Dreaming of ownership structures
Talking ownershio structures at Superyacht Investor London 2026.
The phrase “emotional purchase” is as common in yachting as loafers and lush hair.
But behind the dream, the glamour and the gleaming asset, there is a space in which the head needs to take over the heart.
It might not be as seductive as planning the layout of the yacht, imagining the beach club, savouring the sumptuous interior, sketching where the gym or the plunge pool could go, shopping for the grill on the upper deck or measuring for the right size TV. Especially in the US. Or feeling good about the innovative propulsion and the adventures you’re going to have.
Even choosing a flag has a hint of exoticism mixed in with all that legal and regulatory admin. But arguably, just as important is the yacht’s ownership structure.
“The ownership side, the corporate side, gets short shrift,” said Umberto Bonavita, partner, Robert Allen Law at our Superyacht Investor London conference.
“The industry as a whole has to be more sensitive to that, because the same amount of time that you dedicate to reviewing technical specs and the general arrangement should be spent working with your legal team, your tax advisers and planning the right corporate structure.
“That includes who should own it, who should be involved, what the management should look like and the jurisdiction.”
Sue and be sued
The key to any corporate vehicle, whether that be a company, a limited partnership, or any other structure, is that is has a “separate legal personality”, according to fellow panellist Richard Elliott of lawyers Boodle Hatfield.
“What that means is that as an entity, they can enter into contracts, they can own assets, and importantly, they can be sued and sue,” he said.
“And they do all of this without bringing any liability on the people who manage that vehicle, or the people who own it.”
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The two key drivers behind the choice of vehicle are tax and risk, added Elliott. In terms of risk, the vehicle protects the people who own it. It also protects the people who manage it. “It’s very limited circumstances in which that protection can be pierced,” he added.
According to Bonavita, there’s a third driving factor for ownership structures, which can be considered a component of risk management, or risk mitigation.
“That’s privacy, confidentiality,” he said. “Ultra-high-net-worth individuals don’t like and shouldn’t publicise their connection to a yacht or any kind of luxury asset.” While not “bulletproof”, a proper ownership structure provides a level of privacy, he added.
‘Time kills deals’
owever, there is a sense that while a structure is crucial, the “tail shouldn’t wag the dog”, especially when it comes to a yacht purchase, according to Elliott.
“We need to understand what the family and the UBO want to do with the asset, and how they want to use it,” he said. “But what we don’t want is the corporate structure to slow down the purchase. It takes time to put these structures in place, so we need to be thinking about it early.”
Bonavita agrees. “There’s a saying in the United States: time kills deals, and the last thing the broker and the owners want is to be waiting around for the lawyers to be finishing drafting documents,” he said.
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But he added that neglecting a proper ownership structure could lead to expensive and convoluted solutions. He cites an example of a transaction he was brought into late, where a client had signed a new-build contract in his own name with a view to changing the structure at a later date. Nearing delivery, Bonavita’s team had to deal with assigning the contract.
“The problem is that in that jurisdiction, the assignment triggered a VAT event,” he said. “So they had to close in their individual name, personally, then go offshore, and then do a back-to-back closing to then transfer the asset from their individual name to the corporate entity. It wasn’t efficient and ended up being much more costly.”
Where does the buck stop?
For Bruce Maltwood, director, Yacht Services, Praxis, setting up an ownership structure is only the start of the journey. He says a “watching brief” is essential at all times, not just from a fiscal perspective but on an operational basis. He cited the example of a captain taking the decision to put his yacht into a yard period but not realising the vessel would lose its VAT-paid status once it emerged because of the specific circumstances.
“There was a potential loss there of €1.8m in terms of VAT,” said Maltwood. “We see so many instances where yachts fall foul of the rules almost on a daily basis. It’s quite scary.”
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More significantly, the directors of an ownership structure are ultimately responsible for the asset.
“The buck stops with the directors,” he added. “This is very often forgotten. We’re heavily involved in setting up the structure, but then quite often we’re kept in the dark from there on in, with the yacht managers taking over all the communications.
“There are financial penalties for directors, we can be barred from acting as directors, we can even face imprisonment. Our regulator has got very sharp teeth, and can inflict quite painful consequences, so it’s really important that we’re there for the journey.”
navita warned that often “directors are made to be figureheads” where they are the director “on paper but not in substance”, not necessarily maliciously.
Expanding the point, Maltwood explained how a European client needed to offer evidence that the management and control sat with the directors to avoid incurring a €30m personal tax liability.
“That’s why you need to have a specialist team, from a director’s perspective, overseeing it to make sure that you’ve got the control and that the management sits in the right jurisdiction,” he said.
The choice of the ownership structure can also have a “dramatic effect” on the cost of insurance or the availability of insurance altogether, according to Hugo Jacquot of Fort Insurance.
He suggested, for example, that it could be more complicated to insure a US-flagged vessel with a US owning company trading in the Mediterranean.
He also said it is common for an insurer to receive instructions from up to half a dozen stakeholders, including owners, owners’ reps, managers, captains and others.
“They’ll all say to us they’re legitimate and it’s fine, until it’s not and the directors are being blamed for the issue that’s been decided,” he said.
“One thing that’s very clear is that there needs to be some standard operational procedures that are very clear as to whose responsibility it is to do what.”
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Looking from the owner’s perspective, Elliott suggests there is this “inherent conflict” in that the UBO and their family office want one point of contact, but the key is to make sure the point of contact is “not solely at one level”. Certain decisions need to be made at director level, but he suggests there should be restrictions.
“So that changes, for example, to the structure itself, but also the sale of the yacht, those big decisions can be reserved back to the beneficial owner,” he said.
The takeaway from the panel was that while imaginations are drifting to sun-soaked days and dreamy nights on the yacht, buyers should also be planning ownership vehicles. That’s to ensure the yacht-owning journey doesn’t become an unnecessarily expensive and headache-inducing hassle. Making this structure bespoke for each client is key, suggested Maltwood.
“As a client of mine says, if you get on the wrong train, every station is the wrong station,” he added.
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