Guernsey: From Privateers to Expert Tax planners. Yacht Ownership the Guernsey Way

Last Updated: 12 January 2004

Written by David Arklie

Wealth means luxury toys and the most luxurious of all has to be the yacht. Whether a sleek 45 knot, 25 metre power-cruiser, or a state of the art ocean going racer-sailer, the wealthy international businessman will want to play with one at some time in his life.

And hand in hand with their accumulated wealth will have come an increasing awareness – probably through their professional tax advisors – of the increasing role played in their financial affairs by sophisticated offshore finance centres such as Guernsey.

Guernsey, popular destination for sailors as well as tax planners, may not have always been a finance centre but it has an extensive maritime history (we are the descendants of successful privateers) and it wasn’t long before the two married to find a tax efficient way for yacht ownership. The privateers, I will emphasise, are long gone.

The link was a simple one – corporate ownership and registration of the yacht under the auspices of the British flag. So what are the benefits?

The Merchant Shipping Acts of 1894, 1988 and 1993 state the following persons are entitled to register a yacht on the British Register of shipping –

(a) British subjects;

(b) Bodies corporate established under and subject to the laws of the United Kingdom or some part of Her Majesty’s dominions, and having their principle place of business in the United Kingdom or those dominions.

Guernsey is one of those dominions and immediately opens the way for the international client (whether or not they are the holder of a British passport) to establish a Guernsey company for ownership of their yacht and thereby take advantage of the benefits of British registry. Some of these benefits are tax driven and some are associated with sound legislation, for example –

(a) The strict requirements for registration, including the provision of physical proof of the yachts existence and identity by means of a tonnage survey, ensures that an owner of a British registered yacht has definitive proof of title. This is important to a purchaser and equates closely with the title deeds to a property.

(b) This proof of ownership greatly assists with the registration of marine mortgages and simplifies documentary procedures for any future transfer of ownership.

(c) A British registered yacht sails under the protection of the British Crown, enabling authorised users of the yacht to ask for assistance from British Embassies and Consulates throughout the world.

So, what of the tax planning opportunities? First and foremost there is estate planning. Rather than own the yacht directly, the client owns the shares in the company which are then subject to the terms of his will, or if his advisor so advises, an offshore trust. With careful planning the latter may mean the client is able to circumvent inheritance tax in his home country.

Secondly, provided the Guernsey company is properly registered with the local tax authorities, it is not subject to tax in Guernsey. As a consequence, should the yacht be chartered then the charter income can be collected and held in Guernsey free of Guernsey tax. In addition, should the yacht be sold for a capital gain, there is no additional corporation tax to be paid. In fact, the normal way for a sale to progress is for the shares in the company to be sold to the new owner rather than the yacht. This is a far simpler and more straightforward procedure than going through the onerous and expensive procedures of selling and re-registering the yacht itself.

Thirdly, there is no inheritance tax liability in Guernsey should the owner unfortunately die. The shareholding, if not held by way of trust, can be held so the shares pass automatically by way of survivorship – i.e. "Mr. and Mrs. Smith or the survivor of them".

However, do beware, should a client insist the shares are held in his sole name and he dies, he does so with an estate in Guernsey. This makes it necessary to go through the process of proving his Will in the Guernsey Royal Court and obtaining Letters of Administration over his Guernsey estate - a costly and time-consuming process.

Fiduciary companies, such as the Bachmann Group, have long established specialist marine departments who not only ensure the tax planning options are laid before the client and his advisor, but also arrange and ensure the correct registration procedures are followed. This will include the tonnage survey, checking title, liasing with the builders wherever they are situated and making stage payments if the yacht is a new build.

Bachmanns will also establish the Guernsey company and provide full management and administrative services to the company, including provision of nominee directors and shareholders and company secretary. The client can be shareholder himself, but many high-profile businessmen prefer to rest behind the anonymity of nominee shareholders.

Over the years specialists such as Bachmanns have extended their range of services so they are now able to incorporate and administer companies in other Crown dependencies such as the Isle of Man, Gibraltar, Cayman Islands, British Virgin Islands and also to register clients yachts in these jurisdictions.

In addition they will offer active ancillary services such as crew employment, payment of crew salaries, controlling stage payments on a new build or major refit, radio-licensing for the vessels broadcasting equipment (Bachmanns have their own call-sign, GB12), inmarsat satellite communications, and, most importantly, see you through the minefield of insurance to ensure you have the correct and comprehensive cover for your equipment, your cruising range and your crew. Should you be unfortunate enough to have to make a claim then Bachmann Insurance Brokers will handle all the liason with the insurers wherever you are in the world.

One item which is usually not offered by these specialists is marine finance. This is a complex affair because yachts by their very nature (they are moveable and vulnerable) are not considered safe enough security for a bank to lend against. Most bankers have an image of their security sailing into the sunset and disappearing forever across the horizon.

Given a yacht will often cost hundreds of thousands, and likely as not, millions of pounds, this reticence is understandable. Bachmanns are able to provide introductions to lending instititions but clients need to be ready to supply additional collateral security such as property or blue-chip company shares, together with excellent financial references.

Lastly, I cannot finish this article without mentioning VAT. Sometimes referred to as that ‘Very Awful Tax’ , but definitely a very complicated tax, however one that can be deferred given proper planning. Note the word ‘deferred’ – it is not a tax that can be avoided and a client should be wary of any advisor who suggests it can.

The basic rules are straightforward and are as follows (for a more in-depth review visit the Bachmann website) – if you are the holder of an EU passport and are using your yacht in EU waters you have to pay VAT on your yacht. If you are non EU resident you may use your yacht in EU waters for a period of six months, whereupon if you stay you pay, but if you leave you cannot return for a period of a further six months.

Simply placing the ownership of the yacht in a Guernsey company does not get around the VAT legislation even though Guernsey is outside of the EU – the authorities will look to the user of the yacht.

Suffice to say the tax planners have also found ways to defer client VAT payments and Bachmanns will be pleased to discuss these in detail with any interested clients.

So, from privateers to legal tax planners – who would have believed how maritime history can be put to use?

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions