Any vessel, whether it is a yacht, commercial ship, a merchant ship or a trawler, must be registered. Namely, she should belong to a certain state, fly its flag, and be under the law and international marine conventions of that state. At the domestic level, a vessel is to be registered in a particular port. Her registration data is highly important. Since a yacht may navigate in multinational waters most of her life, she must ensure she has the support and protection of the registration state if any unforeseen problems arise.
Your vessel’s nationality
After passing the registration procedure, a vessel qualifies to fly the flag of her country just as she has the right for property registration and a variety of other services. Passing the registration means that a country whose flag is going to be put on the pillar acts like the adpromissor of legal norms, the adherence of a vessel purchase and her good technical condition. The government should assure that these regulations comply with national and international requirements and testify to this over all parties involved.
The 1982 UN Law of the Sea Convention (UNCLOS), confirmed by 154 states, provides that any vessel must sail under the flag of a certain state (Article No. 92 of the Convention). According to article No. 91, every state should determine the conditions of its nationality assignment to vessels, registration of vessels within their territories, and right to sail under their flags. Vessels are to be of that state’s nationality, which authorizes sailing under its flag. In addition there must be a factual connection between a vessel and a state. Also every state issues to ship owners corresponding documents.
Nonregistered vessels
It is worth noting that international naval law doesn’t directly require compulsory registration of vessels. In theoretical terms, a vessel may be absent in any ship register and be independent of any state attribution, and in case she is detected on the high seas, she will not become outlawed. But lacking a state flag means that this vessel is not controlled by any government, and no government may guarantee her technical serviceability and compliance with regulations. If that vessel enters into domestic waters of any state or even calls at a port, she may become outlawed and be arrested according to the international legal norms.
How to choose the state for yacht registry
While choosing the state for yacht registry the following factors are to be taken in consideration:
- Financial: learn the difference in the cost of registration and reregistration in the name of the owner, tax rates for salary payments to the yacht personnel;
- Technical: in some cases it is necessary to present a yacht while undergoing registration and statuary examinations; and
- International legal: possibility of state’s participation in bilateral and multilateral contracts in order to avoid dual taxation and to assignation of favorable treatment, e.g., while marine transportation.
Different official registration conditions
Yacht registration means possessing the national identity and the right to sail under the flag of a certain state. It defines the legal regulations applied to a vessel. Official registration conditions are specific for every state. The space occupied by a vessel is considered to be part of her flag state territory. It means that a state has certain sovereign rights for that space and authorities of a state possess the contributions applied to a vessel. So a state has certain obligations within the limits of that space. On board a vessel, there must be a flag and state laws settled.
Permanent and temporary vessel registration
Temporary vessel registration allows the owner to prepare all documents for the permanent registration properly. Temporary registration clearance involves issuing the certificate, which is valid for up to 6 months to a ship owner or his representative, the radio user permit, also valid for up to 6 months. In both cases the registration should be executed by the Directorate of Merchant Marine. This organization issues the registration certificates and ship station licenses.
Documents required for the official yacht registration
- registration statement, signed by a ship owner;
- warrant in the name of an agent for execution of the registration;
- radio facilities list and general properties of a vessel;
- general view and/or deck layout
Title establishing documents:
- Bill of sale – notarized bill of sale
- builder’s certificate, issued by a shipyard (in case a vessel is new built);
- deletion certificate, issued by a broker or vendor (for previously owned vessels);
- 1F form (specific for every register);
- estimated vessel’s name;
- survey report
Advantages of vessel registration in the name of an offshore company
If a yacht is under an offshore company flag, the change of ownership procedure is performed much more easily. The undeniable advantage of doing so is the absence of tax expenses when a vessel is selling. The point here is that there are the owning company’s equities to be sold, not a vessel herself. This allows the buyer to avoid changing the owner in the register, and by doing this it is possible to allow him not to pass through any extra procedures of changing the beneficial owner. Most offshore companies offer easy vessel registration terms and annual extension of this registration type. These conditions are often accompanied by the absence of a vessel use income taxation, indirect tax/VAT (depending on the jurisdiction) and customs duties.
