Buying a superyacht is one of the most significant investments anyone can make. New owners often choose to first dip their toe into the water by chartering a yacht to experience life on board. But for those looking for something a little more long term with easy exit options, yacht leasing offers a happy halfway house while simultaneously providing yacht owners with a secure and viable way of commercialising their asset.Photo: Matheus FradeThough yacht leasing itself is not a new initiative, the existing model in the popular yachting hub of Malta has now been modified for the better. Published in 2019, Malta’s guidelines for its new Yacht Leasing Model extend beyond VAT considerations and offer owners and lessees a clear and secure way of leasing that prioritises use and enjoyment of the yacht within the parameters of EU law.Photo: SuperYacht TimesAs the model applies specifically to Maltese yachts, the new yacht lease contracts must be drawn up in Malta and must follow the Malta and EU laws and practice, including decisions from the European Court of Justice in relation to operating leases. Equally as important is the fact that the owner needs to be set up as a lessor company (incorporated and registered for VAT and Income Tax purposes with the Maltese Tax Authority) in Malta prior to purchasing the yacht. This is because the lessor is purchasing the yacht with the intent to conduct an economic activity (i.e. lease), and consequently is then entitled to deduct input VAT on the yacht purchase. By then entering into a lease agreement in Malta, the lessor is subjecting itself to pay VAT in Malta and follow the Maltese rules.Photo: Charl van Rooy / SuperYacht TimesOf course, not all potential yacht owners who find the idea of yacht leasing commercially attractive are in a position to buy a yacht outright. It’s a sizable chunk of money and the ongoing maintenance costs can seem daunting. The good news is that most banks and financial institutions are already familiar with yacht lease models and are therefore open to lending.
Another positive is that the terms of agreement outside of what is listed above are fairly flexible for both parties. There is no maximum or minimum period of time imposed for a yacht lease, and the finer details of the agreement can suit both parties. A variety of exit options are available, none of which need to be decided upon beforehand, including termination, expiration and even allowing the contract to roll over. Photo: SuperYacht TimesIn some instances, the lessee may wish to purchase the yacht at the end of the lease agreement, at which point the Maltese VAT Department reserves the right to issue a VAT Paid Certificate as long as all legal and general principles have been observed during the term of the lease.
As with any business contract, it’s advisable to have the lease analysed and verified by a third party, such as Vistra Marine & Aviation Limited, prior to signing on the dotted line. Aside from delivering peace of mind, it ensures that the yacht’s intended use is clearly outlined in the contract and verifies that the agreement is both fair and financially viable; if the lessor is not set to make a profit, there is little point in purchasing a yacht with the intent to undertake a leasing activity.A standard Maltese VAT rate of 18% will be charged on the lease in yearly, monthly or quarterly instalments. However, the lessor is entitled to adjust, and even defer, the VAT collected and paid if the yacht has been used and enjoyed in non-EU waters. Proof of non-EU activity is required, of course, and it always falls on the lessor to provide it. With this in mind, Vistra advocates keeping a record of all the yacht’s logs, marina invoices and moreover GPS positionings to avoid any unnecessary debates with the Maltese VAT department, or worse still, a possible tax investigation.
In a world where the unexpected can strike at any time, yacht leasing is an attractive option for owners looking to enjoy the long-term spoils of sailing while reaping a short-term return on their investment – and everything else in between.Photo: SuperYacht TimesFor more information on Vistra's products and the Malta Yacht Leasing Model, contact the company directly using the information below.
Vistra Marine & Aviation Limited
Dr Anthony Galea
T: +356 2258 6400
E: [email protected]
SuperYacht Times - The State of Yachting 2020
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