Yacht ownership, registration and operation: EU versus Asia Asia Pacific Superyacht and Boating Conference

Singapore 8-9 April 2014

Janet Xanthopoulos MONOECI MANAGEMENT SAM

Head of the Yacht Department A Rosemont International company

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PLAN

Part 1 • How do I purchase my yacht?

Part 2 • How do I register my yacht?

Part 3 • How do I operate my yacht?

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PART 1

HOW DO I PURCHASE MY YACHT?

Janet Xanthopoulos

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Part 1 How do I purchase my yacht?

I. Do I buy in my personal name or do I use a company?

II. Do I buy a new or a second hand yacht?

III. Do I need to finance my yacht?

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I. Do I buy in my personal name or do I use a company?

Advantages of using a company in comparison to individual ownership: • Confidentiality; • Limitation of liability (use an SPV and not one of

your business vehicles); • Tax mitigation; • Asset protection and estate planning.

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II. Do I buy a new or second hand yacht? A. New builds 1. Type of builds

1. Production yachts; 2. Semi Custom yachts; 3. Custom yachts. The yacht building contract will depend upon the type of build. The two first are faster to deliver but there is very little margin for variation or negotiation. Seek the advice of a maritime lawyer and possibly of a technical manager to coordinate the work of the designer, naval architect, builder and external suppliers, especially for semi and custom yachts. 6

II. Do I buy a new or second hand yacht? A. New builds 2. Main contract clauses to consider

• Specification and plans; • Contract price / variation in the costs; • Payments; • Sub contracting / suppliers (ie: engines and navigation systems); • Failure to meet performances criteria; • Risks (yard insurance during the construction / what happens in case of

total loss?); • Security (refund guarantees for the owner / payment guarantee for the yard

(personal or bank guaranty)); • Trials; • Documentation and delivery; • Warranty period; • Default; • Dispute resolution; • Choice of law.

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II. Do I buy a new or second hand yacht? B. Second hand yacht 1. Review of the MOA / Documentation and delivery

Make sure the MOA covers the below points (seek the advice of a professional): • Price and mode of payment (usually 10% down deposit on signature and the balance

on delivery in exchange of the documentation agreed); • Special conditions (ie: acquisition subject to finance); • Complete list of documents and certificates to be delivered on delivery in exchange of

the balance of the purchase price; • Sear trial and condition survey (to be preferred to the “as is where is basis” clause); • Dates for the sea trials and conditions survey, acceptation and/or rejection of the

yacht, delivery; • Place of delivery; • VAT status of the yacht; • Methods of rejection of the yacht; • Defects of both parties and consequences as far as down deposit, commission of

broker, cancellation, damages are concerned; • Law of the contract.

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II. Do I buy a new or second hand yacht? B. Second hand yacht 2. Trials

Sea Trials and Condition survey should be part of the MOA or Sales contract. Extra costs? Yes but these would save a lot more hidden costs in the future. You need to know exactly what you are buying and have an idea about the future costs you would have to incur. If the yacht is in perfect condition, fine, at least you will be 100% sure. If she is not…. you will either be in a position to negotiate her price or negotiate so that the defects and, above all, those affecting the seaworthiness of the yacht be fixed at the Seller’s costs before you take delivery.

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II. Do I buy a new or second hand yacht? C. Do I finance my yacht? 1. Present yacht finance market

The yacht finance market is a true niche market, more risky than the private jet finance market. Yachts are depreciating assets and it is far more difficult to determine and guaranty their re sale value than for private jets which are used more for business and corporate activities. Since 2008 reserved to UHNW / never lend to someone who cannot afford to pay cash. a. In Europe: • Lots of banks proposing yacht finance have stepped back from the market. • Since 2008 mainly private banks that propose yacht finance with the aim to develop a private

relationship with the client / No more straight asset finance. • Easier for yachts over 40 m and with a value > 10M USD. • Leasing easier for smaller yachts / less risky as the bank owns the yacht but the risk remains in

case of resale following the default from the lessee. b. In Asia: • Back to back loans available but not typical marine products. • Some banks in Hong Kong for instance propose some loans but they will keep the original

documents of the yacht. • Some banks show an interest and start thinking about developing some yacht finance solutions.

