue that a good marine lawyer and tax adviser can help you understand fully. Quite often the current owner really does think VAT is paid and that their paperwork is correct, when in fact it is not, so it’s important to ask questions around what proof is available early on if you’re serious about buying.”

Michael Ashdown of Harwood Hutton VAT Consultancy regularly advises yacht owners. “You should be looking initially for the original sales invoice, subsequent sales invoices and/or an importation invoice; always asking the question ‘Would this satisfy an inquisitive customs officer further down the line?’

“We are now seeing an increasing number of clients who are choosing to pay EU VAT, knowing that it will ensure their yacht has true free movement within the EU without complexity.”

Paperwork checks in Europe.

Time aboard

While buying a yacht in the EU is possible for a UK citizen, being able to use it is another matter. An extended season of Mediterranean cruising for most is no longer an option, due to the Schengen restrictions meaning no British citizen can spend more than 90 days in the EU in one 180-day period. This means that some buyers looking to cruise for longer are investigating other options to allow them to stay in Europe. Remember that the rules for a yacht are separate to the rules for people.

Dave Birch bought his yacht to take a sabbatical with his wife and daughter, but found himself confronted with the prospect of a shortened season before he’d even completed the sale. “There are options, heavily dependent on your individual circumstances, but to keep cruising we have seriously investigated different ways to spend more time in Europe. Maltese residency can be purchased by investing in private property or business, granting an EU passport and access rights, but it is a serious amount of money that some would think extreme just to be able to keep sailing.

“Other options are so called ‘digital nomad’ visas, allowing those working while living afloat the potential to stay for longer and continue cruising. What is clear is that, at present, there’s no cheap or easy option.”

Many cruisers build time out of the EU Schengen zone into their cruising plans to take maximum advantage of the time allowance. For example, Croatia is not currently part of the zone.

A 2012 Hallberg-Rassy 64 for sale in Italy

Areas of confusion

Alex Grabau has been brokering yachts in Europe throughout Brexit. “There’s still a huge amount of confusion, particularly for UK buyers keen to buy second hand boats located in Europe. A lot remains unclear, even where there are written rules in place.

“Returned Goods Relief (RGR) is the most common area of misunderstanding,” he explains. “RGR is only available to boats where the importer is the same as the original exporter. If a VAT-paid boat is sold outside of the UK, the new owner may be liable to pay VAT if the boat is brought back into the UK.

“This currently also applies to UK owners of VAT-paid boats bought and then kept in the EU while the UK was still part of the EU28, which now would like to come to the UK.

“Even if the boat was originally UK VAT paid, or kept in the UK in a previous ownership, the owner and their boat may not be eligible for RGR and could find themselves with a sizeable VAT liability upon arrival in the UK.”

A 2002 Oyster 56 for sale in the Western Med

Another area of confusion relates to Temporary Admission (TA) which is applicable in both the EU (for non-EU boats) and the UK (for non-UK boats). “Many UK buyers believe they can buy a yacht in Europe then bring it back to the UK temporarily before heading off on their planned adventures. This is not the case, as eligibility for UK TA requires the boat is registered outside of the UK and used by a non-UK resident. There is no grace period offered by HMRC, so even spending a day in the UK may result in a VAT liability.”

Grabau also regularly comes up against misunderstandings about the difference between Europe and the European VAT area. “It can be unclear when a boat is sold in places such as Martinique, Guadeloupe, Saint Martin and the Canary Islands. These are all territories within the EU, but fall outside of the EU’s VAT area. Buying an EU VAT paid boat in these territories may see the VAT paid status lost.

“Care also needs to be taken when boats are in the Channel Islands as they fall outside of the UK’s VAT area.”

The right mark

While VAT issues can ultimately be resolved through writing a cheque, Grabau sees the UK’s introduction of its own build standard (the equivalent to the EU’s Recreational Craft Directive) potentially creating more hurdles.

“Bringing a yacht back to the UK market may soon be more of an issue because a compliance survey may be needed and some yachts may not be considered importable, or too difficult to import to the UK.”

Alasdair Reay is a naval architect and CEO of HPI Verification Services, a business that helps yachts comply with build standard regulations and undertakes compliance surveys. He adds: “Since leaving the EU, the UK has introduced its own CA mark. Most recently-built CE-marked yachts will not need a survey to comply with the CA standard.

“However, the UK government’s position on second-hand yachts is still not clear. If you do need a survey, the cost for a 50ft yacht would likely be £4,000-£10,000. If the build standards and technical data are available to us, it’s a cheaper paper-based exercise, but where it is not a survey can be necessary to formally document the yacht’s construction.”

Photo: agefotostock/Alamy

Buying a yacht in Europe – case study

Tim (who wishes to remain anonymous) found his ideal cruising yacht online, located in Spain. The prospect of buying a yacht in Spain following Brexit immediately posed several questions, particularly considering his cruising plans. “The yacht was UK VAT paid but had been present in the EU on 31 December 2020 and so also had EU VAT status. As VAT status does not survive a change of ownership, we had to make a choice between the ability to bring the boat back to the UK and our initial plan, which was to cruise Europe.

“We decided to maintain UK VAT status. This necessitated a survey and acceptance of the boat in the EU, followed by a Biscay crossing to conclude the sale in the UK, with all the logistical hurdles that that entailed.”

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Yacht leasing is a popular option for future yacht owners who want a long-term lease with the right to purchase later. The French and Italian leasing schemes are the most popular in Europe. It involves a first deposit from 20 to 50%, terms up to ten years, and the annual VAT rate is from 6 to 19%. Leasing can be used by both individuals and ...
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