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How to Finance a Superyacht

May. 25th, 2011 | Comments 0 | Make a Comment   
Should you require financial assistance in purchasing a superyacht - most do - several banks are now happy to finance the purchase of both new and existing vessels. A proportion of the loan and interest repayments can be delayed until the end of the loan term and paid using sale proceeds or by refinancing. Aside from just handing the money over to you, for security's sake the bank may wish to buy the superyacht itself and charter it to you, with your charter fees repaying the loan.

As the principal security will be superyacht itself, the lender may want, for example, a say in which country you keep and register your vessel. The bank may also require charter money directly to it, insurance payouts to be paid to it first, and for further insurance in case the superyacht's insurance becomes invalid. Your vessel must normally be maintained to certain standards, with surveys and independent valuations carried out annually. The bank may still take an interest in you personally, perhaps requiring a personal guarantee and an undertaking that your net worth remains at a certain level.

Value Added Tax
If you want to keep your superyacht in European Union waters, you may have to pay Value Added Tax, ranging from 15% to 25% of the vessel's value depending on the country. Although the principles are the same, all the EU countries interpret and apply VAT differently. Generally, VAT is normally payable in the EU country through which the superyacht is first brought into the EU. Once VAT has been paid in one EU country, this should (in theory) be good enough for the all the other tax authorities. So it's possible to bring the vessel into the EU through the country with the lowest rate. Removal of the superyacht from the EU for a particular period of time resets the clock and VAT must be paid again.

Having the correct paperwork on board to prove the superyacht's VAT status is vital if arguments with customs officials, possibly leading to the confiscation of the vessel, are to be avoided. If this is going to be an issue, the VAT status should be made a term of the sale contract, and a bank guarantee provided just in case the seller is mistaken.

Thankfully, there are ways of avoiding VAT. For a start, superyachts built by a certain date, and moored in the EU on a certain date, are relieved, although proving where it was moored years ago can be tricky. Also relieved are vessels registered outside the EU, owned by a non-EU resident and only used temporarily in the EU. Temporarily means for 18 months in any 24 month period. An individual is resident in the EU having spent more than 185 days a year there.

It is also possible to effectively neutralise the payment of VAT where the superyacht is being chartered, by setting up a company as purchaser in the Isle of Man, which for VAT purposes is part of the EU. It is not necessary for the vessel to be sailed to the Isle of Man.

Read the entire article for a complete and in-depth look at buying a super yacht
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