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II. Do I buy a new or second hand yacht? C. Do I finance my yacht? 2. Marine products available a. Marine mortgage loan…

This is the most frequent way to finance commercial and offshore registered yachts. The loan terms available will obviously be dependent upon various factors such as the creditworthiness of the owner, the age and value of the yacht and any other collateral security that is available.

However, typically the terms offered are likely to be as follows: • Available for both new or used boats; • Available for both private and company ownership; • 5 to 7 years repayment loan. Some bank accept to finance up to 20 years depending on the

profile of the client; • Maximum loan to value ratio is usually 75%; • No VAT in case of a commercial registration/offshore registration when possible; • Floating and fixed terms available; • Typical interest margins range between 0.5 to 6.5 % over LIBOR or EURIBOR according to client's

net worth and type of finance; • Arrangement Fee's similar to margins usually vary between 0.35 and 1.5% + legal costs; • Monthly or quarterly repayments; • Prepayment penalties depending on the bank.

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II. Do I buy a new or second hand yacht? C. Do I finance my yacht? 2. Marine products available a. …Marine mortgage loan

• Valuation and condition survey could be requested if the yacht is more than 12 months. • Minimum security required:

o Personal liability of the owner; o First ranking Marine Mortgage over the vessel; o Assignment of earnings and insurances; o Assignment of Building contract in case of a new construction; o Possibly pledge on the shares of the holding company of the yacht or business entity of the

client; o Cash deposit as additional guaranty.

• The owner may also be required to covenant that their net worth will never be less than a

specified multiple of the amount of the loan. The particular terms of any loan are then likely to be set out in a detailed loan agreement including the various conditions required to be satisfied prior to any drawdown and the ongoing covenants with which the owners would be required to comply until the loan is repaid (e.g. concerning the use, condition and operation of the yacht). I strongly advise that this agreement be reviewed by a lawyer prior to its signature.

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II. Do I buy a new or second hand yacht? C. Do I finance my yacht? 2. Marine products available b. Leasing Schemes…

Using a leasing scheme is a very attractive way to finance the purchase of pleasure yachts as it allows to mitigate VAT. (Reduced VAT rates on the lease instalments depending upon the jurisdiction of the leasing). In simple terms, a lease involves a bank or finance house, buying the asset and then effectively renting it back to the client for an agreed period at an agreed price. The main jurisdictions offering such kind of schemes are Italy, France and Malta. At the difference of Italy and France it is not compulsory to involve a Bank in Malta (agreement between the lessor, the Maltese VAT department and the lessee). The rates on the instalments will vary in Italy and Malta depending upon the length of the yacht. ie: for a yacht over 24m the rate would be 5.4% in Malta and 6.4% in Italy. In France the rate is fixed at 10% for all yachts under leasing. At the end of the lease, the client has the option to buy the asset which then becomes a transfer of goods. In this event a VAT paid certificate will be issued to the lessee provided that all the VAT due has been paid.

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II. Do I buy a new or second hand yacht? C. Do I finance my yacht? 2. Marine products available b. …Leasing Schemes

Typical terms: • Leasing facility available usually from 300,000 euros (no maximum); • Initial deposit between 20% and 34% of the value of the hull without VAT in France

and Italy; (in Malta VAT on 50% of the yacht at the reduced rate applicable); • Lease maturity from 3 to 7 years (1 to 3 in Malta); • Residual value usually 1% that will be subject to the standard rate of VAT (22% in Italy,

20% in France, 18% in Malta); • Available for both private and company ownership; • Available for both new and used boats; • In Malta the lessor shall make a profit out of the transaction (typically 2% of the value

of the yacht) which shall be taxable at 35%.

• In two cases it is possible to have a VAT free lease in Italy and France as follows: • A charter business buying a vessel which is used 100% for chartering in EU

waters. • An individual buying a vessel for use 100% outside EU waters.

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II. Do I buy a new or second hand yacht? C. Do I finance my yacht? 2. Marine products available c. Acceptance of a dossier

Unfortunately the old times are far, Banks will now require extra guarantees and develop a private bank relation with the owner. Financial institutions want much more detailed information than before to assess the client's eligibility which results in an application taking considerably longer.

