Over the years Guernsey has developed into a sophisticated business centre, providing management services for a growing number of International yachtsmen (Power and Sail),. These services comprise predominantly Corporate ownership and Registration under the British Flag.
In accordance with the Merchant Shipping Acts of 1894, 1988 and 1993 those entitled to inscribe a yacht on the British Register of Shipping are a) British subjects; and b) bodies corporate established under and subject to the Laws of the United Kingdom or of some part of Her Majesty's Dominion, and having their principal place of business in the United Kingdom or those Dominions. Such registration enables the yacht to fly the "Red Ensign" - the most prestigious of maritime flags - and to enjoy the facilities of British Consular services worldwide, with the added advantage of being able to register a marine mortgage against the vessel.
A yacht-owning company can be established in Guernsey very simply and usually within a working week. In addition to the benefits of British Flag Registration this Guernsey company will not be liable to Wealth or inheritance Tax and liability is limited to the company's assets. As the registered owner of the vessel is the company, the proprietor will also enjoy anonymity as well as being able to sell the vessel through a share transfer of the company.
In addition to ensuring that the day to day management of the yacht owning company is carried out in line with the client's requirements, some establishments in Guernsey offering these services will also provide the added value of crew employment, radio licensing for the vessel's broadcasting equipment, management of the vessel's operational funds and comprehensive insurance cover, not only for the vessel but also personal accident and legal protection.
Increasingly, Guernsey Trusts are being created to hold the shares of yacht owning companies. Briefly, a Trust is created when the "Settlor" transfers assets to Trustees to hold such assets upon terms laid down by the Settlor, for beneficiaries, of which the Settlor may be one. The Trustees are also bound by Guernsey Trust Law. Creating a Trust to own the shares of a yacht owning company keeps the company and other assets settled outside the Settlor's estate. The main benefits here are:- confidentiality, estate and tax planning opportunities, flexibility to meet changing business or family circumstances, avoidance of forced heirship laws and exchange control (where applicable) and the ability to consolidate assets from a variety of jurisdictions. However, advice should be sought in the relevant jurisdiction to ensure that the most tax-efficient structure is created.
Marine Finance by comparison is quite a complex affair. By its very nature (movable and vulnerable) a yacht is not always accepted as a safe financial proposition. Often costing hundreds of thousands of pounds, a bank or other financial institution will require substantial collateral, property or blue chip company shares for example, in addition to excellent references before considering a finance package, or mortgage, for a yacht. Any person looking for such finance should first approach their own bankers in their country of domicile. This applies equally for the purchase of an existing vessel or funding for a new-build project. Whilst finding the right finance package may at time prove difficult, it has not deterred millions of international yachtsmen from fulfilling their ambitions.
Guernsey is considered to be the World's second most popular British Port of Registry; a testament perhaps to the level of expertise and professionalism found on our small island.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances from a local lawyer or accountant.
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The claim followed the conclusion of two years of litigation (ORD 12/0035 & ORD 12/0034) between the parties in respect of the Bank's contractual claim for amounts owed by TSEL to the Bank pursuant to certain business loans.
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