Which flag should I choose for my yacht?
Which flag is perhaps not the first question that springs to mind when you are thinking of buying a yacht. Certainly questions involving, speed over water, cruising areas and even wine fridges, are often far more exciting and tend to dominate the conversation when you’re perusing the offerings online, talking to your broker or visiting a boat show.
However, the above questions, and indeed so many more, depend on the answer to our initial question. So – which flag should you choose?
The flag
The flag of your yacht is so much more than a colourful emblem waving on your stern. It is a giant declaration that you are following and abiding by the laws of that country. In short, the flag state you choose will determine such things as; where you use your yacht, how you use it, who can crew it, how it operates, taxes, and even what equipment you need to carry.
This gets even more complicated if you intend on using your yacht for commercial purposes such as chartering. Of course, Figure Eight can help you choose or navigate your flag state but to get you started we have outlined a few things to think about.
Private or Commercial?
If you are buying your yacht for purely private use and you aim to keep it that way your first port of call is to look at your own countries flag. What are the pros and cons of your home countries flag, and do they line up with what you want to get out of your yacht? At this stage, tax and your own tax status should be included in your thought process – especially if you are purchasing in a country different from your own or want it based in a country different from its flag.
If you would like to go commercial, which is very tempting given the tax benefits and using your asset for income, then you need to consider the commercial code of each flag. For example, a Malta Flag is a popular choice for commercial vessels operating in Europe but comes with a strict code regarding safety and radio equipment.
For both private and commercial owners one of the most important factors for determining where you flag your yacht is where would you like your yacht based. If your plans include transiting multiple countries this should also be carefully considered.
The Good, The bad and the grey.
Ever heard of the Paris MoU or Tokyo MoU? If not don’t worry that’s exactly what we are here for.
Both Paris and Tokyo control the White, Grey and Black lists of the worlds flags. This list is regularly updated and reflects the risk associated with each flag based on inspection results and number of detentions.
Black list flags should be avoided. Grey flags are the ones to watch. They fluctuate depending on current events and of course the inspection/detention results. White list flags are what you need to aim for and we would always recommend a flag that appears on both the Paris and the Tokyo White List rather than one or the other. For example, Panama is currently on the Tokyo White list but it is on Paris Grey list.
THE COSTS.
There is no denying it, whichever flag you choose there are certain costs associated with it. There will be administration fees and, in some cases, various inspection fees. New equipment may also need retrofitting on your yacht or including during the build process. For example, although both part of the Red Ensign Group, the BVI flag is less expensive than The Cayman Islands flag.
Changing flags.
You can of course change flags. We have helped multiple yachts do this especially since Brexit. Although it can sometimes be a lengthy process, the benefits of getting your yacht flagged to best suit you is money and time well spent. This will benefit you in the long run and set you up to enjoy your yacht as you want to.
Choosing your flag is important. The burden of doing so should certainly not stop you from enjoying the excitement of buying your new yacht. Every yacht owners’ circumstance is unique and therefore what might suit one owner may not be viable for someone else.
If you are still in the buying process you can ask your broker for their thoughts as well as seeking financial advice from a specialist marine finance service. Impartial advice can always be found from Figure Eight Yacht Management for both new and existing yacht owners.
Discover our owner services so you can get back to those wine fridges – though we can help with that too!