Typical due diligence information required: • Details of the yacht to be financed; • Curriculum Vitae and background information. Besides the usual personal data (including marital

status), the document should include a description of the client’s personal history and highlights of his professional background/career ;

• Information and documents evidencing the professional activity of the client; • A short summary of the client’s future personal and professional plans; • Information on the client’s source of wealth and family circumstances + estate planning entities if

any; • Overview of assets/liabilities and income/main fixed expenses, including evidence of the main

items. Personal Wealth statement; • 2 last tax returns; • 2 last balance sheets of the client’s company if any; • Recent bank reference; • Information about any bank accounts held in Europe. 15

PART 2

HOW DO I REGISTER MY YACHT?

Janet Xanthopoulos

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Part 2 How do I register my yacht?

I. Key elements to consider regarding the flag I choose.

II. Key elements to consider regarding my personal situation, my yacht and her futur use.

III. Current flag trends.

One of the most important decisions to make once the yacht has been chosen is the ownership structure and registration. These can be two different jurisdictions. The choice of flag should be made at an early stage in the acquisition process, ideally before any agreement to build or purchase is signed, as the final choice of registration will impact on various contractual and practical aspects of the process. In order to choose the most suitable jurisdiction(s) to own and register a yacht, there are a number of factors to bear in mind which will need careful analysis.

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I. Key elements to consider in relation to the flag I choose. (covered by CI presentation)

• Experience and Reputation - the reputation of the register is vitally important. Choosing a registry with a poor reputation or which is targeted by Port States and Customs could have a detrimental effect on the smooth running of the vessel. The Port State Control Rankings and list of detentions of each registry is a good guide.

• Political Stability - how stable is the government and economic environment? • Political and consular support given by the Flag State. • Registration Process – does the jurisdiction provide a convenient and speedy registration

service? • Mortgages - security of mortgages registered in the Flag State. • Registration Fees - how competitive are the fees imposed by the registry? • Manning - how flexible is the registry in its manning requirements? • Services - what is the business infrastructure of the Flag State, are there comprehensive,

professional support services? • Lenders and insurance companies will review a Flag State’s enforcement of international

environment and safety and procedures and standards, compliance with international regulations and casualty record. A poor record will inevitably affect the decisions of the lenders and underwriters. 18

II. Key elements to consider in relation to my personal situation, my yacht and her future use. A. Elements concerning my personal situation and my yacht.

• Nationality of yacht owner (EU or not EU / Less impact in Asia, importation

has more impact than nationality); • Residence of the yacht’s principal user(s) and their guests (more impact

within the EU (ie Spain or non EU yacht under TI with EU guests on board); • Physical characteristics of yacht (age, length and tonnage being particularly

important / conformity with any commercial yacht code); • Existing registration of yacht (if applicable); • Availability of historical proof of ownership / title documentation for yacht; • Usage of yacht (i.e. private or for charter); • VAT or equivalent tax status of the yacht; • Area of operation and primary homeport/country of use; • Specific crew and operational considerations.

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II. Key elements to consider in relation to my personal situation, my yacht and her future use. B. Elements concerning the use and area of operation of my yacht. 1. Within EU / Pleasure yachts…

• EU owner / EU and non EU registered yacht: VAT liability on the hull

o Payment of VAT up front (rates will depend upon the country of delivery as VAT will be payable in the place of delivery or final delivery or first port of call if the yacht is imported or re imported after being exported). If the yacht is imported a formal valuation will be required unless the yacht is new.

o Leasing Schemes to mitigate VAT as previously detailed (Italy, France,

Malta, (Monaco)). o Exemptions: Yachts built before 1985 and in EU waters before 1.01.1993

/ Vat paid yachts (Vat not recovered and if exported for less than three years).

• Non EU owner / Non EU registered yacht: Temporary admission

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II. Key elements to consider in relation to my personal situation, my yacht and her future use. B. Elements concerning the use and area of operation of my yacht. 1. …Within EU / Commercial yachts • EU VAT registered owner / EU registered yacht: exemption or zero rated operation:

o Vat exempted operation for yachts delivered in France, Monaco, Malta, Italy, Madeira… o Zero rated supply or neutral operation for yachts owned by UK or IOM structures and which

are delivered in the UK or the Isle of Man. • Non EU owner / non EU registered yacht The yacht needs to be formally imported and put into free circulation to be able to validly charter within the EU. The import procedure would normally be made in Monaco or France in exemption of VAT or in Malta by using the Onward Supply Relief ("OSR"). Once they have been imported, the same VAT / Tax advantages would then also apply to these offshore yachts. Nevertheless the owner should be ready to play the real commercial game (commercial registration, permanent crew, commercial operation at all times, charter fee at commercial market rates even when the UBO uses his yacht) //heavy sanctions.

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II. Key elements to consider in relation to my personal situation, my yacht and her future use. B. Elements concerning the use and area of operation of my yacht. 2. Within Asia Different regulations and requirements apply depending upon the country or area of delivery and operation of the yacht: • Hong Kong: no VAT (very popular for Chinese to avoid 43% tax but marinas full). If a yacht is to remain

longer than 6 months, a Hong Kong “Pleasure Vessel Operator” licence must be applied. • China: 43% import tax and interdiction to import yachts of more than 1 year. It is recommended to register the yacht first under Hong Kong flag so as to ease the entrance and visa application / work permit process in China. Solutions available to mitigate tax but lots of grey areas. Difficult to move from one port to the other. • Singapore: 7% GST if yacht is sold in Singaporean waters unless registered locally. • Indonesia: 45% import tax (5% import duty, 10% VAT and 30% luxury tax). • Thailand: Sale of a non Thai owned and flagged yacht in Thailand subject to Thai income tax (20% corporate income tax on net profits on the sale and 10 % profit tax on the net profits remitted abroad in addition to VAT at 7%) To avoid these taxes sales are generally completed in International waters. Thai flag recommended if yacht based in Thailand. • Japan: Import tax of 5% for Japanese flagged yacht + import duty of 2.5% (waived if the yacht is built in certain emerging markets (ie: China and Taiwan)). No import or sales taxes payable in relation to foreign flagged yachts cruising in Japan. • Taiwan: is working on new rules inspired from Europe to liberalize the navigation, within the country to attract more yachts from Hong Kong and China. TBC

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II. Key elements to consider in relation to my personal situation, my yacht and her future use. C. Current flag trends (covered by CI presentation)

• Red Ensign These registers are divided into two categories: 1. Category 1 - register ships of unlimited tonnage and type. 2. Category 2 - register commercial ships and yachts of up to 150 gross registered tons (GRT); and vessels which are not

operated commercially of up to 400 GRT. Category 1 Category 2 Bermuda Anguilla BVI Falkland Islands Cayman Islands Guernsey Isle of Man Jersey UK Montserrat Gibraltar St Helena Turks & Caicos Islands Cayman Islands and Isle of Man as the Marshall Islands are enhancing their presence in Asia. Isle of Man and Cayman Islands also present the “flip flop” possibility (change from pleasure to commercial and vice versa). LY II / LYIII for commercial yachts over 24m and transporting up to 12 passengers // Passenger Yacht Code for pleasure yachts of any size, in private use or engaged in trade which carry 13-36 passengers and which do not carry cargo (where more than 12 passengers are carried more onerous passenger ship regulations apply).

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II. Key elements to consider in relation to my personal situation, my yacht and her future use. C. Current flag trends … • Marshall Islands

o Marshall Islands registered yachts have automatic rights to a cruising permit for sailing in US territorial waters.

o In common with St Vincent & the Grenadines, the Marshall Islands allows qualifying private yachts to charter up to 84 days a year, but subjects them to detailed surveys heavy on lifesaving, safety, firefighting and a minimum safe manning certificate when on charter. These two registries could be a good option for yacht owners who are not ready to play a real commercial game.

o New Passager Yacht Code for up to 36 passagers.

• Malta very popular with the UK London flag for navigating within the EU o Pragmatic approach and tax advantages. o Well accepted by finance institutions + straightforward mortgage system. o Maltese Commercial Yacht Code (since 2006) extends to commercial yachts those benefits

that are applicable to trading ships in Malta (no corporate tax, no capital gain tax, no witholding tax...).

o Class not compulsory for yachts below 500 GT but a report submitted by a Government approved surveyor at each survey.

o No Mini ISM for commercial yachts below 500 GT. o No compulsory manning requirements for private yachts for the time being.

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II. Key elements to consider in relation to my personal situation, my yacht and her future use. C. …Current flag trends • Hong Kong:

For navigating in Asia, popular registry even though, at present it does not distinguish between pleasure and commercial yachts. • Langkawi International Yacht Registry: LIYR

o Langkawi is the only registry in the South East Asia to have adopted a real commercial yacht

registry. o Launched in 2003 the registry is operated by the Director General of Marine in Malaysia. o Open registry: no restrictions or limits with regards to the ownership of a yacht individuals,

joint owners, corporations) o No import duty o Provides full and interim registration, bareboat charter yacht and yacht under construction o Mortgage registration

Most of the main offshore registries have enhanced their presence in Asia including the Marshall Islands, Isle of Man and Cayman which also should be considered for navigating in Asia.

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PART 3

HOW DO I OPERATE MY YACHT (PLEASURE VERSUS COMMERCIAL)?

Janet Xanthopoulos

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Part 3 How do I operate my yacht (pleasure versus commercial) ?

I. Differences on the technical side.

II. Differences on the crew and insurance side.

III. Differences depending upon the areas of operation.

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I. Differences on the technical side (covered by CI presentation) The rules and regulations applying to a particular yacht will generally depend on a combination of the following factors: registration, length, tonnage, engine size, usage (i.e. private or charter), area of operation, distance operated from a safe haven. Commercial yachts or private yachts hosting helicopters need to comply with stricter rules than yachts that are only used privately (used solely for the recreational purposes of their owners and guests / not intented to carry for reward a maximum of 12 to 36 passengers). Among other matters, commercial yachts must be in Class and comply with the Commercial Yacht Code Regulations in accordance with the chosen registry, the International Maritime Conventions and Regulations and must comply with minimum safe manning requirements if over 24m. While introducing a stricter set of rules and regulations, commercial registration enables yacht owners to profit from the chartering activity of their yachts and to take advantage of all the other fiscal benefits derived from commercial operations. The need for yacht owners and crew to adhere to the laws, rules and regulations that apply to their yachts is important for the following reasons: • Primarily the health and safety of all onboard; • The proper maintenance and upkeep of the yacht, tenders, machinery in good working order; • Compliance with any insurance warranty that may invalidate the yacht’s insurance if breached; • The avoidance of litigation in the event of an accident or incident involving the yacht and its tenders; • The avoidance of detention by Port State Control in the event of non compliance.

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I. Differences on the technical side (covered by CI presentation)…

The main International regulations applying to commercial yachts are set below:

• International Load Line Convention (yachts over 24m);

• International Convention for the Prevention of Pollution from Ships (MARPOL / annex I oil, annex IV sewage, annex VI air for yachts over 400GT, annex V garbage for yachts over 100 GT);

• Ship Oil Pollution Emergency Plan (SOPEP);

• International Safety Management Code (ISM) ( for yachts over 500 GT but mini ISM required under Red Ensign flags for yachts over 24m engaged in trade);

• International Ship and Port Facility Security Code (ISPS) (for yachts over 500 GT);

• International convention on the control of Harmful Anti-Fouling system on ships;

• SOLAS Conventions (construction, life saving appliances, radio, navigation, maritime safety / part of the convention is applicable to yachts);

• Colregs Convention;

• Maritime Labour Convention (MLC) (for commercial yachts over 500 GT but advised to comply for all commercial yachts on a lighter level);

• Ship Energy Efficiency Management Plan (SEEMP);

• STCW 1995 (for commercial yachts / Crew certification);

• Classification Society Rules and regulations.

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II. Differences on the insurance and crew side. A. Differences on the insurance side 1. General considerations

The yacht, her crew and passengers shall be properly insured. Commercial yachts shall be insured for chartering activities and have a greater third part liability or P&I coverage. The two most used sets of standard wordings are the Institute Yacht Clauses 1/11/85 (CL328) and the American Yacht Clauses May 1947 (CLA231). Both have exclusions and warranties that may limit cover. The main insurance policies are: • Hull & Machinery; • P&I or Third part liability; • Crew medical and accident cover; • War risks. These policies typically cover the below risks:

• Hull & Machinery; • Machinery breakdown; • Total loss; • Fixtures and fittings; • Personal effects; • Tenders and water sport toys; • Third party liabilities; • Personal Accident; • Medical expenses; • Charter activities for commercial yachts or private yachts with limited autorisation to charter; • Ancillary items (such as art works, helicopters etc); • Small pleasure yachts usually have a Hull &Machinery policy which include Third Part liability risk.

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II. Differences on the insurance and crew side. B. Differences on the crew side

• Certificates The crew members will need to have some maritime certificates which are recognised by the flag state and required depending upon the type of registration. The crew will need to have STCW 1995 certificates if engaged on board a commercially registered yacht and minimum safe manning rules will apply. Requirements are less constraining on board pleasure yachts. • Employment contract Crew will need to be employed either by the owning company or through an offshore payroll company to remove any employer’s social and tax liability from the owner. The company would employ the crew members and sub-contract them back to the owning company to take instructions on how the yacht should be run etc. The employment contracts between the offshore employment company and each crewmember should state that the Employee will be liable for all applicable taxes, government fees, social security payments or other obligations arising from his citizenship, place of engagement or country of residence if any. Minimum standard clauses will be compulsory for “commercial crew contracts "under new MLC 2006 Convention. • Insurance If the crew members are not covered by a national social scheme of the flag state, the Employer will have to take a private medical and accident cover for each crew member in addition to the P&I or third part liability cover, as the deductibles are high and not all risks covered. This also became compulsory with the MLC 2006 Convention on board commercial yachts. • MLC 2006 Convention: Minimum rights (entered into force in August 2013). The Convention establishes minimum requirements for almost all aspects of working conditions for seafarers including conditions of employment, hours of work and rest, accommodation, recreational facilities, food and catering, health protection, medical care, welfare and social security protection. Even if the Convention applies to ships and yachts over 500 GT engaged in commercial activity, we strongly advise yacht owners of all commercially registered yachts to apply for a Statement of Compliance in order to avoid any detention following Port State Control as inspection system applies for all ships/ yachts of over 200 GT. 31

III. Differences depending upon the areas of operation. A. Operation within the EU and the US.

EU

• Offshore registered commercial yachts need to be imported to charter/Offshore private yachts can benefit from the Temporary Admission regime for 18 months.

• For commercial yachts necessity to appoint a fiscal agent/representative that will collect and pay the VAT payable on charters in the country where the charter starts (rates differ from one country to the other and reduced rates are available is some countries if the yacht sails in International waters (ie Italy, France, Malta).

• The Balearics (Spain) and Greece have specific rules and some charter licences are required to be able to embark / disembark passengers (available for EU owned and registered yachts for the time being).

• Detaxed fuel not available everywhere and questions on the future regime. Still available in some areas in Italy, Greece and France but for how long?

US

• Not possible for non-US commercially registered yachts to charter in the US and to stay in private marinas. Commercial yachts exchange their certificate of registry for a pleasure yacht one, such as in the case of a Cayman Island flagged vessel, or may re-flag under Marshall Islands pleasure flag for the time they navigate in the US as Marshall Islands and the US have special arrangements.

• Vessels over 400GT will require an approved Federal Non Tank Vessel Response Plan for pollution prevention, plus State Response Plans as required and a proper Certificate of Financial Responsibility (COFR) as a pre-voyage requirement. 32

III. Differences depending upon the areas of operation. B. Operation within Asia. • Hong Kong If a yacht is to remain longer than 6 months, a Hong Kong “Pleasure Vessel Operator” licence must be applied. • China Supposed to be easier to register, enter and operate a yacht within this area since 2010, especially in Hainan but lots of grey areas still remain. Two options are available (Bank guarantee letter required. An exemption could be applied in the second option): • 183 days authorisation of stay per year and not renewable every six months / available for visiting yachts • “Bare Charter” (yacht rented out by a Honk Kong Holding company to a local Hainan company. Rental hire fixed by the

Customs in accordance with the value of the vessel and the 43% tax paid only on the rental fee) Yachts coming from Hong Kong need to pass through a specific survey before leaving Hong Kong for Sanya in accordance with Marine Department rules in force in Hainan. • Singapore Generally speaking there is a 7 % Vat (GST) levied on the importation of goods. Exemption for the import of a private yacht where she is used only for pleasure purposes. The yacht should enter Singaporean waters under its own engine or sail and there should be an intention to leave Singaporean waters in due course. As within the Temporary Admission within the EU, there are no specific formalities to comply with. There is no apparent time limit specified for the yacht’s stay in Singapore though. • Indonesia Cruising in Indonesia has recently become much easier and cheaper since the introduction of a new temporary admission scheme. No VAT, import or luxury taxes are payable as long as the yacht is used only for private cruising. It will be necessary to obtain on arrival from the port of entry an import declaration and an Indonesian cruising permit. The cruising permit will be issued for 90 days and could be extended up to a maximum of three years before any import and related taxes become payable. Crucial to appoint a local agent to deal with all the formalities especially where written guarantees may be required. • Thailand Like Singapore, Thailand has implemented a temporary admission scheme available to private cruising yachts. However Customs temporary importation limited in time: from 6 months to 2 years (6 months renewable 3 times) Number of formalities to accomplish with the Customs (declaration of all fittings, accessories, passengers…and some bonds may be required as well for the period of stay (cash deposit or bank guarantees). Use a good local agent to assist you.

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III. Differences depending upon the areas of operation. B. Operation within Asia...

• Japan Situation in Japan is complex. No import or sales taxes payable in relation to foreign flagged yachts cruising in Japan although there is a large amount of paperwork to comply with as a yacht moves around the country. If the yacht is over 100 tons it must have insurance cover for oil pollution and wreck removal. It is recommended that the yacht does not stay more than one year even if there no any regulation on the topic. • Taiwan Taiwan is working on new rules inspired from Europe to liberalize the navigation, within the country to attract more yachts from Hong Kong and China. In addition to the temporary import or clearance formalities, the question of the visas for the crew and passengers must also been studied prior to arrival. Crew: from 30 to 90 days by applying to a 60 day Tourist Visa from the nearest Consulate prior to arrival (this visa can be then extended for an additional 30 days in the country). A bond might be required to be able to leave some countries (ie: Thailand). Passengers: 30 days visa + 7 days extension or 60 day tourist visa from embassy/ consul + 30 days extension.

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Yacht owners must do their homework before cruising and/or importing vessels as each country, each region have specific navigating rules whether in the EU, the US, the Caribbean or in Asia. In Asia whilst a number of countries have or are starting to recognise the benefits of operating a VAT and duty free temporary importation scheme for pleasure yachts, others have yet to distinguish between pleasure yachts in commercial use and commercial vessels and implement some real charter regulations. 34S

CONCLUSION

If you should remember one thing out of this speech and probably out of these two days of conference it is that a yacht is certainly a shining and glamorous toy, a yacht is part of a dream….but a yacht can also quickly become a real nightmare. Do not let your dream become a nightmare…speak to a professional! Let real yachting professionals deal with all the “unsexy” problems surrounding the acquisition, administration and operation of the yacht. I just have two last words to tell you: BON VOYAGE!

THANK YOU FOR YOUR ATTENTION.

Monoeci Management SAM :

Yacht ownership, registration and administration experts

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Janet Xanthopoulos Head of the Yacht Department Rosemont (Hong Kong) Ltd 2nd floor, Casey Building 38 Lok Ku Road Sheung Wan Hong Kong Tel. +852 3755 4500 Fax. +852 3755 4501 Mobile: +852 6058 6905 Monoeci Management SAM (Monaco) Les Villas del Sole 47-49, boulevard d’Italie Monaco Tel. +377 97 97 21 41 Fax. +377 97 97 21 51 email: j.xanthopoulos@monoeci.com

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